UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-0816 ------------------------------------------- AMERICAN CENTURY MUTUAL FUNDS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 816-531-5575 --------------------------- Date of fiscal year end: 10-31 -------------------------------------------------- Date of reporting period: 04-30-2006 -------------------------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] American Century Investments SEMIANNUAL REPORT [photo of boy and airplane] APRIL 30, 2006 Ultra(reg.sm) Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Six-Month Total Returns . . . . . . . . . . . . . . . . . . . . . . . . 2 ULTRA Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 6 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 9 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .12 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .14 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .15 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .16 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .23 OTHER INFORMATION Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .28 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .29 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 The opinions expressed in the Market Perspective and the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century Ultra Fund for the six months ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of Fortune magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. /s/James E. Stowers III James E. Stowers, Jr. James E. Stowers III FOUNDER CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective [photo of Mark Mallon] BY MARK MALLON, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS WHAT HAPPENED IN THE ECONOMY A short-lived economic slowdown on the heels of last summer's devastating Gulf Coast hurricanes gave way to a strong rebound after the first of the year, providing fuel for a dose of investor enthusiasm that pushed U.S. broad market indices to solid gains in the 6-month period ended April 30, 2006. As measured in gross domestic product (GDP), U.S. economic growth slowed to 1.7% in the fourth quarter of 2005 as energy supply interruptions caused by hurricanes Rita and Katrina -- and a corresponding spike in oil and natural gas prices -- filtered through the economy. Other temporary business and employment disruptions caused by those two storms further muted economic vitality in the final months of 2005. By January 2006, however, economic growth reaccelerated, with retailers reporting strong post-holiday sales and overall corporate profits remaining robust. Not even rising commodity prices and rising interest rates halted the momentum, with GDP growth of 5.3% in the first quarter of 2006 more than tripling the rate of the previous quarter. The surge in many commodity values gave the Federal Reserve one reason to keep its string of interest rate hikes intact, even though broader inflation remained modest. The Fed boosted its short-term rate target to 4.75% in the period with four consecutive quarter-point increases. WHAT HAPPENED IN THE MARKET The notion that the Fed might soon stop raising rates helped feed investors' appetites throughout the period, even after short-term interest rates briefly surpassed long-term yields in the final week of 2005. Such yield-curve inversions historically presage a recession. But long-term yields finally inched upward in early 2006, with the benchmark 10-year Treasury note topping the 5% level for the first time in four years. Investors normally disdain rising 10-year yields. Nevertheless, equity markets surged, and as they have since 1999, stocks with smaller capitalizations once more set the pace. But large-cap returns outperformed in the period's final month, when gasoline prices again crept to near $3 per gallon. Growth stocks also found more favor. Among small- and mid-cap stocks, returns on growth issues surpassed returns for value stocks in the 6-month period. Large-cap growth continued languishing behind large-cap value, though, with the latter garnering substantial support from energy conglomerates riding record profits and surging share prices. SIX-MONTH TOTAL RETURNS AS OF APRIL 30, 2006(1) - -------------------------------------------------------------------------------- S&P 500 Index 9.64% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 10.24% - -------------------------------------------------------------------------------- Nasdaq Composite Index 10.02% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. - ------ 2 Ultra - Performance TOTAL RETURNS AS OF APRIL 30, 2006 -------------------------------- AVERAGE ANNUAL RETURNS - ---------------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - ---------------------------------------------------------------------------------------- INVESTOR CLASS 3.15% 10.09% 0.56% 6.40% 13.04% 11/2/81 - ---------------------------------------------------------------------------------------- RUSSELL 1000 GROWTH INDEX(2) 7.06% 15.18% -0.76% 6.21% 11.51%(3) -- - ---------------------------------------------------------------------------------------- S&P 500 INDEX(2) 9.64% 15.42% 2.70% 8.94% 13.30%(3) -- - ---------------------------------------------------------------------------------------- Institutional Class 3.21% 10.30% 0.77% -- 5.85% 11/14/96 - ---------------------------------------------------------------------------------------- Advisor Class 3.01% 9.80% 0.29% -- 5.77% 10/2/96 - ---------------------------------------------------------------------------------------- C Class 2.65% 9.00% -- -- 2.63% 10/29/01 - ---------------------------------------------------------------------------------------- R Class 2.89% 9.53% -- -- 6.67%(4) 8/29/03 - ---------------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Since 10/31/81, the date nearest the Investor Class's inception for which data are available. (4) Class return would have been lower if the class had not received partial reimbursement of its distribution and service fee. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. (continued) - ------ 3 Ultra - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made April 30, 1996
ONE-YEAR RETURNS OVER 10 YEARS Periods ended April 30 - -------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------------------------- Investor Class 10.69% 39.75% 25.52% 27.06% -26.70% -9.83% -14.79% 21.64% -0.07% 10.09% - -------------------------------------------------------------------------------------------------- Russell 1000 Growth Index 22.06% 42.09% 26.53% 27.58% -32.25% -20.10% -14.35% 21.65% 0.40% 15.18% - -------------------------------------------------------------------------------------------------- S&P 500 Index 25.13% 41.07% 21.82% 10.13% -12.97% -12.63% -13.31% 22.88% 6.34% 15.42% - -------------------------------------------------------------------------------------------------- Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 4 Ultra - Portfolio Commentary PORTFOLIO MANAGERS: BRUCE WIMBERLY, JERRY SULLIVAN AND WADE SLOME American Century Ultra gained 3.15%* during the six months ended April 30, 2006, which trailed the 7.06% return of its benchmark, the Russell 1000 Growth Index, and the S&P 500 Index's 9.64% return. Over the long term, Ultra has proved its worth. During the past 5- and 10- year periods, the portfolio's gains have surpassed those of both its benchmark and the Lipper Large-Cap Growth Funds Index** measuring its peers. SURGING CYCLICALS In the latest 6-month period, Ultra's orientation toward companies with consistent, above-average growth did not match the market's preference for firms with traditionally cyclical profits. The portfolio scaled back positions in many cyclical companies throughout 2005 because management believed further share price increases would accrue at a heightened level of risk. In particular, the fund's lower weight in industrial companies hindered the portfolio's relative performance. For the 6-month period, that sector ranked third in performance among all sectors in the benchmark. Today, management believes that stock prices in many industrial companies excessively reflect their probable future profits. CHALLENGES IN TECHNOLOGY, HEALTH CARE Technology and health care stocks -- areas that normally compose a large portion of Ultra's holdings -- also negatively impacted Ultra's relative performance. In the health care sector, equipment suppliers and biotech holdings underperformed the benchmark during the period. Equipment suppliers have struggled recently amid concerns about Medicare reimbursement rates for certain orthopedic procedures and medical devices. Biotech companies had strong full-year returns but lackluster performance in the recent period. Several high-profile technology companies made the portfolio's list of leading detractors. Dell lost 18% of its market value as the company's efforts to revive sales resulted in lower margins and lower profits. Shares of Amazon.com, eBay and Yahoo! also fell as they encoun- TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Wal-Mart Stores, Inc. 3.7% 3.3% - -------------------------------------------------------------------------------- First Data Corp. 3.3% 2.7% - -------------------------------------------------------------------------------- Teva Pharmaceutical Industries Ltd. ADR 3.0% 2.6% - -------------------------------------------------------------------------------- eBay Inc. 3.0% 2.9% - -------------------------------------------------------------------------------- Electronic Arts Inc. 2.9% 2.0% - -------------------------------------------------------------------------------- Yahoo! Inc. 2.8% 1.7% - -------------------------------------------------------------------------------- International Game Technology 2.7% 2.1% - -------------------------------------------------------------------------------- UnitedHealth Group Incorporated 2.7% 2.5% - -------------------------------------------------------------------------------- QUALCOMM Inc. 2.6% 1.7% - -------------------------------------------------------------------------------- Apollo Group Inc. Cl A 2.5% 2.3% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. **The Lipper Large-Cap Growth Funds Index returned 17.74%, -1.01% and 5.64% for the 1-, 5- and 10- year periods ended April 30, 2006, respectively. (continued) - ------ 5 Ultra - Portfolio Commentary tered mounting revenue and competition concerns. Those four stocks, on average, composed 10% of Ultra's portfolio during the period. One of the portfolio's top five overweight positions, Apollo Group, ranked second only to eBay among Ultra's worst relative performers. The parent company of the for-profit University of Phoenix, Apollo reported declining quarterly profits in March 2006, two months after the unexpected resignation of its chief executive. Its shares fell 13% in the 6-month period. Nevertheless, Ultra's management remains confident that rising enrollment rates will help Apollo rebound in the second half of 2006. FINDING STRENGTH IN FINANCIALS Financial stocks accounted for about 40% of Ultra's positive total return in the period, as the portfolio maintained an advantageous and substantial overweight in the sector. Positions in diversified financial services and capital markets worked particularly well. The latter benefited from renewed investment interest in stocks that boosted trading volumes and broad market returns, primarily in early 2006. Meanwhile, International Game Technology led Ultra's list of individual performers as its shares rallied 44%. The world's biggest slot machine maker constituted one of Ultra's five leading average overweight positions on an individual basis. The company reported strong fiscal second-quarter earnings near the end of the period and raised its profit outlook through 2007. Its optimism reflects rising global demand for gaming machines -- exemplifying the type of secular growth Ultra's management finds especially appealing. INVESTMENT PHILOSOPHY Ultra's management team invests in companies it expects will sustain above-average growth rates over time. The portfolio's managers seek industry leaders with competitive advantages, strong management and a solid financial picture that can support growth. The team believes investments in such firms will generate long-term benefits for investors. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Internet Software & Services 8.5% 2.7% - -------------------------------------------------------------------------------- IT Services 7.8% 7.4% - -------------------------------------------------------------------------------- Hotels, Restaurants & Leisure 7.1% 5.5% - -------------------------------------------------------------------------------- Specialty Retail 6.4% 5.2% - -------------------------------------------------------------------------------- Software 6.1% 5.3% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 91.6% 93.4% - -------------------------------------------------------------------------------- Foreign Common Stocks 7.3% 5.7% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 98.9% 99.1% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.2% 0.9% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) (0.1)% --(2) - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. (2) Category is less than 0.05% of total net assets. - ------ 6 Shareholder Fee Example (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. (continued) - ------ 7 Shareholder Fee Example (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ------------------------------------------------------------------------------------ EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - ------------------------------------------------------------------------------------ ULTRA SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------ ACTUAL - ------------------------------------------------------------------------------------ Investor Class $1,000 $1,031.50 $4.94 0.98% - ------------------------------------------------------------------------------------ Institutional Class $1,000 $1,032.10 $3.93 0.78% - ------------------------------------------------------------------------------------ Advisor Class $1,000 $1,030.10 $6.19 1.23% - ------------------------------------------------------------------------------------ C Class $1,000 $1,026.50 $9.95 1.98% - ------------------------------------------------------------------------------------ R Class $1,000 $1,028.90 $7.45 1.48% - ------------------------------------------------------------------------------------ HYPOTHETICAL - ------------------------------------------------------------------------------------ Investor Class $1,000 $1,019.93 $4.91 0.98% - ------------------------------------------------------------------------------------ Institutional Class $1,000 $1,020.93 $3.91 0.78% - ------------------------------------------------------------------------------------ Advisor Class $1,000 $1,018.70 $6.16 1.23% - ------------------------------------------------------------------------------------ C Class $1,000 $1,014.98 $9.89 1.98% - ------------------------------------------------------------------------------------ R Class $1,000 $1,017.46 $7.40 1.48% - ------------------------------------------------------------------------------------ *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 8 Ultra - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.9% AIR FREIGHT & LOGISTICS -- 3.1% - -------------------------------------------------------------------------------- 992,000 C.H. Robinson Worldwide Inc.(1) $ 43,995 - -------------------------------------------------------------------------------- 673,000 Expeditors International of Washington, Inc.(1) 57,616 - -------------------------------------------------------------------------------- 1,712,000 FedEx Corporation 197,103 - -------------------------------------------------------------------------------- 3,650,000 United Parcel Service, Inc. Cl B 295,905 - -------------------------------------------------------------------------------- 594,619 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 2.7% - -------------------------------------------------------------------------------- 4,695,000 Amgen Inc.(2) 317,851 - -------------------------------------------------------------------------------- 2,439,000 Genentech, Inc.(1)(2) 194,413 - -------------------------------------------------------------------------------- 512,264 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 2.8% - -------------------------------------------------------------------------------- 1,539,000 Goldman Sachs Group, Inc. (The) 246,686 - -------------------------------------------------------------------------------- 961,000 Legg Mason, Inc. 113,859 - -------------------------------------------------------------------------------- 2,183,000 T. Rowe Price Group Inc. 183,787 - -------------------------------------------------------------------------------- 544,332 - -------------------------------------------------------------------------------- CHEMICALS -- 0.8% - -------------------------------------------------------------------------------- 1,775,000 Monsanto Co. 148,035 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 1.1% - -------------------------------------------------------------------------------- 3,111,000 Wells Fargo & Co. 213,695 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 3.5% - -------------------------------------------------------------------------------- 8,682,000 Cisco Systems Inc.(2) 181,888 - -------------------------------------------------------------------------------- 9,605,000 QUALCOMM Inc. 493,121 - -------------------------------------------------------------------------------- 675,009 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 2.4% - -------------------------------------------------------------------------------- 1,072,000 Apple Computer, Inc.(2) 75,458 - -------------------------------------------------------------------------------- 14,797,000 Dell Inc.(2) 387,681 - -------------------------------------------------------------------------------- 463,139 - -------------------------------------------------------------------------------- CONSUMER FINANCE -- 2.4% - -------------------------------------------------------------------------------- 8,624,000 SLM Corporation 456,037 - -------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES -- 3.0% - -------------------------------------------------------------------------------- 8,822,000 Apollo Group Inc. Cl A(1)(2)(3) 482,034 - -------------------------------------------------------------------------------- 1,981,000 Weight Watchers International, Inc.(1) 97,762 - -------------------------------------------------------------------------------- 579,796 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 2.0% - -------------------------------------------------------------------------------- 436,000 Chicago Mercantile Exchange Holdings Inc.(1) 199,687 - -------------------------------------------------------------------------------- 1,760,000 McGraw-Hill Companies, Inc. (The) 97,962 - -------------------------------------------------------------------------------- 1,551,000 Moody's Corp.(1) 96,178 - -------------------------------------------------------------------------------- 393,827 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 0.8% - -------------------------------------------------------------------------------- 2,253,000 Schlumberger Ltd. 155,772 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING -- 5.8% - -------------------------------------------------------------------------------- 1,985,000 Costco Wholesale Corporation $ 108,044 - -------------------------------------------------------------------------------- 15,649,000 Wal-Mart Stores, Inc. 704,674 - -------------------------------------------------------------------------------- 5,523,000 Walgreen Co.(1) 231,579 - -------------------------------------------------------------------------------- 1,613,000 Whole Foods Market, Inc.(1) 99,006 - -------------------------------------------------------------------------------- 1,143,303 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 0.5% - -------------------------------------------------------------------------------- 1,571,000 Wm. Wrigley Jr. Co. 73,946 - -------------------------------------------------------------------------------- 392,750 Wm. Wrigley Jr. Co. Cl B(1) 18,499 - -------------------------------------------------------------------------------- 92,445 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 5.7% - -------------------------------------------------------------------------------- 4,571,000 Boston Scientific Corp.(1)(2) 106,230 - -------------------------------------------------------------------------------- 1,762,000 Fisher Scientific International(1)(2) 124,309 - -------------------------------------------------------------------------------- 6,018,000 Medtronic, Inc.(1) 301,623 - -------------------------------------------------------------------------------- 2,253,000 St. Jude Medical, Inc.(2) 88,948 - -------------------------------------------------------------------------------- 3,920,000 Stryker Corp. 171,500 - -------------------------------------------------------------------------------- 1,771,000 Varian Medical Systems, Inc.(1)(2) 92,765 - -------------------------------------------------------------------------------- 3,282,000 Zimmer Holdings Inc.(1)(2) 206,438 - -------------------------------------------------------------------------------- 1,091,813 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 3.6% - -------------------------------------------------------------------------------- 634,000 Express Scripts, Inc.(1)(2) 49,541 - -------------------------------------------------------------------------------- 2,179,000 Quest Diagnostics Inc. 121,436 - -------------------------------------------------------------------------------- 10,347,000 UnitedHealth Group Incorporated 514,659 - -------------------------------------------------------------------------------- 685,636 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 7.1% - -------------------------------------------------------------------------------- 8,072,000 Carnival Corporation 377,931 - -------------------------------------------------------------------------------- 2,334,000 Cheesecake Factory Inc.(1)(2) 73,661 - -------------------------------------------------------------------------------- 326,000 Chipotle Mexican Grill Inc. Cl A(1)(2) 17,014 - -------------------------------------------------------------------------------- 13,692,000 International Game Technology 519,337 - -------------------------------------------------------------------------------- 34,684,000 PartyGaming plc ORD 95,242 - -------------------------------------------------------------------------------- 1,987,000 PF Chang's China Bistro, Inc.(1)(2)(3) 84,666 - -------------------------------------------------------------------------------- 5,380,000 Starbucks Corporation(2) 200,513 - -------------------------------------------------------------------------------- 1,368,364 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES -- 0.2% - -------------------------------------------------------------------------------- 1,459,000 D.R. Horton, Inc. 43,799 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS -- 0.9% - -------------------------------------------------------------------------------- 2,917,000 Procter & Gamble Co. (The) 169,799 - -------------------------------------------------------------------------------- INSURANCE -- 5.1% - -------------------------------------------------------------------------------- 4,219,000 Aflac Inc. 200,571 - -------------------------------------------------------------------------------- 1,919,000 Ambac Financial Group, Inc. 158,049 - -------------------------------------------------------------------------------- 3,068 Berkshire Hathaway Inc. Cl A(1)(2) 273,052 - -------------------------------------------------------------------------------- 92,706 Berkshire Hathaway Inc. Cl B(1)(2) 273,668 - -------------------------------------------------------------------------------- 808,000 Progressive Corp. (The) 87,692 - -------------------------------------------------------------------------------- 993,032 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 9 Ultra - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 2.2% - -------------------------------------------------------------------------------- 11,978,000 Amazon.com, Inc.(1)(2) $ 421,745 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 8.5% - -------------------------------------------------------------------------------- 1,650,000 Digital River Inc.(1)(2) 71,841 - -------------------------------------------------------------------------------- 16,858,000 eBay Inc.(2) 580,085 - -------------------------------------------------------------------------------- 742,000 Google Inc. Cl A(2) 310,111 - -------------------------------------------------------------------------------- 5,950,000 VeriSign, Inc.(1)(2) 139,944 - -------------------------------------------------------------------------------- 16,197,000 Yahoo! Inc.(2) 530,938 - -------------------------------------------------------------------------------- 1,632,919 - -------------------------------------------------------------------------------- IT SERVICES -- 7.8% - -------------------------------------------------------------------------------- 6,659,000 Accenture Ltd. Cl A 193,577 - -------------------------------------------------------------------------------- 5,547,000 Checkfree Corp.(1)(2)(3) 298,817 - -------------------------------------------------------------------------------- 13,226,000 First Data Corp. 630,749 - -------------------------------------------------------------------------------- 9,511,000 Paychex, Inc. 384,149 - -------------------------------------------------------------------------------- 1,507,292 - -------------------------------------------------------------------------------- MULTILINE RETAIL -- 1.2% - -------------------------------------------------------------------------------- 4,199,000 Target Corporation 222,967 - -------------------------------------------------------------------------------- OFFICE ELECTRONICS -- 0.4% - -------------------------------------------------------------------------------- 2,012,000 Zebra Technologies Corp. Cl A(1)(2) 79,856 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 4.3% - -------------------------------------------------------------------------------- 2,050,000 Apache Corp. 145,653 - -------------------------------------------------------------------------------- 1,987,000 EnCana Corp. 99,449 - -------------------------------------------------------------------------------- 4,896,000 Exxon Mobil Corp. 308,839 - -------------------------------------------------------------------------------- 1,225,000 Kinder Morgan, Inc. 107,825 - -------------------------------------------------------------------------------- 1,883,000 Suncor Energy Inc.(1) 161,448 - -------------------------------------------------------------------------------- 823,214 - -------------------------------------------------------------------------------- PERSONAL PRODUCTS -- 0.6% - -------------------------------------------------------------------------------- 3,830,000 Avon Products, Inc.(1)(2) 124,896 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 3.4% - -------------------------------------------------------------------------------- 2,511,000 Abraxis BioScience Inc.(1)(2) 78,444 - -------------------------------------------------------------------------------- 14,348,000 Teva Pharmaceutical Industries Ltd. ADR(1) 581,094 - -------------------------------------------------------------------------------- 659,538 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 3.1% - -------------------------------------------------------------------------------- 48,533,000 ARM Holdings plc ORD 120,231 - -------------------------------------------------------------------------------- 1,944,000 KLA-Tencor Corp.(1) 93,623 - -------------------------------------------------------------------------------- 4,826,000 Maxim Integrated Products, Inc. 170,165 - -------------------------------------------------------------------------------- 5,656,000 Microchip Technology Inc. 210,743 - -------------------------------------------------------------------------------- 594,762 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SOFTWARE -- 6.1% - -------------------------------------------------------------------------------- 1,636,000 Adobe Systems Inc.(2) $ 64,131 - -------------------------------------------------------------------------------- 9,852,000 Electronic Arts Inc.(1)(2) 559,593 - -------------------------------------------------------------------------------- 1,095,000 Intuit Inc.(2) 59,316 - -------------------------------------------------------------------------------- 5,610,000 Microsoft Corporation 135,482 - -------------------------------------------------------------------------------- 1,894,000 NAVTEQ Corp.(1)(2) 78,639 - -------------------------------------------------------------------------------- 3,300,000 Red Hat Inc.(1)(2) 96,987 - -------------------------------------------------------------------------------- 1,617,000 Salesforce.com Inc.(1)(2) 56,676 - -------------------------------------------------------------------------------- 7,581,000 Symantec Corp.(2) 124,177 - -------------------------------------------------------------------------------- 1,175,001 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 6.4% - -------------------------------------------------------------------------------- 8,842,000 Bed Bath & Beyond Inc.(2) 339,092 - -------------------------------------------------------------------------------- 9,182,000 Carmax, Inc.(1)(2)(3) 324,216 - -------------------------------------------------------------------------------- 5,302,000 Lowe's Companies, Inc. 334,291 - -------------------------------------------------------------------------------- 8,655,000 PETsMART, Inc.(1)(3) 239,397 - -------------------------------------------------------------------------------- 1,236,996 - -------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE -- 1.4% - -------------------------------------------------------------------------------- 1,599,000 Countrywide Financial Corporation 65,015 - -------------------------------------------------------------------------------- 2,813,000 Golden West Financial Corp.(1) 202,171 - -------------------------------------------------------------------------------- 267,186 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $14,005,529) 19,071,088 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.2% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 6.875% - 8.75%, 8/15/20 - 8/15/25, valued at $67,327), in a joint trading account at 4.65%, dated 4/28/06, due 5/1/06 (Delivery value $66,126) 66,100 - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 1.875%, 7/15/13, valued at $162,423), in a joint trading account at 4.66%, dated 4/28/06, due 5/1/06 (Delivery value $159,162) 159,100 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $225,200) 225,200 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(4) -- 4.7% REPURCHASE AGREEMENTS -- 4.7% - -------------------------------------------------------------------------------- Repurchase Agreement, Barclays Bank plc, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.79%, dated 4/28/06, due 5/1/06 (Delivery value $100,040) 100,000 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 10 Ultra - Schedule of Investments APRIL 30, 2006 (UNAUDITED) ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- Repurchase Agreement, Barclays Bank plc, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.89%, dated 4/28/06, due 5/1/06 (Delivery value $210,086) $ 210,000 - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.77%, dated 4/28/06, due 5/1/06 (Delivery value $200,080) 200,000 - -------------------------------------------------------------------------------- Repurchase Agreement, Citigroup Global Markets Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.77%, dated 4/28/06, due 5/1/06 (Delivery value $300,119) 300,000 - -------------------------------------------------------------------------------- ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.875%, dated 4/28/06, due 5/1/06 (Delivery value $92,823) $ 92,785 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $902,785) 902,785 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 104.8% (Cost $15,133,514) 20,199,073 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (4.8)% (928,804) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $ 19,270,269 ================================================================================ FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* ($ IN THOUSANDS) Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - -------------------------------------------------------------------------------- 59,509,348 GBP for USD 5/31/2006 $108,445 $(2,148) ================================== (Value on Settlement Date $106,297) *FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future -- and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt GBP = British Pound ORD = Foreign Ordinary Share USD = United States Dollar (1) Security, or a portion thereof, was on loan as of April 30, 2006. (2) Non-income producing. (3) Affiliated Company: the fund's holding represents ownership of 5% or more of the voting securities of the company; therefore, the company is affiliated as defined in the Investment Company Act of 1940. (See Note 5 in Notes to Financial Statements for a summary of transactions for each company which is or was an affiliate at or during the six months ended April 30, 2006.) (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 6 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 11 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities -- unaffiliated, at value (cost of $12,614,757) -- including $691,242 of securities on loan $17,867,158 - ------------------------------------------------------------ Investment securities -- affiliated, at value (cost of $1,615,972) -- including $181,927 of securities on loan 1,429,130 - ------------------------------------------------------------ Investments made with cash collateral received for securities on loan, at value (cost of $902,785) 902,785 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $15,133,514) 20,199,073 - ------------------------------------------------------------ Receivable for investments sold 36,994 - ------------------------------------------------------------ Receivable for capital shares sold 408 - ------------------------------------------------------------ Dividends and interest receivable 7,672 - -------------------------------------------------------------------------------- 20,244,147 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received for securities on loan 902,785 - ------------------------------------------------------------ Disbursements in excess of demand deposit cash 31,286 - ------------------------------------------------------------ Payable for investments purchased 21,795 - ------------------------------------------------------------ Payable for forward foreign currency exchange contracts 2,148 - ------------------------------------------------------------ Accrued management fees 15,624 - ------------------------------------------------------------ Distribution fees payable 124 - ------------------------------------------------------------ Service fees (and distribution fees -- R Class) payable 116 - -------------------------------------------------------------------------------- 973,878 - -------------------------------------------------------------------------------- NET ASSETS $19,270,269 ================================================================================ See Notes to Financial Statements. (continued) - ------ 12 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $13,717,333 - ------------------------------------------------------------ Accumulated net investment loss (14,157) - ------------------------------------------------------------ Undistributed net realized gain on investment and foreign currency transactions 503,661 - ------------------------------------------------------------ Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 5,063,432 - -------------------------------------------------------------------------------- $19,270,269 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $17,310,178,710 - ------------------------------------------------------------ Shares outstanding 579,028,135 - ------------------------------------------------------------ Net asset value per share $29.90 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $1,404,627,202 - ------------------------------------------------------------ Shares outstanding 46,463,749 - ------------------------------------------------------------ Net asset value per share $30.23 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $540,613,848 - ------------------------------------------------------------ Shares outstanding 18,345,326 - ------------------------------------------------------------ Net asset value per share $29.47 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $4,676,717 - ------------------------------------------------------------ Shares outstanding 162,978 - ------------------------------------------------------------ Net asset value per share $28.70 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $10,172,777 - ------------------------------------------------------------ Shares outstanding 344,256 - ------------------------------------------------------------ Net asset value per share $29.55 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 13 Statement of Operations FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - --------------------------------------------------------- Dividends (including $4,507 from affiliates and net of foreign taxes withheld of $346) $ 83,062 - --------------------------------------------------------- Interest 5,032 - --------------------------------------------------------- Securities lending 584 - -------------------------------------------------------------------------------- 88,678 - -------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------------------- Management fees 99,908 - --------------------------------------------------------- Distribution fees: - --------------------------------------------------------- Advisor Class 764 - --------------------------------------------------------- C Class 20 - --------------------------------------------------------- Service fees: - --------------------------------------------------------- Advisor Class 764 - --------------------------------------------------------- C Class 7 - --------------------------------------------------------- Distribution and service fees -- R Class 25 - --------------------------------------------------------- Directors' fees and expenses 157 - --------------------------------------------------------- Other expenses 41 - -------------------------------------------------------------------------------- 101,686 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (13,008) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- Net realized gain (loss) on investment and foreign currency transactions (including $26,277 from affiliates) 982,481 - --------------------------------------------------------- Change in net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies (285,759) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 696,722 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 683,714 ================================================================================ See Notes to Financial Statements. - ------ 14 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ (13,008) $ 19,579 - -------------------------------------------------- Net realized gain (loss) 982,481 2,243,496 - -------------------------------------------------- Change in net unrealized appreciation (depreciation) (285,759) (769,938) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 683,714 1,493,137 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income: - -------------------------------------------------- Investor Class (22,728) -- - -------------------------------------------------- Institutional Class (4,891) -- - -------------------------------------------------------------------------------- Decrease in net assets from distributions (27,619) -- - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (2,403,845) (2,985,926) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (1,747,750) (1,492,789) NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 21,018,019 22,510,808 - -------------------------------------------------------------------------------- End of period $19,270,269 $21,018,019 ================================================================================ Accumulated undistributed net investment income (loss) $(14,157) $26,470 ================================================================================ See Notes to Financial Statements. - ------ 15 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Ultra Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund's investment objective is to seek long-term capital growth. The fund pursues this objective by investing primarily in equity securities. The fund generally invests in equity securities of large companies, but may invest in companies of any size. The following is a summary of the fund's significant accounting policies. MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the Institutional Class, the Advisor Class, the C Class and the R Class. The C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the fund to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending agent to certain approved borrowers in order to earn additional income. The fund continues to recognize any gain or loss in the market price of the securities loaned and records any interest earned or dividends declared. FUTURES CONTRACTS -- The fund may enter into futures contracts in order to manage the fund's exposure to changes in market conditions. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Upon entering into a futures contract, the fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. (continued) - ------ 16 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The fund may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the fund and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. (continued) - ------ 17 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of the fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in the fund's investment strategy (strategy assets) to calculate the appropriate fee rate for the fund. The strategy assets include the fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for each class of the fund is as follows: - -------------------------------------------------------------------------------- INVESTOR, C & R INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $5 billion 1.000% 0.800% 0.750% - -------------------------------------------------------------------------------- Next $5 billion 0.990% 0.790% 0.740% - -------------------------------------------------------------------------------- Next $5 billion 0.980% 0.780% 0.730% - -------------------------------------------------------------------------------- Next $5 billion 0.970% 0.770% 0.720% - -------------------------------------------------------------------------------- Next $5 billion 0.950% 0.750% 0.700% - -------------------------------------------------------------------------------- Next $5 billion 0.900% 0.700% 0.650% - -------------------------------------------------------------------------------- Over $30 billion 0.800% 0.600% 0.550% - -------------------------------------------------------------------------------- The effective annual management fee for each class of the fund for the six months ended April 30, 2006 was 0.98%, 0.78%, 0.73%, 0.98% and 0.98% for the Investor Class, Institutional Class, Advisor Class, C Class and R Class, respectively. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class (the Advisor Class plan) and a separate Master Distribution and Individual Shareholder Services Plan for each of the C Class and R Class (collectively with the Advisor Class Plan, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------------------------------------------------- Service Fee 0.25% 0.25% - -------------------------------------------------------------------------------- The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the fund. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class and R Class shares. Fees incurred under the plans during the six months ended April 30, 2006, are detailed in the Statement of Operations. (continued) - ------ 18 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. The fund has a bank line of credit agreement and securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2006, were $2,664,631 and $5,110,336, respectively. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the fund were as follows: - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 3,500,000 ================================================================================ Sold 18,745 $ 568,030 - ----------------------------------------------- Issued in reinvestment of distributions 700 21,649 - ----------------------------------------------- Redeemed (91,750) (2,773,395) - -------------------------------------------------------------------------------- Net increase (decrease) (72,305) $(2,183,716) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 3,500,000 ================================================================================ Sold 41,530 $ 1,184,069 - ----------------------------------------------- Redeemed (152,379) (4,366,071) - -------------------------------------------------------------------------------- Net increase (decrease) (110,849) $(3,182,002) ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 200,000 ================================================================================ Sold 6,986 $ 212,083 - ----------------------------------------------- Issued in reinvestment of distributions 151 4,743 - ----------------------------------------------- Redeemed (10,387) (317,302) - -------------------------------------------------------------------------------- Net increase (decrease) (3,250) $(100,476) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 200,000 ================================================================================ Sold 21,128 $ 615,833 - ----------------------------------------------- Redeemed (9,862) (284,976) - -------------------------------------------------------------------------------- Net increase (decrease) 11,266 $ 330,857 ================================================================================ (continued) - ------ 19 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 100,000 ================================================================================ Sold 2,236 $ 66,725 - ----------------------------------------------- Redeemed (6,252) (186,891) - -------------------------------------------------------------------------------- Net increase (decrease) (4,016) $(120,166) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 300,000 ================================================================================ Sold 7,767 $ 219,363 - ----------------------------------------------- Redeemed (12,891) (358,139) - -------------------------------------------------------------------------------- Net increase (decrease) (5,124) $(138,776) ================================================================================ C CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 100,000 ================================================================================ Sold 16 $ 460 - ----------------------------------------------- Redeemed (53) (1,544) - -------------------------------------------------------------------------------- Net increase (decrease) (37) $(1,084) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 100,000 ================================================================================ Sold 73 $ 2,036 - ----------------------------------------------- Redeemed (56) (1,563) - -------------------------------------------------------------------------------- Net increase (decrease) 17 $ 473 ================================================================================ R CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000 ================================================================================ Sold 115 $ 3,445 - ----------------------------------------------- Redeemed (62) (1,848) - -------------------------------------------------------------------------------- Net increase (decrease) 53 $ 1,597 ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 50,000 ================================================================================ Sold 188 $ 5,384 - ----------------------------------------------- Redeemed (65) (1,862) - -------------------------------------------------------------------------------- Net increase (decrease) 123 $ 3,522 ================================================================================ (continued) - ------ 20 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 5. AFFILIATED COMPANY TRANSACTIONS (SHARES IN FULL) If a fund's holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the six months ended April 30, 2006 follows: - -------------------------------------------------------------------------------------------------------------------- SHARE BALANCE PURCHASE SALES REALIZED DIVIDEND APRIL 30, 2006 10/31/05 COST COST GAIN (LOSS) INCOME SHARE BALANCE MARKET VALUE - -------------------------------------------------------------------------------------------------------------------- Apollo Group Inc. Cl A(1)(2) 7,599,000 $ 74,095 $ -- $ -- $ -- 8,822,000 $ 482,034 - ---------------------------- Carmax, Inc.(1)(2) 8,328,000 23,087 -- -- -- 9,182,000 324,216 - ---------------------------- Checkfree Corp.(1)(2) 6,813,000 -- 40,184 20,443 -- 5,547,000 298,817 - ---------------------------- International Game Technology(3) 16,671,000 19,603 126,267 5,834 3,988 13,692,000 519,337 - ---------------------------- PETsMART, Inc.(1) 7,529,000 28,168 -- -- 519 8,655,000 239,397 - ---------------------------- PF Chang's China Bistro, Inc.(1)(2) 875,000 55,503 -- -- -- 1,987,000 84,666 - -------------------------------------------------------------------------------------------------------------------- $200,456 $166,451 $26,277 $4,507 $1,948,467 ==================================================================================================================== (1) Security, or a portion thereof, was on loan as of April 30, 2006. (2) Non-income producing. (3) Company was not an affiliate at April 30, 2006. 6. SECURITIES LENDING As of April 30, 2006, securities in the fund valued at $873,169 were on loan through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives and maintains collateral in the form of cash, and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total value of all collateral received, at this date, was $902,785. The fund's risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the fund may be delayed or limited. 7. BANK LINE OF CREDIT The fund, along with certain other funds managed by ACIM or ACGIM, has a $500 million unsecured bank line of credit agreement with JPMCB, which was renewed from $575 million effective December 14, 2005. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the six months ended April 30, 2006. (continued) - ------ 21 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- Federal tax cost of investments $20,192,139 ================================================================================ Gross tax appreciation of investments $ 3,525,204 - ----------------------------------------------------------- Gross tax depreciation of investments (3,518,270) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $ 6,934 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of October 31, 2005, the fund had accumulated capital losses of $437,175, which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Capital loss carryovers of $255,914 and $181,261 expire in 2010 and 2011, respectively. - ------ 22 Ultra - Financial Highlights For a Share Outstanding Throughout the Years Ended October 31 (except as noted) - -------------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $29.02 $27.17 $26.01 $21.83 $25.09 $41.45 - -------------------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------- Net Investment Income (Loss)(2) (0.02) 0.02 (0.05) (0.02) 0.06 (0.06) - ---------------------------------------- Net Realized and Unrealized Gain (Loss) 0.94 1.83 1.21 4.26 (3.32) (11.89) - -------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.92 1.85 1.16 4.24 (3.26) (11.95) - -------------------------------------------------------------------------------------------------------- Distributions - ---------------------------------------- From Net Investment Income (0.04) -- -- (0.06) -- -- - ---------------------------------------- From Net Realized Gains -- -- -- -- -- (4.41) - -------------------------------------------------------------------------------------------------------- Total Distributions (0.04) -- -- (0.06) -- (4.41) - -------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $29.90 $29.02 $27.17 $26.01 $21.83 $25.09 ======================================================================================================== TOTAL RETURN(3) 3.15% 6.81% 4.46% 19.50% (12.99)% (31.44)% - -------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.98%(4) 0.99% 0.99% 1.00% 0.99% 0.98% - ---------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.13)%(4) 0.09% (0.20)% (0.09)% 0.24% (0.18)% - ---------------------------------------- Portfolio Turnover Rate 13% 33% 34% 82% 92% 86% - ---------------------------------------- Net Assets, End of Period (in millions) $17,310 $18,904 $20,708 $21,341 $18,616 $24,560 - -------------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset value to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 23 Ultra - Financial Highlights For a Share Outstanding Throughout the Years Ended October 31 (except as noted) - ------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $29.38 $27.44 $26.22 $22.02 $25.24 $41.65 - ------------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) 0.01 0.07 --(3) 0.02 0.11 0.01 - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.94 1.87 1.22 4.29 (3.33) (11.94) - ------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.95 1.94 1.22 4.31 (3.22) (11.93) - ------------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Investment Income (0.10) -- -- (0.11) -- -- - ------------------------------------- From Net Realized Gains -- -- -- -- -- (4.48) - ------------------------------------------------------------------------------------------------------- Total Distributions (0.10) -- -- (0.11) -- (4.48) - ------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $30.23 $29.38 $27.44 $26.22 $22.02 $25.24 ======================================================================================================= TOTAL RETURN(4) 3.21% 7.07% 4.65% 19.66% (12.76)% (31.25)% - ------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.78%(5) 0.79% 0.79% 0.80% 0.79% 0.78% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.07%(5) 0.29% 0.00% 0.11% 0.44% 0.02% - ------------------------------------- Portfolio Turnover Rate 13% 33% 34% 82% 92% 86% - ------------------------------------- Net Assets, End of Period (in thousands) $1,404,627 $1,460,343 $1,055,145 $822,333 $556,316 $593,436 - ------------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset value to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 24 Ultra - Financial Highlights For a Share Outstanding Throughout the Years Ended October 31 (except as noted) - ---------------------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $28.61 $26.85 $25.77 $21.62 $24.92 $41.23 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) (0.06) (0.05) (0.12) (0.08) --(3) (0.13) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.92 1.81 1.20 4.24 (3.30) (11.87) - ---------------------------------------------------------------------------------------------------- Total From Investment Operations 0.86 1.76 1.08 4.16 (3.30) (12.00) - ---------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Investment Income -- -- -- (0.01) -- -- - ------------------------------------- From Net Realized Gains -- -- -- -- -- (4.31) - ---------------------------------------------------------------------------------------------------- Total Distributions -- -- -- (0.01) -- (4.31) - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $29.47 $28.61 $26.85 $25.77 $21.62 $24.92 ==================================================================================================== TOTAL RETURN(4) 3.01% 6.55% 4.19% 19.24% (13.24)% (31.69)% - ---------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.23%(5) 1.24% 1.24% 1.25% 1.24% 1.23% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.38)%(5) (0.16%) (0.45)% (0.34)% (0.01)% (0.43)% - ------------------------------------- Portfolio Turnover Rate 13% 33% 34% 82% 92% 86% - ------------------------------------- Net Assets, End of Period (in thousands) $540,614 $639,792 $738,032 $643,144 $391,968 $437,024 - ---------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset value to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 25 Ultra - Financial Highlights For a Share Outstanding Throughout the Years Ended October 31 (except as noted) - -------------------------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001(2) - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $27.96 $26.44 $25.57 $21.59 $25.09 $25.53 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(3) (0.16) (0.26) (0.32) (0.26) (0.19) --(4) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.90 1.78 1.19 4.24 (3.31) (0.44) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 0.74 1.52 0.87 3.98 (3.50) (0.44) - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $28.70 $27.96 $26.44 $25.57 $21.59 $25.09 ================================================================================================== TOTAL RETURN(5) 2.65% 5.75% 3.40% 18.43% (13.95)% (1.72)% - -------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.98%(6) 1.99% 1.99% 2.00% 1.99% 1.99%(6) - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.13)%(6) (0.91%) (1.20)% (1.09)% (0.76)% (3.10)%(6) - ------------------------------------- Portfolio Turnover Rate 13% 33% 34% 82% 92% 86%(7) - ------------------------------------- Net Assets, End of Period (in thousands) $4,677 $5,601 $4,836 $2,232 $502 $95 - -------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) October 29, 2001 (commencement of sale) through October 31, 2001. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset value to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2001. See Notes to Financial Statements. - ------ 26 Ultra - Financial Highlights For a Share Outstanding Throughout the Years Ended October 31 (except as noted) - ------------------------------------------------------------------------------------------ R CLASS - ------------------------------------------------------------------------------------------ 2006(1) 2005 2004 2003(2) - ------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $28.72 $27.01 $25.99 $24.87 - ------------------------------------------------------------------------------------------ Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(3) (0.10) (0.12) (0.22) (0.04) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.93 1.83 1.24 1.16 - ------------------------------------------------------------------------------------------ Total From Investment Operations 0.83 1.71 1.02 1.12 - ------------------------------------------------------------------------------------------ Net Asset Value, End of Period $29.55 $28.72 $27.01 $25.99 ========================================================================================== TOTAL RETURN(4) 2.89% 6.33% 3.92% 4.50% - ------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.48%(5) 1.44%(6) 1.49% 1.50%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.63)%(5) (0.36%)(6) (0.70)% (0.81)%(5) - ------------------------------------------ Portfolio Turnover Rate 13% 33% 34% 82%(7) - ------------------------------------------ Net Assets, End of Period (in thousands) $10,173 $8,367 $4,545 $3 - ------------------------------------------------------------------------------------------ (1) Six months ended April 30, 2006 (unaudited). (2) August 29, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset value to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) During the year ended October 31, 2005, the class received a partial reimbursement of its distribution and service fee. Had fees not been reimbursed the annualized ratio of operating expenses to average net assets and annualized ratio of net investment income (loss) to average net assets would have been 1.49% and (0.41)%, respectively. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 27 Share Class Information Five classes of shares are authorized for sale by the fund: Investor Class, Institutional Class, Advisor Class, C Class and R Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratios of Advisor Class, C Class and R Class shares are higher than that of Investor Class shares. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the unified management fee of Institutional Class shares is 0.20% less than the unified management fee of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 distribution and service fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. C CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for C Class shares is the same as for Investor Class shares. C Class shares also are subject to a Rule 12b-1 distribution and service fee of 1.00%. R CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. The unified management fee for R Class shares is the same as for Investor Class shares. R Class shares are subject to a 0.50% annual Rule 12b-1 distribution and service fee. All classes of shares represent a pro rata interest in the fund and generally have the same rights and preferences. - ------ 28 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 29 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The LIPPER LARGE-CAP GROWTH FUNDS INDEX is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Large Cap Growth fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL 1000(reg.sm) GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth rates. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 30 Notes - ------ 31 Notes - ------ 32 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0606 SH-SAN-49693S American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved.
American Century Investments SEMIANNUAL REPORT APRIL 30, 2006 [photo of boy and airplane] Growth Fund Focused Growth Fund Heritage Fund Vista(reg.sm) Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Six-Month Total Returns. . . . . . . . . . . . . . . . . . . . . . . . . 2 GROWTH FUND Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries and Types of Investments in Portfolio. . . . . . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 7 FOCUSED GROWTH FUND Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Top Five Industries and Types of Investments in Portfolio . . . . . . . 13 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 14 HERITAGE FUND Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Top Five Industries and Types of Investments in Portfolio . . . . . . . 19 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 20 VISTA FUND Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Top Five Industries and Types of Investments in Portfolio . . . . . . . 26 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 27 Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . . . . 30 FINANCIAL STATEMENTS Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . . . 33 Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . 35 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . 36 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 38 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 OTHER INFORMATION Share Class Information. . . . . . . . . . . . . . . . . . . . . . . . . . 61 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Index Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century Growth, Focused Growth, Heritage and Vista funds for the six months ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor, and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective [photo of Mark Mallon] BY MARK MALLON, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS WHAT HAPPENED IN THE ECONOMY A short-lived economic slowdown on the heels of last summer's devastating Gulf Coast hurricanes gave way to a strong rebound after the first of the year, providing fuel for a dose of investor enthusiasm that pushed U.S. broad market indices to solid gains in the 6-month period ended April 30, 2006. As measured in gross domestic product (GDP), U.S. economic growth slowed to 1.7% in the fourth quarter of 2005 as energy supply interruptions caused by hurricanes Rita and Katrina -- and a corresponding spike in oil and natural gas prices -- filtered through the economy. Other temporary business and employment disruptions caused by those two storms further muted economic vitality in the final months of 2005. By January 2006, however, economic growth reaccelerated, with retailers reporting strong post-holiday sales and overall corporate profits remaining robust. Not even rising commodity prices and rising interest rates halted the momentum, with GDP growth of 5.3% in the first quarter of 2006 more than tripling the rate of the previous quarter. The surge in many commodity values gave the Federal Reserve one reason to keep its string of interest rate hikes intact, even though broader inflation remained modest. The Fed boosted its short-term rate target to 4.75% in the period with four consecutive quarter-point increases. WHAT HAPPENED IN THE MARKET The notion that the Fed might soon stop raising rates helped feed investors' appetites throughout the period, even after short-term interest rates briefly surpassed long-term yields in the final week of 2005. Such yield-curve inversions historically presage a recession. But long-term yields finally inched upward in early 2006, with the benchmark 10-year Treasury note topping the 5% level for the first time in four years. Investors normally disdain rising 10-year yields. Nevertheless, equity markets surged, and as they have since 1999, stocks with smaller capitalizations once more set the pace. But large-cap returns outperformed in the period's final month, when gasoline prices again crept to near $3 per gallon. Growth stocks also found more favor. Among small- and mid-cap stocks, returns on growth issues surpassed returns for value stocks in the 6-month period. Large-cap growth continued languishing behind large-cap value, though, with the latter garnering substantial support from energy conglomerates riding record profits and surging share prices. SIX-MONTH TOTAL RETURNS AS OF APRIL 30, 2006(1) - -------------------------------------------------------------------------------- S&P 500 Index 9.64% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 10.24% - -------------------------------------------------------------------------------- Nasdaq Composite Index 10.02% - -------------------------------------------------------------------------------- (1) Total returns less than one year are not annualized. - ------ 2 Growth - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ----------------------------- AVERAGE ANNUAL RETURNS - ---------------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - ---------------------------------------------------------------------------------------- INVESTOR CLASS 6.65% 13.10% -0.13% 6.82% 14.79% 6/30/71(2) - ---------------------------------------------------------------------------------------- RUSSELL 1000 GROWTH INDEX(3) 7.06% 15.18% -0.76% 6.21% N/A(4) -- - ---------------------------------------------------------------------------------------- Institutional Class 6.72% 13.29% 0.09% -- 5.04% 6/16/97 - ---------------------------------------------------------------------------------------- Advisor Class 6.51% 12.81% -0.42% -- 5.18% 6/4/97 - ---------------------------------------------------------------------------------------- C Class 6.14% 11.95% -- -- 0.98% 11/28/01 - ---------------------------------------------------------------------------------------- R Class 6.38% 12.53% -- -- 8.99% 8/29/03 - ---------------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Although the fund's actual inception date was 10/31/58, this inception date corresponds with the investment advisor's implementation of its current investment philosophy and practices. (3) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (4) Benchmark began 12/29/78. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 3 Growth - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made April 30, 1996
ONE-YEAR RETURNS OVER 10 YEARS Periods ended April 30 - ------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------------------------- Investor Class 13.30% 44.50% 24.48% 32.16% -27.72% -15.05% -16.33% 17.74% 4.99% 13.10% - ------------------------------------------------------------------------------------------------- Russell 1000 Growth Index 22.06% 42.09% 26.53% 27.58% -32.25% -20.10% -14.35% 21.65% 0.40% 15.18% - ------------------------------------------------------------------------------------------------- Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 4 Growth - Portfolio Commentary PORTFOLIO MANAGERS: PRESCOTT LEGARD AND GREGORY WOODHAMS Growth returned 6.65%* during the six months ended April 30, 2006. The portfolio underperformed its benchmark, the Russell 1000 Growth Index, which gained 7.06%. However, it edged out the 6.56%** return of the Lipper Large-Cap Growth Funds Index, a measure of the performance of leading large growth funds. Growth's longer-term performance remained solid, with average annual returns in excess of its benchmark and the Lipper index for the five- and 10-year periods ended in April (see page 3 for more detailed performance comparisons). The biggest contributors to Growth's performance relative to its benchmark were the consumer staples, information technology, and materials sectors. Much of Growth's underperformance relative to its benchmark stemmed from stock selection in the health care and consumer discretionary sectors. ADDING PERFORMANCE Growth's strongest performance relative to its benchmark came from stock selection in the consumer staples sector. The largest contributor to performance was the avoidance of Wal-Mart, which has seen its growth rate decelerate. In addition, the fund held an overweight position in Archer-Daniels-Midland (ADM), which performed well during the period on the strength of its oilseed and corn processing businesses. Recently, ADM has drawn even more investor interest because it is a leading producer of ethanol, an alternative and additive to gasoline made from corn. Information technology was another area of strength. Stock selection in semiconductors, including overweights in Broadcom (a leading chip manufacturer experiencing strong growth in wireless networking) and Freescale Semiconductor (a spin-off from Motorola producing chips for a number of wireless and industrial applications) added the most value on an absolute basis. Coupled with an underweight to Intel, which performed poorly for the period, these three positions were among the largest contributors to relative returns as well. Growth's performance also was lifted by stock selection in the materials TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- General Electric Co. 4.2% 4.5% - -------------------------------------------------------------------------------- Cisco Systems Inc. 3.1% -- - -------------------------------------------------------------------------------- PepsiCo, Inc. 2.9% 3.3% - -------------------------------------------------------------------------------- United Technologies Corp. 2.5% 1.8% - -------------------------------------------------------------------------------- Emerson Electric Co. 2.4% 0.7% - -------------------------------------------------------------------------------- United Parcel Service, Inc. Cl B 2.3% 2.0% - -------------------------------------------------------------------------------- Textron Inc. 2.3% 1.6% - -------------------------------------------------------------------------------- Internal Business Machines Corp. 2.3% -- - -------------------------------------------------------------------------------- Amgen Inc. 2.0% 2.7% - -------------------------------------------------------------------------------- QUALCOMM Inc. 2.0% 1.5% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares.Total returns for periods less than one year are not annualized. ** The Lipper Large-Cap Growth Funds Index returned 17.74%, -1.01% and 5.64% for the one-, five- and 10-year periods ended April 30, 2006, respectively. (continued) - ------ 5 Growth - Portfolio Commentary sector. The portfolio's materials holdings gained 30%, doubling the benchmark's 15% return in this sector. The biggest contributor in this space was Monsanto, an agricultural biotechnology company experiencing strong demand for its genetically engineered seeds, here and abroad. Finally, our top absolute and relative contributor for the six months was Schlumberger, a global oil-field-services provider benefiting from increased exploration for oil and gas given higher energy prices. That helped Schlumberger gain more than 50% for the six-month period. HEALTH CARE, CONSUMER DISCRETIONARY DETRACT Growth's return was negatively impacted by the health care sector. In particular, exposure to the biotechnology segment hurt performance for the six months, with Amgen and Genzyme both relative and absolute detractors. In addition, several of the fund's holdings in the medical device area performed poorly, due in part to uncertainty over the outlook for sales of heart implant devices and Medicare reimbursement rates. St. Jude Medical, a leading provider of such devices, was among the portfolio's top detractors. Stock selection in the consumer discretionary sector also hurt results compared with the benchmark. In particular, strong stock selection in textiles and apparel could not overcome the relative underweighting of hotels, restaurants, and the leisure industry, each of which performed well in the period. A LARGE GROWTH FUND In conclusion, the American Century Growth Fund continues to invest in large companies that are showing improving results. We believe that this strategy will be rewarded over long periods of time and provide relative out-performance to our shareholders. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 87.9% 94.9% - -------------------------------------------------------------------------------- Foreign Common Stocks* 9.8% 2.6% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 97.7% 97.5% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.5% 2.4% - -------------------------------------------------------------------------------- Other Assets and Liabilities 0.8% 0.1% - -------------------------------------------------------------------------------- * Includes depositary shares and foreign ordinary shares. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Industrial Conglomerates 6.4% 6.1% - -------------------------------------------------------------------------------- Communications Equipment 6.0% 3.1% - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 5.8% 5.4% - -------------------------------------------------------------------------------- IT Services 5.5% 2.4% - -------------------------------------------------------------------------------- Software 5.3% 7.4% - -------------------------------------------------------------------------------- - ------ 6 Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.7% AEROSPACE & DEFENSE -- 4.9% - -------------------------------------------------------------------------------- 795,400 Boeing Co. $ 66,376 - -------------------------------------------------------------------------------- 889,000 Rockwell Collins 50,851 - -------------------------------------------------------------------------------- 1,952,600 United Technologies Corp. 122,643 - -------------------------------------------------------------------------------- 239,870 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS -- 2.3% - -------------------------------------------------------------------------------- 1,411,300 United Parcel Service, Inc. Cl B 114,414 - -------------------------------------------------------------------------------- BEVERAGES -- 2.9% - -------------------------------------------------------------------------------- 2,428,400 PepsiCo, Inc. 141,430 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 4.1% - -------------------------------------------------------------------------------- 1,483,400 Amgen Inc.(1) 100,426 - -------------------------------------------------------------------------------- 507,600 Genentech, Inc.(1) 40,461 - -------------------------------------------------------------------------------- 1,046,800 Gilead Sciences, Inc.(1) 60,191 - -------------------------------------------------------------------------------- 201,078 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 2.5% - -------------------------------------------------------------------------------- 321,500 Bear Stearns Companies Inc. (The) 45,817 - -------------------------------------------------------------------------------- 322,900 Franklin Resources, Inc. 30,068 - -------------------------------------------------------------------------------- 275,800 Goldman Sachs Group, Inc. (The) 44,208 - -------------------------------------------------------------------------------- 120,093 - -------------------------------------------------------------------------------- CHEMICALS -- 2.2% - -------------------------------------------------------------------------------- 1,004,500 Monsanto Co. 83,775 - -------------------------------------------------------------------------------- 233,700 Potash Corp. of Saskatchewan 22,127 - -------------------------------------------------------------------------------- 105,902 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 2.0% - -------------------------------------------------------------------------------- 1,445,400 Wells Fargo & Co. 99,285 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 6.0% - -------------------------------------------------------------------------------- 3,262,800 CIENA Corporation(1) 13,345 - -------------------------------------------------------------------------------- 7,170,000 Cisco Systems Inc.(1) 150,211 - -------------------------------------------------------------------------------- 1,528,800 Motorola, Inc. 32,640 - -------------------------------------------------------------------------------- 1,949,600 QUALCOMM Inc. 100,092 - -------------------------------------------------------------------------------- 296,288 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 4.7% - -------------------------------------------------------------------------------- 1,914,900 Brocade Communications System(1) 11,796 - -------------------------------------------------------------------------------- 4,557,700 EMC Corp.(1) 61,575 - -------------------------------------------------------------------------------- 2,879,000 Hewlett-Packard Co. 93,480 - -------------------------------------------------------------------------------- 255,800 Komag, Inc.(1) 10,754 - -------------------------------------------------------------------------------- 616,700 QLogic Corp.(1) 12,834 - -------------------------------------------------------------------------------- 1,566,300 Seagate Technology 41,601 - -------------------------------------------------------------------------------- 232,040 - -------------------------------------------------------------------------------- CONSUMER FINANCE -- 1.7% - -------------------------------------------------------------------------------- 797,000 American Express Co. 42,887 - -------------------------------------------------------------------------------- 454,700 Capital One Financial Corp. 39,395 - -------------------------------------------------------------------------------- 82,282 - -------------------------------------------------------------------------------- CONTAINERS & PACKAGING -- 0.5% - -------------------------------------------------------------------------------- 1,591,000 Crown Holdings Inc.(1) 25,504 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 4.7% - -------------------------------------------------------------------------------- 769,000 Cooper Industries, Ltd. Cl A $ 70,325 - -------------------------------------------------------------------------------- 1,397,100 Emerson Electric Co. 118,684 - -------------------------------------------------------------------------------- 891,200 Roper Industries Inc. 42,296 - -------------------------------------------------------------------------------- 231,305 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 0.5% - -------------------------------------------------------------------------------- 376,400 Itron Inc.(1) 25,238 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 2.5% - -------------------------------------------------------------------------------- 545,100 Cooper Cameron Corp.(1) 27,386 - -------------------------------------------------------------------------------- 1,343,400 Schlumberger Ltd. 92,883 - -------------------------------------------------------------------------------- 120,269 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 3.2% - -------------------------------------------------------------------------------- 2,663,400 Archer-Daniels-Midland Co. 96,788 - -------------------------------------------------------------------------------- 1,209,600 General Mills, Inc. 59,682 - -------------------------------------------------------------------------------- 156,470 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 5.8% - -------------------------------------------------------------------------------- 354,800 Alcon Inc.(1) 36,087 - -------------------------------------------------------------------------------- 1,987,700 Baxter International, Inc. 74,936 - -------------------------------------------------------------------------------- 1,382,800 Becton Dickinson & Co. 87,171 - -------------------------------------------------------------------------------- 343,400 Cytyc Corp.(1) 8,877 - -------------------------------------------------------------------------------- 303,200 DJ Orthopedics Inc.(1) 12,055 - -------------------------------------------------------------------------------- 851,300 Edwards Lifesciences Corporation(1) 37,832 - -------------------------------------------------------------------------------- 735,300 St. Jude Medical, Inc.(1) 29,030 - -------------------------------------------------------------------------------- 285,988 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 1.5% - -------------------------------------------------------------------------------- 619,500 Caremark Rx Inc.(1) 28,218 - -------------------------------------------------------------------------------- 432,000 Express Scripts, Inc.(1) 33,757 - -------------------------------------------------------------------------------- 330,900 Sunrise Senior Living Inc.(1) 12,309 - -------------------------------------------------------------------------------- 74,284 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES -- 0.2% - -------------------------------------------------------------------------------- 266,900 Newell Rubbermaid Inc. 7,318 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS -- 1.6% - -------------------------------------------------------------------------------- 1,341,700 Procter & Gamble Co. (The) 78,100 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES -- 6.4% - -------------------------------------------------------------------------------- 5,883,100 General Electric Co. 203,495 - -------------------------------------------------------------------------------- 1,246,700 Textron Inc. 112,141 - -------------------------------------------------------------------------------- 315,636 - -------------------------------------------------------------------------------- INSURANCE -- 2.1% - -------------------------------------------------------------------------------- 1,101,300 American International Group, Inc. 71,860 - -------------------------------------------------------------------------------- 476,000 Endurance Specialty Holdings Ltd. 14,737 - -------------------------------------------------------------------------------- 227,500 PartnerRe Ltd. 14,230 - -------------------------------------------------------------------------------- 100,827 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 2.5% - -------------------------------------------------------------------------------- 1,347,400 eBay Inc.(1) $ 46,364 - -------------------------------------------------------------------------------- 177,700 Google Inc. Cl A(1) 74,268 - -------------------------------------------------------------------------------- 120,632 - -------------------------------------------------------------------------------- IT SERVICES -- 5.5% - -------------------------------------------------------------------------------- 2,074,700 Accenture Ltd. Cl A 60,312 - -------------------------------------------------------------------------------- 1,257,900 Ceridian Corp.(1) 30,479 - -------------------------------------------------------------------------------- 884,300 Global Payments Inc. 41,942 - -------------------------------------------------------------------------------- 1,351,900 International Business Machines Corp. 111,315 - -------------------------------------------------------------------------------- 854,800 VeriFone Holdings Inc.(1) 26,465 - -------------------------------------------------------------------------------- 270,513 - -------------------------------------------------------------------------------- MEDIA -- 0.6% - -------------------------------------------------------------------------------- 506,100 Lamar Advertising Co. Cl A(1) 27,830 - -------------------------------------------------------------------------------- METALS & MINING -- 1.9% - -------------------------------------------------------------------------------- 501,900 Carpenter Technology 59,701 - -------------------------------------------------------------------------------- 536,000 Freeport-McMoRan Copper & Gold, Inc. Cl B 34,615 - -------------------------------------------------------------------------------- 94,316 - -------------------------------------------------------------------------------- MULTILINE RETAIL -- 3.0% - -------------------------------------------------------------------------------- 1,027,300 J.C. Penney Co. Inc. 67,247 - -------------------------------------------------------------------------------- 1,532,200 Target Corporation 81,360 - -------------------------------------------------------------------------------- 148,607 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 1.7% - -------------------------------------------------------------------------------- 241,600 Anadarko Petroleum Corp. 25,325 - -------------------------------------------------------------------------------- 570,300 Occidental Petroleum Corp. 58,592 - -------------------------------------------------------------------------------- 83,917 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 3.2% - -------------------------------------------------------------------------------- 1,047,700 Novartis AG ORD 60,051 - -------------------------------------------------------------------------------- 508,900 Novo Nordisk AS Cl B ORD 33,037 - -------------------------------------------------------------------------------- 401,900 Roche Holding AG ORD 61,740 - -------------------------------------------------------------------------------- 154,828 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 4.6% - -------------------------------------------------------------------------------- 827,100 Broadcom Corp. Cl A(1) 34,002 - -------------------------------------------------------------------------------- 2,609,000 Freescale Semiconductor Inc. Cl B(1) 82,628 - -------------------------------------------------------------------------------- 349,100 Marvell Technology Group Ltd.(1) 19,930 - -------------------------------------------------------------------------------- 1,309,900 Maxim Integrated Products, Inc. 46,187 - -------------------------------------------------------------------------------- 1,817,100 Novellus Systems, Inc.(1) 44,882 - -------------------------------------------------------------------------------- 227,629 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SOFTWARE -- 5.3% - -------------------------------------------------------------------------------- 2,331,200 BEA Systems Inc.(1) $ 30,888 - -------------------------------------------------------------------------------- 1,710,500 Cadence Design Systems Inc.(1) 32,380 - -------------------------------------------------------------------------------- 613,600 Citrix Systems, Inc.(1) 24,495 - -------------------------------------------------------------------------------- 3,022,600 Microsoft Corporation 72,996 - -------------------------------------------------------------------------------- 3,522,900 Oracle Corp.(1) 51,399 - -------------------------------------------------------------------------------- 856,300 Red Hat Inc.(1) 25,167 - -------------------------------------------------------------------------------- 437,200 SAP AG ADR 23,884 - -------------------------------------------------------------------------------- 261,209 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 4.2% - -------------------------------------------------------------------------------- 696,900 AnnTaylor Stores Corporation(1) 26,015 - -------------------------------------------------------------------------------- 906,500 Chico's FAS, Inc.(1) 33,595 - -------------------------------------------------------------------------------- 551,300 Dress Barn Inc.(1) 13,942 - -------------------------------------------------------------------------------- 1,323,100 Foot Locker, Inc. 30,669 - -------------------------------------------------------------------------------- 289,100 Guess?, Inc.(1) 11,457 - -------------------------------------------------------------------------------- 1,108,300 Payless ShoeSource, Inc.(1) 25,458 - -------------------------------------------------------------------------------- 1,431,900 Ross Stores, Inc. 43,874 - -------------------------------------------------------------------------------- 437,500 Williams-Sonoma, Inc. 18,318 - -------------------------------------------------------------------------------- 203,328 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS -- 1.8% - -------------------------------------------------------------------------------- 189,400 Carter's, Inc.(1) 12,758 - -------------------------------------------------------------------------------- 273,000 Phillips-Van Heusen 10,975 - -------------------------------------------------------------------------------- 1,069,900 Polo Ralph Lauren Corp. 64,964 - -------------------------------------------------------------------------------- 88,697 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 1.1% - -------------------------------------------------------------------------------- 1,568,500 American Tower Corp. Cl A(1) 53,549 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $4,174,558) 4,788,676 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.5% Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 7.125% -- 8.125%, 8/15/19 -- 2/15/23, valued at $75,826), in a joint trading account at 4.67%, dated 4/28/06, due 5/1/06 (Delivery value $74,529) (Cost $74,500) 74,500 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.2% (Cost $4,249,058) 4,863,176 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.8% 37,390 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $4,900,566 ================================================================================ See Notes to Financial Statements. (continued) - ------ 8 Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* - ------------------------------------------------------------------------------------ ($ IN THOUSANDS) Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - ------------------------------------------------------------------------------------ 90,504,993 CHF for USD 5/31/06 $73,159 $(1,691) - ------------------------------------------------------------------------------------ 120,609,300 DKK for USD 5/31/06 20,428 (301) - ------------------------------------------------------------------------------------ $93,587 $(1,992) ===================================== (Value on Settlement Date $91,595) * FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future -- and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CHF = Swiss Franc DKK = Danish Krone ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. See Notes to Financial Statements. - ------ 9 Focused Growth - Performance TOTAL RETURNS AS OF APRIL 30, 2006 --------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 7.22% 17.00% 10.96% 2/28/05 - -------------------------------------------------------------------------------- BLENDED INDEX 8.34% 15.31% 9.43% -- - -------------------------------------------------------------------------------- RUSSELL 1000 GROWTH INDEX(2) 7.06% 15.18% 9.30% -- - -------------------------------------------------------------------------------- S&P 500 INDEX(2) 9.64% 15.42% 9.54% -- - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund is considered non-diversified and has the potential for wide performance swings, both up and down. The fund's investment approach may also result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. (continued) - ------ 10 Focused Growth - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made February 28, 2005
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended April 30 - -------------------------------------------------------------------------------- 2005* 2006 - -------------------------------------------------------------------------------- Investor Class -3.50% 17.00% - -------------------------------------------------------------------------------- Blended index -3.66% 15.31% - -------------------------------------------------------------------------------- Russell 1000 Growth Index -3.69% 15.18% - -------------------------------------------------------------------------------- S&P 500 Index -3.63% 15.42% - -------------------------------------------------------------------------------- * From 2/28/05, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund is considered non-diversified and has the potential for wide performance swings, both up and down. The fund's investment approach may also result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 11 Focused Growth - Portfolio Commentary PORTFOLIO MANAGERS: JOE REILAND AND GREGORY WOODHAMS. Focused Growth returned 7.22%* for the six-month reporting period ended April 30, 2006, trailing its blended benchmark, which had a return of 8.34%. The blended index's return reflects the performance of its equally weighted components, the Russell 1000 Growth Index and the S&P 500 Index, which rose 7.06% and 9.64%, respectively. Looking at the 12 months ended in April, Focused Growth's performance is better compared with its index -- the portfolio's return is 17.00%, versus 15.31% for the benchmark. By comparison, the Russell 1000 Growth and S&P 500 returned 15.18% and 15.42%, respectively. TOP CONTRIBUTORS The portfolio's top contributor for the six months was Schlumberger, a global oil-field-services provider benefiting from increased exploration for oil and gas given higher energy prices. That helped Schlumberger gain more than 50% for the six-month period. Focused Growth's information technology holdings also made a significant contribution to return, thanks to holdings in Broadcom and Freescale Semiconductor. Broadcom is a leading chip manufacturer experiencing strong growth in wireless networking. Its products are used in everything from consumer electronics to Internet communications gear. Freescale Semiconductor is a spin-off from Motorola producing chips for a number of wireless and industrial applications. Archer-Daniels-Midland (ADM) was another of Focused Growth's top contributors. The stock performed very well in the period on the strength of its oilseed and corn processing businesses. Recently, ADM has drawn even more investor interest because it is a leading producer of ethanol, an alternative and additive to gasoline made from corn. TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- United Technologies Corp. 4.6% 3.8% - -------------------------------------------------------------------------------- Schlumberger Ltd. 4.5% 4.5% - -------------------------------------------------------------------------------- Freescale Semiconductor Inc. Cl B 4.3% -- - -------------------------------------------------------------------------------- Emerson Electric Co. 4.3% -- - -------------------------------------------------------------------------------- Becton Dickinson & Co. 4.3% 4.1% - -------------------------------------------------------------------------------- Novartis AG ORD 4.3% 1.2% - -------------------------------------------------------------------------------- PepsiCo, Inc. 4.3% -- - -------------------------------------------------------------------------------- American Express Co. 4.2% 3.5% - -------------------------------------------------------------------------------- Textron Inc. 4.2% 1.6% - -------------------------------------------------------------------------------- J.C. Penney Co. Inc. 4.2% -- - -------------------------------------------------------------------------------- * Total returns for periods less than one year are not annualized. (continued) - ------ 12 Focused Growth - Portfolio Commentary TOP DETRACTORS The portfolio's largest detractor was anti-virus software maker McAfee. Troubles at rival Symantec, a stock the fund did not own, and concerns that Microsoft would enter the business weighed on the stock. Focused Growth's return was also limited by its exposure to medical device maker St. Jude Medical. The stock was hurt by uncertainty over the outlook for sales of heart implant devices and Medicare reimbursement rates. OUR COMMITMENT We're committed to an investment strategy that concentrates on companies we think are able to sustain accelerating growth in their fundamentals. We believe this approach will lead to the businesses that are the keys to generating solid returns over time. That said, shareholders should understand that Focused Growth is a non-diversified fund, meaning its holdings are typically limited to a core group of approximately 25 - 45 stocks. Stocks advancing in this concentrated portfolio, where a single holding may account for more than 5% of assets, will have a positive impact on performance. However, investors need to be prepared for the other side of the coin: if a large position stumbles, the effect is magnified. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 87.3% 92.3% - -------------------------------------------------------------------------------- Foreign Common Stocks* 10.9% 5.7% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 98.2% 98.0% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.6% 1.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities 1.2% 0.4% - -------------------------------------------------------------------------------- * Includes depositary shares and foreign ordinary shares. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- IT Services 9.2% 3.5% - -------------------------------------------------------------------------------- Multiline Retail 8.3% 5.1% - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 7.9% 7.4% - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 7.7% 6.7% - -------------------------------------------------------------------------------- Communications Equipment 6.5% 5.1% - -------------------------------------------------------------------------------- - ------ 13 Focused Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.2% AEROSPACE & DEFENSE -- 4.6% - -------------------------------------------------------------------------------- 12,612 United Technologies Corp. $ 792 - -------------------------------------------------------------------------------- BEVERAGES -- 4.3% - -------------------------------------------------------------------------------- 12,695 PepsiCo, Inc. 739 - -------------------------------------------------------------------------------- CHEMICALS -- 4.1% - -------------------------------------------------------------------------------- 8,626 Monsanto Co. 719 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 1.3% - -------------------------------------------------------------------------------- 3,222 Wells Fargo & Co. 221 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 6.5% - -------------------------------------------------------------------------------- 33,681 Cisco Systems Inc.(1) 706 - -------------------------------------------------------------------------------- 8,281 QUALCOMM Inc. 425 - -------------------------------------------------------------------------------- 1,131 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 4.1% - -------------------------------------------------------------------------------- 21,952 Hewlett-Packard Co. 713 - -------------------------------------------------------------------------------- CONSUMER FINANCE -- 5.4% - -------------------------------------------------------------------------------- 13,554 American Express Co. 730 - -------------------------------------------------------------------------------- 2,406 Capital One Financial Corp. 208 - -------------------------------------------------------------------------------- 938 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 4.4% - -------------------------------------------------------------------------------- 8,875 Emerson Electric Co. 754 - -------------------------------------------------------------------------------- 177 Roper Industries Inc. 8 - -------------------------------------------------------------------------------- 762 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 4.5% - -------------------------------------------------------------------------------- 11,379 Schlumberger Ltd. 787 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 3.5% - -------------------------------------------------------------------------------- 17,119 Archer-Daniels-Midland Co. 622 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 7.9% - -------------------------------------------------------------------------------- 11,911 Becton Dickinson & Co. 751 - -------------------------------------------------------------------------------- 15,709 St. Jude Medical, Inc.(1) 620 - -------------------------------------------------------------------------------- 1,371 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 3.7% - -------------------------------------------------------------------------------- 8,287 Express Scripts, Inc.(1) 648 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES -- 4.2% - -------------------------------------------------------------------------------- 8,049 Textron Inc. 724 - -------------------------------------------------------------------------------- INSURANCE -- 2.1% - -------------------------------------------------------------------------------- 5,851 PartnerRe Ltd. 366 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 1.7% - -------------------------------------------------------------------------------- 8,579 eBay Inc.(1) 295 - -------------------------------------------------------------------------------- Shares/Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- IT SERVICES -- 9.2% - -------------------------------------------------------------------------------- 28,767 Ceridian Corp.(1) $ 697 - -------------------------------------------------------------------------------- 5,159 Global Payments Inc. 245 - -------------------------------------------------------------------------------- 7,977 International Business Machines Corp. 657 - -------------------------------------------------------------------------------- 1,599 - -------------------------------------------------------------------------------- METALS & MINING -- 0.4% - -------------------------------------------------------------------------------- 1,188 Freeport-McMoRan Copper & Gold, Inc. Cl B 77 - -------------------------------------------------------------------------------- MULTILINE RETAIL -- 8.3% - -------------------------------------------------------------------------------- 11,029 J.C. Penney Co. Inc. 722 - -------------------------------------------------------------------------------- 13,481 Target Corporation 716 - -------------------------------------------------------------------------------- 1,438 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 1.7% - -------------------------------------------------------------------------------- 2,807 Anadarko Petroleum Corp. 294 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 4.3% - -------------------------------------------------------------------------------- 12,983 Novartis AG ORD 744 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 7.7% - -------------------------------------------------------------------------------- 23,831 Freescale Semiconductor Inc. Cl B(1) 755 - -------------------------------------------------------------------------------- 12,089 Maxim Integrated Products, Inc. 426 - -------------------------------------------------------------------------------- 6,370 Novellus Systems, Inc.(1) 157 - -------------------------------------------------------------------------------- 1,338 - -------------------------------------------------------------------------------- SOFTWARE -- 4.3% - -------------------------------------------------------------------------------- 19,265 Cadence Design Systems Inc.(1) 365 - -------------------------------------------------------------------------------- 9,506 Citrix Systems, Inc.(1) 379 - -------------------------------------------------------------------------------- 744 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $16,254) 17,062 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.6% - -------------------------------------------------------------------------------- $100 FNMA Discount Notes, 4.71%, 5/1/06(2) (Cost $100) 100 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 98.8% (Cost $16,354) 17,162 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 1.2% 207 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $17,369 ================================================================================ See Notes to Financial Statements. (continued) - ------ 14 Focused Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* - -------------------------------------------------------------------------------- ($ IN THOUSANDS) Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - -------------------------------------------------------------------------------- 557,360 CHF for USD 5/31/06 $450 $(10) ====================================== (Value on Settlement Date $440) * FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future -- and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS CHF = Swiss Franc FNMA = Federal National Mortgage Association ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------ 15 Heritage - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ---------------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - ------------------------------------------------------------------------------------------- INVESTOR CLASS 23.94% 47.33% 6.11% 9.96% 12.87% 11/10/87 - ------------------------------------------------------------------------------------------- RUSSELL MIDCAP GROWTH INDEX(2) 15.18% 28.27% 5.77% 8.92% 12.64%(3) -- - ------------------------------------------------------------------------------------------- RUSSELL MIDCAP INDEX(2) 14.35% 26.42% 10.85% 12.43% 14.36%(3) -- - ------------------------------------------------------------------------------------------- Institutional Class 24.12% 47.62% 6.34% -- 9.28% 6/16/97 - ------------------------------------------------------------------------------------------- Advisor Class 23.83% 47.07% 5.84% -- 8.29% 7/11/97 - ------------------------------------------------------------------------------------------- C Class 23.37% 45.99% -- -- 5.25% 6/26/01 - ------------------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Lipper Fund Performance - Performance data is total return, and is preliminary and subject to revision. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Since 10/31/87, the date nearest the Investor Class's inception for which data are available. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. (continued) - ------ 16 Heritage - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made April 30, 1996
ONE-YEAR RETURNS OVER 10 YEARS Periods ended April 30 - -------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------------------------- Investor Class 6.01% 35.37% -6.05% 54.89% -7.92% -9.34% -19.98% 20.31% 4.61% 47.33% - -------------------------------------------------------------------------------------------------- Russell Midcap Growth Index 3.92% 40.84% 12.33% 53.02% -29.47% -15.01% -16.67% 36.14% 7.05% 28.27% - -------------------------------------------------------------------------------------------------- Russell Midcap Index 10.95% 40.98% 5.93% 16.01% 0.29% -0.70% -14.13% 35.45% 14.62% 26.42% - -------------------------------------------------------------------------------------------------- Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 17 Heritage - Portfolio Commentary PORTFOLIO MANAGERS: KURT STALZER AND DAVID ROSE Heritage performed very well relative to its benchmarks and the competition during the six months ended April 30, 2006, returning 23.94%*. By comparison, the Russell Midcap and Russell Midcap Growth indices returned 14.35% and 15.18%, respectively. The 599 funds in Lipper's Mid-Cap Growth peer group had an average return of 16.42%.** What's more, Heritage's 47.33% return for the 12 months ended in April compared very favorable with its Lipper category, with an average return of 30.45%. The portfolio's longer-term returns are also better than its benchmark (see page 16 for more detailed performance comparisons). We think this history of strong performance relative to our peers and benchmarks demonstrates that Heritage is a good fit for shareholders looking for a fund that invests in mid- and small-sized growth-oriented companies. SOLID GROWTH, STOCKS HIGHER The economy fared surprisingly well during the period, overcoming hurricanes, rising oil prices, and higher interest rates. In that environment, stocks managed double-digit gains, with shares of smaller, growth-oriented companies generally outperforming large, value-oriented stocks (see the Market Perspective on page 2). This trend benefited Heritage, which invests in mid- and small-sized companies showing accelerating earnings. Some of the key reasons for Heritage's strong performance against this market backdrop were positioning among the industrials, telecommunications services, and energy sectors. We were overweight in these sectors, and added value through our stock selection in all three. However, Heritage's return would have been even better relative to its benchmarks but for our stock selection among health care stocks, which detracted slightly from our relative results. INDUSTRIAL-STRENGTH WINNERS Solid economic growth both here and abroad fueled big gains among industrial firms. One example is construction-equipment maker Manitowoc Co. Demand for its industrial cranes has been so strong the firm experienced rapid earnings growth, while its stock price surged to an all-time high. Manitowoc and Foster Wheeler -- a heavy construction firm benefiting from surging global demand for big TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- NII Holdings, Inc. 6.5% 7.1% - -------------------------------------------------------------------------------- Precision Castparts Corp. 3.9% 2.9% - -------------------------------------------------------------------------------- America Movil SA de CV Series L ADR 3.2% 3.3% - -------------------------------------------------------------------------------- Diamond Offshore Drilling, Inc. 3.2% -- - -------------------------------------------------------------------------------- Alliance Data Systems Corp. 3.1% 0.5% - -------------------------------------------------------------------------------- Harrah's Entertainment, Inc. 3.0% -- - -------------------------------------------------------------------------------- Aker Kvaerner ASA ORD 2.8% 0.8% - -------------------------------------------------------------------------------- Weatherford International Ltd. 2.5% -- - -------------------------------------------------------------------------------- Manitowoc Co. 2.4% 1.0% - -------------------------------------------------------------------------------- Station Casinos Inc. 2.2% 2.2% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares.Total returns for periods less than one year are not annualized. ** The Lipper Mid-Cap Growth Funds Average Returns returned 4.15% and 7.84% for the five- and 10-year periods ended April 30, 2006, respectively. (continued) - ------ 18 Heritage - Portfolio Commentary infrastructure projects -- were two of the biggest contributors to Heritage's outperformance of its benchmarks. DIALING FOR DOLLARS After energy, telecommunication services was the sector making the greatest contribution to portfolio performance. The top-contributing stock in both relative and absolute terms was Heritage's largest holding, wireless phone company NII Holdings. Another big contributor in this space was America Movil, which benefited from tremendous growth in the Latin American market, as did NII. ENERGY ADDS PERFORMANCE Within the energy sector, the portfolio's biggest contributors were in the equipment and services industries. Strong global demand for energy led to record capital spending by oil and gas exploration companies. The best performer from this segment was Aker Kvaerner, a Norwegian oil-services firm. Diamond Offshore Drilling and Weatherford International were other big contributors to Heritage's performance relative to its benchmarks. Our biggest detractor from portfolio returns also came from the energy sector. Vestas Wind Systems -- a provider of alternative energy -- experienced project delays and cost overruns because of parts supply problems, which hurt profitability. HEALTH CARE HURTS It helped to be overweight the health care sector as a whole, but several of Heritage's biggest detractors relative to our benchmarks were health care providers, such as Aetna, Caremark Rx, and Humana. Aetna was the largest detractor from relative performance after a sharp sell-off on news of rising medical service costs. This despite the fact that the company announced solid profit and membership growth, as well as a stock buy-back plan. COMMITMENT TO GROWTH PHILOSOPHY Our investment process targets medium-sized and smaller companies with accelerating earnings growth rates and share price momentum. We believe our long-term track record shows how well this approach can work over time, and that Heritage can be a good choice for the mid-cap growth portion of an investor's portfolio. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Energy Equipment & Services 13.8% 9.3% - -------------------------------------------------------------------------------- Wireless Telecommunication Services 9.6% 11.2% - -------------------------------------------------------------------------------- Hotels, Restaurants & Leisure 7.9% 3.7% - -------------------------------------------------------------------------------- Aerospace & Defense 6.4% 6.7% - -------------------------------------------------------------------------------- Health Care Providers & Services 5.2% 12.5% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 80.6% 80.9% - -------------------------------------------------------------------------------- Foreign Common Stocks* 19.3% 19.0% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 99.9% 99.9% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.5% 0.2% - -------------------------------------------------------------------------------- Other Assets and Liabilities (1.4)% (0.1)% - -------------------------------------------------------------------------------- * Includes depositary shares and foreign ordinary shares. - ------ 19 Heritage - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 99.9% AEROSPACE & DEFENSE -- 6.4% - -------------------------------------------------------------------------------- 387,097 BE Aerospace, Inc.(1) $ 10,076 - -------------------------------------------------------------------------------- 166,600 Boeing Co. 13,903 - -------------------------------------------------------------------------------- 813,900 Precision Castparts Corp. 51,259 - -------------------------------------------------------------------------------- 176,102 Rockwell Collins 10,073 - -------------------------------------------------------------------------------- 85,311 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS -- 0.9% - -------------------------------------------------------------------------------- 51,410 EGL Inc.(1) 2,402 - -------------------------------------------------------------------------------- 315,974 UTI Worldwide Inc. 9,855 - -------------------------------------------------------------------------------- 12,257 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 2.1% - -------------------------------------------------------------------------------- 423,581 CSL Ltd. ORD 18,571 - -------------------------------------------------------------------------------- 155,200 Gilead Sciences, Inc.(1) 8,924 - -------------------------------------------------------------------------------- 27,495 - -------------------------------------------------------------------------------- BUILDING PRODUCTS -- 2.7% - -------------------------------------------------------------------------------- 416,300 NCI Building Systems Inc.(1) 27,056 - -------------------------------------------------------------------------------- 80,700 USG Corp.(1) 8,632 - -------------------------------------------------------------------------------- 35,688 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 4.1% - -------------------------------------------------------------------------------- 125,400 Goldman Sachs Group, Inc. (The) 20,100 - -------------------------------------------------------------------------------- 158,000 Investors Financial Services Corporation 7,562 - -------------------------------------------------------------------------------- 605,949 Lazard Ltd. Cl A 26,904 - -------------------------------------------------------------------------------- 54,566 - -------------------------------------------------------------------------------- CHEMICALS -- 1.9% - -------------------------------------------------------------------------------- 304,532 Monsanto Co. 25,398 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 1.8% - -------------------------------------------------------------------------------- 179,100 Manpower Inc. 11,668 - -------------------------------------------------------------------------------- 204,702 Monster Worldwide Inc.(1) 11,750 - -------------------------------------------------------------------------------- 23,418 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 0.3% - -------------------------------------------------------------------------------- 950,700 Finisar Corp.(1) 4,468 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 1.3% - -------------------------------------------------------------------------------- 341,677 Rackable Systems, Inc.(1) 17,559 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING -- 4.7% - -------------------------------------------------------------------------------- 1,071,000 Chiyoda Corporation ORD 24,102 - -------------------------------------------------------------------------------- 426,774 Foster Wheeler Ltd.(1) 19,017 - -------------------------------------------------------------------------------- 313,708 McDermott International, Inc.(1) 19,073 - -------------------------------------------------------------------------------- 62,192 - -------------------------------------------------------------------------------- CONSTRUCTION MATERIALS -- 3.1% - -------------------------------------------------------------------------------- 215,186 Eagle Materials Inc. 14,256 - -------------------------------------------------------------------------------- 142,950 Martin Marietta Materials, Inc. 15,176 - -------------------------------------------------------------------------------- 134,100 Vulcan Materials Co. 11,393 - -------------------------------------------------------------------------------- 40,825 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- CONSUMER FINANCE -- 1.0% - -------------------------------------------------------------------------------- 44,450 ORIX Corp. ORD $ 13,363 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 0.8% - -------------------------------------------------------------------------------- 172,707 AllianceBernstein Holding L.P.(1) 11,131 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 1.2% - -------------------------------------------------------------------------------- 180,348 Daktronics Inc. 7,073 - -------------------------------------------------------------------------------- 65,600 Multi-Fineline Electronix, Inc.(1) 3,823 - -------------------------------------------------------------------------------- 131,400 Tektronix, Inc. 4,641 - -------------------------------------------------------------------------------- 15,537 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 13.8% - -------------------------------------------------------------------------------- 382,400 Aker Kvaerner ASA ORD 37,192 - -------------------------------------------------------------------------------- 166,600 BJ Services Co. 6,339 - -------------------------------------------------------------------------------- 188,100 Cooper Cameron Corp.(1) 9,450 - -------------------------------------------------------------------------------- 461,600 Diamond Offshore Drilling, Inc. 41,900 - -------------------------------------------------------------------------------- 44,700 Dril-Quip Inc.(1) 3,218 - -------------------------------------------------------------------------------- 159,656 National Oilwell Varco, Inc.(1) 11,011 - -------------------------------------------------------------------------------- 283,800 Noble Corp. 22,403 - -------------------------------------------------------------------------------- 79,800 Technip SA ORD 5,038 - -------------------------------------------------------------------------------- 131,863 TETRA Technologies, Inc.(1) 6,488 - -------------------------------------------------------------------------------- 81,200 Transocean Inc.(1) 6,583 - -------------------------------------------------------------------------------- 638,674 Weatherford International Ltd.(1) 33,805 - -------------------------------------------------------------------------------- 183,427 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 1.2% - -------------------------------------------------------------------------------- 434,835 Archer-Daniels-Midland Co. 15,802 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 0.7% - -------------------------------------------------------------------------------- 149,532 Hologic, Inc.(1) 7,128 - -------------------------------------------------------------------------------- 13,100 Intuitive Surgical Inc.(1) 1,664 - -------------------------------------------------------------------------------- 8,792 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 5.2% - -------------------------------------------------------------------------------- 663,051 Aetna Inc. 25,528 - -------------------------------------------------------------------------------- 317,554 Covance Inc.(1) 18,530 - -------------------------------------------------------------------------------- 303,903 Pharmaceutical Product Development, Inc. 10,901 - -------------------------------------------------------------------------------- 363,600 PSS World Medical Inc.(1) 6,559 - -------------------------------------------------------------------------------- 148,600 Quest Diagnostics Inc. 8,281 - -------------------------------------------------------------------------------- 69,799 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 7.9% - -------------------------------------------------------------------------------- 484,700 Harrah's Entertainment, Inc. 39,572 - -------------------------------------------------------------------------------- 439,100 Las Vegas Sands Corp.(1) 28,458 - -------------------------------------------------------------------------------- 50,784 Pinnacle Entertainment Inc.(1) 1,386 - -------------------------------------------------------------------------------- 192,100 Shuffle Master Inc.(1) 7,098 - -------------------------------------------------------------------------------- 373,421 Station Casinos Inc. 28,783 - -------------------------------------------------------------------------------- 105,297 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES -- 0.6% - -------------------------------------------------------------------------------- 1,953,828 Corporacion GEO SA de CV, Series B ORD(1) 7,331 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 20 Heritage - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INSURANCE -- 2.3% - -------------------------------------------------------------------------------- 197,700 AON Corp. $ 8,286 - -------------------------------------------------------------------------------- 247,440 Berkley (W.R.) Corp. 9,259 - -------------------------------------------------------------------------------- 398,728 HCC Insurance Holdings, Inc. 13,353 - -------------------------------------------------------------------------------- 30,898 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 0.4% - -------------------------------------------------------------------------------- 78,500 NutriSystem, Inc.(1) 5,327 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 0.9% - -------------------------------------------------------------------------------- 279,600 Digital River Inc.(1) 12,174 - -------------------------------------------------------------------------------- IT SERVICES -- 4.5% - -------------------------------------------------------------------------------- 748,115 Alliance Data Systems Corp.(1) 41,146 - -------------------------------------------------------------------------------- 173,165 Euronet Worldwide Inc.(1) 6,189 - -------------------------------------------------------------------------------- 362,300 MoneyGram International Inc. 12,282 - -------------------------------------------------------------------------------- 59,617 - -------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS -- 0.3% - -------------------------------------------------------------------------------- 127,800 Aruze Corp. ORD 3,129 - -------------------------------------------------------------------------------- MACHINERY -- 4.3% - -------------------------------------------------------------------------------- 105,273 Bucyrus International, Inc. Cl A 5,465 - -------------------------------------------------------------------------------- 77,880 Greenbrier Companies Inc. 3,127 - -------------------------------------------------------------------------------- 333,984 JLG Industries Inc. 9,579 - -------------------------------------------------------------------------------- 118,140 Joy Global Inc. 7,761 - -------------------------------------------------------------------------------- 632,620 Manitowoc Co. 31,371 - -------------------------------------------------------------------------------- 57,303 - -------------------------------------------------------------------------------- MARINE -- 1.2% - -------------------------------------------------------------------------------- 211,612 American Commercial Lines Inc.(1) 11,413 - -------------------------------------------------------------------------------- 61,349 Kirby Corporation(1) 4,521 - -------------------------------------------------------------------------------- 15,934 - -------------------------------------------------------------------------------- MEDIA -- 1.1% - -------------------------------------------------------------------------------- 250,043 Focus Media Holding Ltd. ADR(1) 15,100 - -------------------------------------------------------------------------------- METALS & MINING -- 3.7% - -------------------------------------------------------------------------------- 103,400 Alcan Inc. 5,404 - -------------------------------------------------------------------------------- 30,600 Freeport-McMoRan Copper & Gold, Inc. Cl B 1,976 - -------------------------------------------------------------------------------- 341,314 Oregon Steel Mills, Inc.(1) 16,905 - -------------------------------------------------------------------------------- 295,900 Phelps Dodge Corp. 25,504 - -------------------------------------------------------------------------------- 49,789 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 2.1% - -------------------------------------------------------------------------------- 360,107 Denbury Resources Inc.(1) 11,739 - -------------------------------------------------------------------------------- 144,979 Parallel Petroleum Corp.(1) 3,349 - -------------------------------------------------------------------------------- 113,200 Peabody Energy Corp. 7,229 - -------------------------------------------------------------------------------- 137,974 Southwestern Energy Company(1) 4,970 - -------------------------------------------------------------------------------- 27,287 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 2.7% - -------------------------------------------------------------------------------- 168,978 Aspreva Pharmaceuticals Corp.(1) 5,745 - -------------------------------------------------------------------------------- 58,900 Schwarz Pharma AG ORD 5,219 - -------------------------------------------------------------------------------- 296,000 Shire plc ADR 14,019 - -------------------------------------------------------------------------------- 675,397 Shire plc ORD 10,519 - -------------------------------------------------------------------------------- 35,502 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT -- 0.4% - -------------------------------------------------------------------------------- 30,059 CB Richard Ellis Group, Inc. Cl A(1) $ 2,642 - -------------------------------------------------------------------------------- 38,535 Jones Lang LaSalle Inc. 3,266 - -------------------------------------------------------------------------------- 5,908 - -------------------------------------------------------------------------------- ROAD & RAIL -- 0.6% - -------------------------------------------------------------------------------- 168,672 Genesee & Wyoming Inc. Cl A(1) 5,528 - -------------------------------------------------------------------------------- 90,200 Swift Transportation Co. Inc.(1) 2,701 - -------------------------------------------------------------------------------- 8,229 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.3% - -------------------------------------------------------------------------------- 217,850 Atheros Communications, Inc.(1) 5,531 - -------------------------------------------------------------------------------- 67,300 Cymer, Inc.(1) 3,479 - -------------------------------------------------------------------------------- 32,400 MEMC Electronic Materials Inc.(1) 1,315 - -------------------------------------------------------------------------------- 70,061 Microsemi Corporation(1) 1,914 - -------------------------------------------------------------------------------- 199,700 Trident Microsystems, Inc.(1) 5,312 - -------------------------------------------------------------------------------- 17,551 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS -- 2.5% - -------------------------------------------------------------------------------- 239,963 Crocs, Inc.(1) 7,175 - -------------------------------------------------------------------------------- 279,500 Polo Ralph Lauren Corp. 16,971 - -------------------------------------------------------------------------------- 21,900 Puma AG Rudolf Dassler Sport ORD 8,826 - -------------------------------------------------------------------------------- 32,972 - -------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE -- 0.3% - -------------------------------------------------------------------------------- 1,340,000 China Merchants Holdings International Co. Ltd. ORD 4,571 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 9.6% - -------------------------------------------------------------------------------- 1,145,800 America Movil SA de CV Series L ADR 42,291 - -------------------------------------------------------------------------------- 1,436,322 NII Holdings, Inc. Cl B(1) 86,036 - -------------------------------------------------------------------------------- 128,327 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $1,037,446) 1,329,274 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.5% - -------------------------------------------------------------------------------- Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 7.125% -- 8.125%, 8/15/19 -- 2/15/23, valued at $20,254), in a joint trading account at 4.67%, dated 4/28/06, due 5/1/06 (Delivery value $19,908) (Cost $19,900) 19,900 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 101.4% (Cost $1,057,346) 1,349,174 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (1.4)% (19,132) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $1,330,042 ================================================================================ See Notes to Financial Statements. (continued) - ------ 21 Heritage - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* - ------------------------------------------------------------------------------------- ($ IN THOUSANDS) Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - ------------------------------------------------------------------------------------- 7,931,554 AUD for USD 5/31/06 $ 6,024 $ (64) - ------------------------------------------------------------------------------------- 2,263,871 Euro for USD 5/31/06 2,862 (42) - ------------------------------------------------------------------------------------- 3,649,472 Euro for USD 5/31/06 4,613 (58) - ------------------------------------------------------------------------------------- 2,050,674 GBP for USD 5/31/06 3,737 (74) - ------------------------------------------------------------------------------------- 1,564,008,775 JPY for USD 5/31/06 13,805 (135) - ------------------------------------------------------------------------------------- 81,416,012 MXN for USD 5/31/06 7,346 (71) - ------------------------------------------------------------------------------------- 83,516,160 NOK for USD 5/31/06 13,567 (215) - ------------------------------------------------------------------------------------- $51,954 $(659) ==================================== (Value on Settlement Date $51,295) * FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future -- and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt AUD = Australian Dollar GBP = British Pound JPY = Japanese Yen MXN = Mexican Nuevo Peso NOK = Norwegian Krona ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. See Notes to Financial Statements. - ------ 22 Vista - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ------------------------------ AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - ------------------------------------------------------------------------------------------- INVESTOR CLASS 18.88% 31.13% 6.01% 6.68% 11.15% 11/25/83 - ------------------------------------------------------------------------------------------- RUSSELL MIDCAP GROWTH INDEX(2) 15.18% 28.27% 5.77% 8.92% N/A(3) -- - ------------------------------------------------------------------------------------------- Institutional Class 19.05% 31.40% 6.23% -- 7.65% 11/14/96 - ------------------------------------------------------------------------------------------- Advisor Class 18.67% 30.74% 5.69% -- 6.31% 10/2/96 - ------------------------------------------------------------------------------------------- C Class 18.30% 29.77% -- -- 7.42% 7/18/01 - ------------------------------------------------------------------------------------------- R Class 18.57% -- -- -- 15.86%(1) 7/29/05 - ------------------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Benchmark began 12/31/85. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 23 Vista - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made April 30, 1996
ONE-YEAR RETURNS OVER 10 YEARS Periods ended April 30 - ---------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------------------- Investor Class -23.56% 26.13% -15.78% 125.22% -22.00% -15.93% -17.07% 43.43% 2.10% 31.13% - ---------------------------------------------------------------------------------------------------- Russell Midcap Growth Index 3.92% 40.84% 12.33% 53.02% -29.47% -15.01% -16.67% 36.14% 7.05% 28.27% - ---------------------------------------------------------------------------------------------------- Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 24 Vista - Portfolio Commentary PORTFOLIO MANAGERS: GLENN FOGLE AND DAVID M. HOLLOND American Century Vista surged 18.88%* during the six months ended April 30, 2006, exceeding both the 15.18% return of its benchmark, the Russell Midcap Growth Index, and the 17.19%** gain of the Lipper Mid-Cap Growth Funds Index measuring its portfolio peers. In addition, the portfolio's return has topped its benchmark in each of the past one- and five-year periods and has surpassed its Lipper peer index in the past five- and 10-year time frames. NON-TRADITIONAL RETURN TO GROWTH Heading into the period, value stocks in the mid-cap space had outpaced growth stocks substantially during the previous five-year stretch. The Russell Midcap Value Index gained an average of 12.82% annually in that time, versus a 3.71% average annual loss for the Russell Midcap Growth. Mid-cap investors finally moved toward growth stocks in late 2005, though. That allowed the Russell Midcap Growth's return for the six-month period to squeeze past the Russell Midcap Value's gain of 13.58% by 160 bps. The shift didn't mirror the runup of the late 1990s, though, when health care and information technology fed investors' appetite for growth. This time, telecommunications, materials and industrials ranked as the benchmark's top three sectors in terms of total return -- and Vista maintained beneficial overweight stakes in each of those areas. MINING WINNERS Those three sectors accounted for about three-quarters of Vista's total return in the period, and the overweight allocations largely explain the portfolio's relative outperformance. Vista received an additional boost from solid stock selection in a variety of industries within those areas. In the materials sector, metals and mining offers a prime example. Vista's best individual performer in the period, Titanium Metals, continues benefiting from a large-scale move to lightweight components by airline manufacturers. Titanium's share price tripled in the period, and two other stocks in the industry, steel and alloy producers Allegheny Technologies and Oregon Steel Mills, ranked among the portfolio's 10 leading contributors. TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- NII Holdings, Inc. 4.6% 4.4% - -------------------------------------------------------------------------------- McDermott International, Inc. 3.6% -- - -------------------------------------------------------------------------------- Diamond Offshore Drilling, Inc. 2.5% -- - -------------------------------------------------------------------------------- America Movil SA de CV Series L ADR 2.4% 3.0% - -------------------------------------------------------------------------------- Terex Corp. 2.3% -- - -------------------------------------------------------------------------------- Manitowoc Co. 2.3% 1.0% - -------------------------------------------------------------------------------- Foster Wheeler Ltd. 2.2% 1.0% - -------------------------------------------------------------------------------- Titanium Metals Corp. 2.2% 1.3% - -------------------------------------------------------------------------------- American Tower Corp. Cl A 2.2% 2.0% - -------------------------------------------------------------------------------- SBA Communications Corp. Cl A 2.1% -- - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The Lipper Mid-Cap Growth Funds Index returned 32.42%, 3.90% and 6.65% for the one-, five- and 10-year periods ended April 30, 2006, respectively. (continued) - ------ 25 Vista - Portfolio Commentary Vista's choices in metals and mining showed the positive results of finding companies with accelerating revenue and earnings and upward momentum in their share price. They also fit one of Vista's key current investment themes: seeking companies in line to benefit from a rebound in corporate expenditures. Rising business investment requires machinery provided by suppliers such as Manitowoc, which makes construction cranes, and construction expertise by firms such as Foster Wheeler, which builds power plants and refineries. The latter constitutes one of Vista's top ten individual stakes, and both ranked among the portfolio's five leading relative and absolute stock contributors. BAD TIMING Somewhat ironically, weak security selection in two traditional growth-oriented sectors, health care and information technology, did more than anything to crimp Vista's relative return in the period. The portfolio enjoyed absolute contributions from both, but they paled in comparison to what the benchmark received. In technology, Vista employed its capital spending theme primarily in semiconductors, reaping a 31% return in that industry. But the portfolio incurred double-digit losses in a variety of software, Internet and computer-related industries. Apple Computer typified the difficulty Vista encountered in those businesses in the period: Its shares gained 22%, but poor timing on trades made the stock the portfolio's biggest absolute detractor. Timing also hurt the portfolio's top relative detractor, Southwestern Energy. Vista maintained a steady overweight in the stock, its third-heaviest average individual position. But it maintained that weight during a relatively mild winter in which natural gas prices plunged. As a result, Southwestern's share price suffered. Nonetheless, Vista's management believes that the Houston-based company will prosper as natural gas needs expand in the long term, so it retains a stake in the firm. INVESTMENT PHILOSOPHY Vista adheres to an investment process that identifies mid-sized and smaller companies with accelerating earnings and revenue. Ultimately, the portfolio's management team believes this selection strategy will produce solid, long-term gains for investors. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Wireless Telecommunication Services 11.9% 9.4% - -------------------------------------------------------------------------------- Construction & Engineering 8.0% 3.8% - -------------------------------------------------------------------------------- Machinery 7.3% 1.0% - -------------------------------------------------------------------------------- Capital Markets 7.3% 1.9% - -------------------------------------------------------------------------------- Energy Equipment & Services 7.3% 7.1% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 91.2% 83.9% - -------------------------------------------------------------------------------- Foreign Common Stocks* 8.8% 14.6% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 100.0% 98.5% - -------------------------------------------------------------------------------- Temporary Cash Investments 2.3% 1.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities (2.3)% (0.1)% - -------------------------------------------------------------------------------- * Includes depositary shares and foreign ordinary shares. - ------ 26 Vista - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 100% AEROSPACE & DEFENSE -- 3.9% - -------------------------------------------------------------------------------- 1,868,000 BE Aerospace, Inc.(1) $ 48,624 - -------------------------------------------------------------------------------- 859,000 Precision Castparts Corp. 54,100 - -------------------------------------------------------------------------------- 102,724 - -------------------------------------------------------------------------------- AUTOMOBILES -- 1.2% - -------------------------------------------------------------------------------- 466,000 Bayerische Motoren Werke AG ORD 25,339 - -------------------------------------------------------------------------------- 137,240 Thor Industries Inc. 6,928 - -------------------------------------------------------------------------------- 32,267 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 0.5% - -------------------------------------------------------------------------------- 326,000 Celgene Corp.(1) 13,744 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 7.3% - -------------------------------------------------------------------------------- 373,000 Affiliated Managers Group Inc.(1) 37,785 - -------------------------------------------------------------------------------- 1,538,000 E*TRADE Financial Corp.(1) 38,265 - -------------------------------------------------------------------------------- 989,000 Investment Technology Group Inc.(1) 52,407 - -------------------------------------------------------------------------------- 975,000 Janus Capital Group Inc. 18,974 - -------------------------------------------------------------------------------- 404,000 Jefferies Group, Inc. 26,846 - -------------------------------------------------------------------------------- 281,000 Piper Jaffray Companies(1) 19,642 - -------------------------------------------------------------------------------- 193,919 - -------------------------------------------------------------------------------- CHEMICALS -- 0.5% - -------------------------------------------------------------------------------- 153,000 Monsanto Co. 12,760 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 0.4% - -------------------------------------------------------------------------------- 172,789 Monster Worldwide Inc.(1) 9,918 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 1.0% - -------------------------------------------------------------------------------- 1,201,000 Redback Networks Inc.(1) 26,902 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 0.6% - -------------------------------------------------------------------------------- 275,000 Rackable Systems, Inc.(1) 14,132 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING -- 8.0% - -------------------------------------------------------------------------------- 260,000 EMCOR Group Inc.(1) 13,013 - -------------------------------------------------------------------------------- 1,336,000 Foster Wheeler Ltd.(1) 59,532 - -------------------------------------------------------------------------------- 143,639 Jacobs Engineering Group Inc.(1) 11,879 - -------------------------------------------------------------------------------- 1,576,000 McDermott International, Inc.(1) 95,820 - -------------------------------------------------------------------------------- 1,967,000 Quanta Services, Inc.(1) 31,905 - -------------------------------------------------------------------------------- 212,149 - -------------------------------------------------------------------------------- CONSTRUCTION MATERIALS -- 3.3% - -------------------------------------------------------------------------------- 196,000 Cemex SA de CV ADR 13,234 - -------------------------------------------------------------------------------- 476,000 Martin Marietta Materials, Inc. 50,533 - -------------------------------------------------------------------------------- 289,000 Vulcan Materials Co. 24,553 - -------------------------------------------------------------------------------- 88,320 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 0.5% - -------------------------------------------------------------------------------- 207,000 AllianceBernstein Holding L.P.(1) 13,341 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 3.0% - -------------------------------------------------------------------------------- 2,233,000 ABB Ltd. ORD(1) $ 31,840 - -------------------------------------------------------------------------------- 369,000 Alstom RGPT ORD(1) 33,418 - -------------------------------------------------------------------------------- 439,000 General Cable Corp.(1) 13,859 - -------------------------------------------------------------------------------- 79,117 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 2.2% - -------------------------------------------------------------------------------- 351,000 Agilent Technologies, Inc.(1) 13,485 - -------------------------------------------------------------------------------- 179,787 Molex Inc. 6,674 - -------------------------------------------------------------------------------- 200,000 Multi-Fineline Electronix, Inc.(1) 11,656 - -------------------------------------------------------------------------------- 343,000 Sunpower Corp. Cl A(1) 13,178 - -------------------------------------------------------------------------------- 355,000 Tektronix, Inc. 12,539 - -------------------------------------------------------------------------------- 57,532 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 7.3% - -------------------------------------------------------------------------------- 718,000 Diamond Offshore Drilling, Inc. 65,173 - -------------------------------------------------------------------------------- 283,000 Helmerich & Payne, Inc. 20,585 - -------------------------------------------------------------------------------- 212,000 National Oilwell Varco, Inc.(1) 14,622 - -------------------------------------------------------------------------------- 786,000 TETRA Technologies, Inc.(1) 38,671 - -------------------------------------------------------------------------------- 1,013,000 Weatherford International Ltd.(1) 53,618 - -------------------------------------------------------------------------------- 192,669 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 2.0% - -------------------------------------------------------------------------------- 1,429,000 Archer-Daniels-Midland Co. 51,930 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 0.5% - -------------------------------------------------------------------------------- 110,000 Intuitive Surgical Inc.(1) 13,970 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 4.8% - -------------------------------------------------------------------------------- 497,000 Aetna Inc. 19,135 - -------------------------------------------------------------------------------- 926,000 AmerisourceBergen Corp. 39,956 - -------------------------------------------------------------------------------- 571,000 Humana Inc.(1) 25,798 - -------------------------------------------------------------------------------- 219,234 Omnicare, Inc. 12,433 - -------------------------------------------------------------------------------- 799,000 Pharmaceutical Product Development, Inc. 28,660 - -------------------------------------------------------------------------------- 125,982 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 6.0% - -------------------------------------------------------------------------------- 404,000 Harrah's Entertainment, Inc. 32,983 - -------------------------------------------------------------------------------- 677,000 International Game Technology 25,679 - -------------------------------------------------------------------------------- 349,000 Las Vegas Sands Corp.(1) 22,619 - -------------------------------------------------------------------------------- 623,000 Penn National Gaming, Inc.(1) 25,369 - -------------------------------------------------------------------------------- 566,089 Pinnacle Entertainment Inc.(1) 15,454 - -------------------------------------------------------------------------------- 480,000 Station Casinos Inc. 36,997 - -------------------------------------------------------------------------------- 159,101 - -------------------------------------------------------------------------------- INSURANCE -- 0.5% - -------------------------------------------------------------------------------- 303,000 AON Corp. 12,699 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 0.5% - -------------------------------------------------------------------------------- 197,000 NutriSystem, Inc.(1) 13,368 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 27 Vista - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 0.5% - -------------------------------------------------------------------------------- 389,000 Akamai Technologies, Inc.(1) $ 13,105 - -------------------------------------------------------------------------------- IT SERVICES -- 1.0% - -------------------------------------------------------------------------------- 492,000 Alliance Data Systems Corp.(1) 27,060 - -------------------------------------------------------------------------------- MACHINERY -- 7.3% - -------------------------------------------------------------------------------- 1,640,000 JLG Industries Inc. 47,035 - -------------------------------------------------------------------------------- 1,201,000 Manitowoc Co. 59,558 - -------------------------------------------------------------------------------- 691,000 Terex Corp.(1) 59,806 - -------------------------------------------------------------------------------- 434,000 Trinity Industries, Inc. 27,559 - -------------------------------------------------------------------------------- 193,958 - -------------------------------------------------------------------------------- MARINE -- 0.7% - -------------------------------------------------------------------------------- 353,699 American Commercial Lines Inc.(1) 19,075 - -------------------------------------------------------------------------------- MEDIA -- 0.5% - -------------------------------------------------------------------------------- 222,000 Focus Media Holding Ltd. ADR(1) 13,407 - -------------------------------------------------------------------------------- METALS & MINING -- 6.8% - -------------------------------------------------------------------------------- 693,000 Allegheny Technologies Inc. 48,053 - -------------------------------------------------------------------------------- 181,500 IPSCO Inc. 18,727 - -------------------------------------------------------------------------------- 1,131,000 Oregon Steel Mills, Inc.(1) 56,018 - -------------------------------------------------------------------------------- 814,000 Titanium Metals Corp.(1) 58,323 - -------------------------------------------------------------------------------- 181,121 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 3.6% - -------------------------------------------------------------------------------- 289,000 ATP Oil & Gas Corp.(1) 13,161 - -------------------------------------------------------------------------------- 456,000 Peabody Energy Corp. 29,120 - -------------------------------------------------------------------------------- 1,464,000 Southwestern Energy Company(1) 52,734 - -------------------------------------------------------------------------------- 95,015 - -------------------------------------------------------------------------------- REAL ESTATE -- 0.5% - -------------------------------------------------------------------------------- 632,000 Mitsui Fudosan Co. Ltd. ORD 14,167 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 5.8% - -------------------------------------------------------------------------------- 253,000 Cymer, Inc.(1) 13,078 - -------------------------------------------------------------------------------- 323,000 Diodes Inc.(1) 13,159 - -------------------------------------------------------------------------------- 912,000 Intersil Corp. Cl A 27,004 - -------------------------------------------------------------------------------- 278,000 Lam Research Corp.(1) 13,589 - -------------------------------------------------------------------------------- 1,315,000 MEMC Electronic Materials Inc.(1) 53,389 - -------------------------------------------------------------------------------- 198,814 Microsemi Corporation(1) 5,432 - -------------------------------------------------------------------------------- 412,000 OmniVision Technologies, Inc.(1) 11,981 - -------------------------------------------------------------------------------- 1,598,000 RF Micro Devices, Inc.(1) 14,861 - -------------------------------------------------------------------------------- 152,493 - -------------------------------------------------------------------------------- SOFTWARE -- 1.0% - -------------------------------------------------------------------------------- 954,000 BEA Systems Inc.(1) 12,641 - -------------------------------------------------------------------------------- 1,121,000 Nuance Communications, Inc.(1) 14,382 - -------------------------------------------------------------------------------- 27,023 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 3.6% - -------------------------------------------------------------------------------- 1,914,000 Circuit City Stores Inc. $ 55,028 - -------------------------------------------------------------------------------- 987,000 Office Depot, Inc.(1) 40,052 - -------------------------------------------------------------------------------- 95,080 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS -- 0.8% - -------------------------------------------------------------------------------- 49,000 Puma AG Rudolf Dassler Sport ORD 19,748 - -------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS -- 2.0% - -------------------------------------------------------------------------------- 159,000 Watsco Inc. 10,089 - -------------------------------------------------------------------------------- 568,000 WESCO International Inc.(1) 42,600 - -------------------------------------------------------------------------------- 52,689 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 11.9% - -------------------------------------------------------------------------------- 1,741,000 America Movil SA de CV Series L ADR 64,260 - -------------------------------------------------------------------------------- 1,688,000 American Tower Corp. Cl A(1) 57,628 - -------------------------------------------------------------------------------- 449,000 Crown Castle International Corp.(1) 15,109 - -------------------------------------------------------------------------------- 2,053,000 NII Holdings, Inc. Cl B(1) 122,975 - -------------------------------------------------------------------------------- 2,237,000 SBA Communications Corp. Cl A(1) 56,193 - -------------------------------------------------------------------------------- 316,165 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $2,071,247) 2,646,650 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 2.3% - -------------------------------------------------------------------------------- Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 6.875% -- 8.75%, 8/15/20 -- 8/15/25, valued at $58,160), in a joint trading account at 4.65%, dated 4/28/06, due 5/1/06 (Delivery value $57,122) 57,100 - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 9/15/09, valued at $3,569), in a joint trading account at 4.63%, dated 4/28/06, due 5/1/06 (Delivery value $3,501) 3,500 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $60,600) 60,600 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 102.3% (Cost $2,131,847) 2,707,250 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (2.3)% (60,438) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $2,646,812 ================================================================================ See Notes to Financial Statements. (continued) - ------ 28 Vista - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* - -------------------------------------------------------------------------------- ($ IN THOUSANDS) Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - -------------------------------------------------------------------------------- 20,097,000 CHF for USD 5/31/06 $16,245 $(375) - -------------------------------------------------------------------------------- 11,858,649 Euro for USD 5/31/06 14,989 (220) - -------------------------------------------------------------------------------- 19,116,720 Euro for USD 5/31/06 24,164 (303) - -------------------------------------------------------------------------------- 786,840,000 JPY for USD 5/31/06 6,945 (68) - -------------------------------------------------------------------------------- $62,343 $(966) =================================== (Value on Settlement Date $61,377) * FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future -- and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CHF = Swiss Franc JPY = Japanese Yen ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. See Notes to Financial Statements. - ------ 29 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. (continued) - ------ 30 Shareholder Fee Examples (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - --------------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - --------------------------------------------------------------------------------------------------- GROWTH SHAREHOLDER FEE EXAMPLE - --------------------------------------------------------------------------------------------------- ACTUAL: - --------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,066.50 $5.12 1.00% - --------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,067.20 $4.10 0.80% - --------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,065.10 $6.40 1.25% - --------------------------------------------------------------------------------------------------- C Class $1,000 $1,061.40 $10.22 2.00% - --------------------------------------------------------------------------------------------------- R Class $1,000 $1,063.80 $7.68 1.50% - --------------------------------------------------------------------------------------------------- HYPOTHETICAL: - --------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,019.84 $5.01 1.00% - --------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,020.83 $4.01 0.80% - --------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,018.60 $6.26 1.25% - --------------------------------------------------------------------------------------------------- C Class $1,000 $1,014.88 $9.99 2.00% - --------------------------------------------------------------------------------------------------- R Class $1,000 $1,017.36 $7.50 1.50% - --------------------------------------------------------------------------------------------------- FOCUSED GROWTH SHAREHOLDER FEE EXAMPLE - --------------------------------------------------------------------------------------------------- ACTUAL: - --------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,072.20 $5.14 1.00% - --------------------------------------------------------------------------------------------------- HYPOTHETICAL: - --------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,019.84 $5.01 1.00% - --------------------------------------------------------------------------------------------------- * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 31 Shareholder Fee Examples (Unaudited) - ------------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - ------------------------------------------------------------------------------------------------- HERITAGE SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------------- ACTUAL: - ------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,239.40 $5.55 1.00% - ------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,241.20 $4.45 0.80% - ------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,238.30 $6.94 1.25% - ------------------------------------------------------------------------------------------------- C Class $1,000 $1,233.70 $11.08 2.00% - ------------------------------------------------------------------------------------------------- HYPOTHETICAL: - ------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,019.84 $5.01 1.00% - ------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,020.83 $4.01 0.80% - ------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,018.60 $6.26 1.25% - ------------------------------------------------------------------------------------------------- C Class $1,000 $1,014.88 $9.99 2.00% - ------------------------------------------------------------------------------------------------- VISTA SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------------- ACTUAL: - ------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,188.80 $5.43 1.00% - ------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,190.50 $4.34 0.80% - ------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,186.70 $6.78 1.25% - ------------------------------------------------------------------------------------------------- C Class $1,000 $1,183.00 $10.83 2.00% - ------------------------------------------------------------------------------------------------- R Class $1,000 $1,185.70 $8.13 1.50% - ------------------------------------------------------------------------------------------------- HYPOTHETICAL: - ------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,019.84 $5.01 1.00% - ------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,020.83 $4.01 0.80% - ------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,018.60 $6.26 1.25% - ------------------------------------------------------------------------------------------------- C Class $1,000 $1,014.88 $9.99 2.00% - ------------------------------------------------------------------------------------------------- R Class $1,000 $1,017.36 $7.50 1.50% - ------------------------------------------------------------------------------------------------- * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 32 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) - ------------------------------------------------------------------------------------------------ (AMOUNTS IN THOUSANDS) GROWTH FOCUSED GROWTH HERITAGE VISTA - ------------------------------------------------------------------------------------------------ ASSETS - ------------------------------------------------------------------------------------------------ Investment securities -- at value (cost of $4,249,058, $16,354, $1,057,346 and $2,131,847, respectively) $4,863,176 $17,162 $1,349,174 $2,707,250 - ------------------------------------------ Cash -- 123 -- 5,089 - ------------------------------------------ Receivable for investments sold 144,594 -- 29,820 89,264 - ------------------------------------------ Receivable for capital shares sold 79 100 953 90 - ------------------------------------------ Dividends and interest receivable 2,491 8 276 283 - ------------------------------------------------------------------------------------------------ 5,010,340 17,393 1,380,223 2,801,976 - ------------------------------------------------------------------------------------------------ LIABILITIES - ------------------------------------------------------------------------------------------------ Disbursements in excess of demand deposit cash 4,188 -- 2,038 -- - ------------------------------------------ Payable for investments purchased 99,657 -- 46,410 151,968 - ------------------------------------------ Payable for forward foreign currency exchange contracts 1,992 10 659 966 - ------------------------------------------ Payable for capital shares redeemed -- -- -- 58 - ------------------------------------------ Accrued management fees 3,902 14 1,055 2,072 - ------------------------------------------ Distribution fees payable 18 -- 10 51 - ------------------------------------------ Service fees (and distribution fees -- R Class) payable 17 -- 9 49 - ------------------------------------------------------------------------------------------------ 109,774 24 50,181 155,164 - ------------------------------------------------------------------------------------------------ NET ASSETS $4,900,566 $17,369 $1,330,042 $2,646,812 ================================================================================================ See Notes to Financial Statements. (continued) - ------ 33 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) - ------------------------------------------------------------------------------------------------------------ (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) GROWTH FOCUSED GROWTH HERITAGE VISTA - ------------------------------------------------------------------------------------------------------------ NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------------------------ Capital (par value and paid-in surplus) $5,172,650 $16,099 $ 946,090 $2,029,833 - --------------------------------------- Accumulated undistributed net investment income (loss) (382) (8) (757) 572 - --------------------------------------- Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (883,825) 480 93,533 41,983 - --------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 612,123 798 291,176 574,424 - ------------------------------------------------------------------------------------------------------------ $4,900,566 $17,369 $1,330,042 $2,646,812 ============================================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------------------------ Net assets $4,054,606,848 $17,368,715 $1,225,389,288 $2,234,589,281 - --------------------------------------- Shares outstanding 192,820,227 1,548,172 73,773,961 125,377,617 - --------------------------------------- Net asset value per share $21.03 $11.22 $16.61 $17.82 - ------------------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------------------------ Net assets $762,433,114 N/A $57,429,855 $168,996,851 - --------------------------------------- Shares outstanding 35,961,216 N/A 3,414,450 9,326,063 - --------------------------------------- Net asset value per share $21.20 N/A $16.82 $18.12 - ------------------------------------------------------------------------------------------------------------ ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------------------------ Net assets $82,471,345 N/A $44,817,924 $240,011,551 - --------------------------------------- Shares outstanding 3,971,905 N/A 2,740,449 13,722,649 - --------------------------------------- Net asset value per share $20.76 N/A $16.35 $17.49 - ------------------------------------------------------------------------------------------------------------ C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------------------------ Net assets $968,242 N/A $2,405,062 $3,052,816 - --------------------------------------- Shares outstanding 47,860 N/A 151,954 179,542 - --------------------------------------- Net asset value per share $20.23 N/A $15.83 $17.00 - ------------------------------------------------------------------------------------------------------------ R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------------------------ Net assets $86,544 N/A N/A $161,881 - --------------------------------------- Shares outstanding 4,153 N/A N/A 9,115 - --------------------------------------- Net asset value per share $20.84 N/A N/A $17.76 - ------------------------------------------------------------------------------------------------------------ See Notes to Financial Statements. - ------ 34 Statement of Operations FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) - ------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) GROWTH FOCUSED GROWTH HERITAGE VISTA - ------------------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - ------------------------------------------------------------------------------------------- INCOME: - -------------------------------------- Dividends (net of foreign taxes withheld of $333, $2, $73 and $45, respectively) $ 21,615 $ 71 $ 4,148 $ 11,672 - -------------------------------------- Interest 2,693 4 452 1,121 - ------------------------------------------------------------------------------------------- 24,308 75 4,600 12,793 - ------------------------------------------------------------------------------------------- EXPENSES: - -------------------------------------- Management fees 23,697 79 5,258 11,637 - -------------------------------------- Distribution fees: - -------------------------------------- Advisor Class 104 -- 38 272 - -------------------------------------- C Class 3 -- 6 10 - -------------------------------------- Service fees: - -------------------------------------- Advisor Class 104 -- 38 272 - -------------------------------------- C Class 1 -- 2 3 - -------------------------------------- Directors' fees and expenses 36 -- 7 20 - -------------------------------------- Other expenses 14 -- 8 7 - ------------------------------------------------------------------------------------------- 23,959 79 5,357 12,221 - ------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 349 (4) (757) 572 - ------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - ------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - -------------------------------------- Investment transactions 376,157 470 96,660 114,444 - -------------------------------------- Foreign currency transactions 272 12 (832) 902 - ------------------------------------------------------------------------------------------- 376,429 482 95,828 115,346 - ------------------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - -------------------------------------- Investments (56,866) 506 130,711 301,052 - -------------------------------------- Translation of assets and liabilities in foreign currencies (2,897) (15) (911) (1,947) - ------------------------------------------------------------------------------------------- (59,763) 491 129,800 299,105 - ------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 316,666 973 225,628 414,451 - ------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $317,015 $969 $224,871 $415,023 =========================================================================================== See Notes to Financial Statements. - ------ 35 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------------ (AMOUNTS IN THOUSANDS) GROWTH FOCUSED GROWTH - ------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005(1) - ------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------ Net investment income (loss) $ 349 $ 19,679 $ (4) $ -- - ------------------------------------------- Net realized gain (loss) 376,429 314,159 482 88 - ------------------------------------------- Change in net unrealized appreciation (depreciation) (59,763) 26,871 491 307 - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 317,015 360,709 969 395 - ------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------ From net investment income: - ------------------------------------------- Investor Class (17,120) (1,613) (4) -- - ------------------------------------------- Institutional Class (4,228) (1,650) -- -- - ------------------------------------------- Advisor Class (173) -- -- -- - ------------------------------------------- From net realized gains: - ------------------------------------------- Investor Class -- -- (90) -- - ------------------------------------------------------------------------------------------------ Decrease in net assets from distributions (21,521) (3,263) (94) -- - ------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions (179,753) (510,824) 4,319 11,780 - ------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS 115,741 (153,378) 5,194 12,175 NET ASSETS - ------------------------------------------------------------------------------------------------ Beginning of period 4,784,825 4,938,203 12,175 -- - ------------------------------------------------------------------------------------------------ End of period $4,900,566 $4,784,825 $17,369 $12,175 ================================================================================================ Accumulated undistributed net investment income (loss) $(382) $20,790 $(8) -- ================================================================================================ (1) February 28, 2005 (fund inception) through October 31, 2005. See Notes to Financial Statements. (continued) - ------ 36 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 - ----------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) HERITAGE VISTA - ----------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005 - ----------------------------------------------------------------------------------------------- OPERATIONS - ----------------------------------------------------------------------------------------------- Net investment income (loss) $ (757) $ (5,104) $ 572 $ (5,545) - ------------------------------------------- Net realized gain (loss) 95,828 225,287 115,346 176,328 - ------------------------------------------- Change in net unrealized appreciation (depreciation) 129,800 18,373 299,105 68,352 - ----------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 224,871 238,556 415,023 239,135 - ----------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------- From net realized gains: - ------------------------------------------- Investor Class (5,148) -- -- -- - ------------------------------------------- Institutional Class (271) -- -- -- - ------------------------------------------- Advisor Class (151) -- -- -- - ------------------------------------------- C Class (6) -- -- -- - ----------------------------------------------------------------------------------------------- Decrease in net assets from distributions (5,576) -- -- -- - ----------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ----------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 246,072 (596,469) 38,459 384,953 - ----------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 465,367 (357,913) 453,482 624,088 NET ASSETS - ----------------------------------------------------------------------------------------------- Beginning of period 864,675 1,222,588 2,193,330 1,569,242 - ----------------------------------------------------------------------------------------------- End of period $1,330,042 $ 864,675 $2,646,812 $2,193,330 =============================================================================================== Accumulated undistributed net investment income (loss) $(757) -- $572 -- =============================================================================================== See Notes to Financial Statements. - ------ 37 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Growth Fund (Growth), Focused Growth Fund (Focused Growth), Heritage Fund (Heritage) and Vista Fund (Vista) (collectively, the funds) are four funds in a series issued by the corporation. Growth, Heritage and Vista are diversified under the 1940 Act. Focused Growth is nondiversified and normally limits its investments to a core group of approximately 25-45 common stocks. The funds' investment objective is to seek long-term capital growth. The funds pursue this objective by investing primarily in equity securities. Growth and Focused Growth generally invest in larger companies but may purchase companies of any size. Heritage and Vista generally invest in companies that are medium-sized and smaller at the time of purchase. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- Growth and Vista are authorized to issue the Investor Class, the Institutional Class, the Advisor Class, the C Class and the R Class. Focused Growth is authorized to issue the Investor Class. Heritage is authorized to issue the Investor Class, the Institutional Class, the Advisor Class and the C Class. The C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of each fund represent an equal pro rata interest in the assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the funds are allocated to each class of shares based on their relative net assets. Sale of the Investor Class for Focused Growth commenced February 28, 2005. Sale of the R Class for Vista commenced July 29, 2005. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the funds determine that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the funds to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. FUTURES CONTRACTS -- The funds may enter into futures contracts in order to manage the funds' exposure to changes in market conditions. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Upon entering into a futures contract, the funds are required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the funds. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The funds recognize a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. (continued) - ------ 38 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to each fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is each fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. (continued) - ------ 39 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee for Focused Growth, Heritage and Vista is 1.00%, 0.80%, 0.75%, 1.00% and 1.00%, for the Investor Class, Institutional Class, Advisor Class, C Class and R Class, respectively, as applicable. The annual management fee schedule for each class of Growth is as follows: - -------------------------------------------------------------------------------- INVESTOR, C & R INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $5 billion 1.000% 0.800% 0.750% - -------------------------------------------------------------------------------- Next $5 billion 0.990% 0.790% 0.740% - -------------------------------------------------------------------------------- Next $5 billion 0.980% 0.780% 0.730% - -------------------------------------------------------------------------------- Next $5 billion 0.970% 0.770% 0.720% - -------------------------------------------------------------------------------- Next $5 billion 0.950% 0.750% 0.700% - -------------------------------------------------------------------------------- Next $5 billion 0.900% 0.700% 0.650% - -------------------------------------------------------------------------------- Over $30 billion 0.800% 0.600% 0.550% - -------------------------------------------------------------------------------- The effective annual management fee for each class of Growth for the six months ended April 30, 2006 was 1.00%, 0.80%, 0.75%, 1.00% and 1.00% for the Investor Class, Institutional Class, Advisor Class, C Class and R Class, respectively. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class (the Advisor Class plan) and a separate Master Distribution and Individual Shareholder Services Plan for each of the C Class and R Class (collectively with the Advisor Class Plan, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------------------------------------------------- Service Fee 0.25% 0.25% - -------------------------------------------------------------------------------- The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class and R Class shares. Fees incurred under the plans during the six months ended April 30, 2006, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. The funds have a bank line of credit agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. (continued) - ------ 40 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended April 30, 2006, were as follows: - -------------------------------------------------------------------------------- GROWTH FOCUSED GROWTH HERITAGE VISTA - -------------------------------------------------------------------------------- Purchases $3,125,131 $30,665 $1,328,807 $2,819,618 - -------------------------------------------------------------------------------- Proceeds from sales $3,323,400 $26,504 $1,090,742 $2,749,304 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - -------------------------------------------------------------------------------- GROWTH FOCUSED GROWTH - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 800,000 100,000 ================================================================================ Sold 9,137 $ 191,962 744 $ 8,233 - -------------------------------- Issued in reinvestment of distributions 775 16,262 8 89 - -------------------------------- Redeemed (19,515) (408,801) (361) (4,003) - -------------------------------------------------------------------------------- Net increase (decrease) (9,603) $(200,577) 391 $ 4,319 ================================================================================ YEAR ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED 800,000 300,000 ================================================================================ Sold 10,990 $ 212,907 1,271 $12,943 - -------------------------------- Issued in reinvestment of distributions 78 1,548 -- -- - -------------------------------- Redeemed (35,261) (684,014) (114) (1,163) - -------------------------------------------------------------------------------- Net increase (decrease) (24,193) $(469,559) 1,157 $11,780 ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 150,000 N/A ================================================================================ Sold 4,033 $ 85,008 - -------------------------------- Issued in reinvestment of distributions 200 4,228 - -------------------------------- Redeemed (2,813) (59,497) - -------------------------------------------------------------------------------- Net increase (decrease) 1,420 $ 29,739 ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 150,000 N/A ================================================================================ Sold 3,162 $ 61,972 - -------------------------------- Issued in reinvestment of distributions 83 $1,650 - -------------------------------- Redeemed (5,559) (108,738) - -------------------------------------------------------------------------------- Net increase (decrease) (2,314) $ (45,116) ================================================================================ (1) February 28, 2005 (fund inception) through October 31, 2005 for Focused Growth. (continued) - ------ 41 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- GROWTH FOCUSED GROWTH - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 210,000 N/A ================================================================================ Sold 614 $ 12,728 - ---------------------------------- Issued in reinvestment of distributions 8 162 - ---------------------------------- Redeemed (1,068) (21,978) - -------------------------------------------------------------------------------- Net increase (decrease) (446) $ (9,088) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 210,000 N/A ================================================================================ Sold 1,575 $ 30,169 - ---------------------------------- Redeemed (1,382) (26,458) - -------------------------------------------------------------------------------- Net increase (decrease) 193 $ 3,711 ================================================================================ C CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 100,000 N/A ================================================================================ Sold 10 $206 - ---------------------------------- Redeemed (3) (66) - -------------------------------------------------------------------------------- Net increase (decrease) 7 $140 ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 100,000 N/A ================================================================================ Sold 9 $159 - ---------------------------------- Redeemed (3) (55) - -------------------------------------------------------------------------------- Net increase (decrease) 6 $104 ================================================================================ R CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000 N/A ================================================================================ Sold 2 $ 47 - ---------------------------------- Redeemed (1) (14) - -------------------------------------------------------------------------------- Net increase (decrease) 1 $ 33 ================================================================================ EAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 50,000 N/A ================================================================================ Sold 3 $ 54 - ---------------------------------- Redeemed (1) (18) - -------------------------------------------------------------------------------- Net increase (decrease) 2 $ 36 ================================================================================ (continued) - ------ 42 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- HERITAGE VISTA - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 400,000 800,000 ================================================================================ Sold 18,301 $282,858 10,982 $ 183,576 - -------------------------------- Issued in reinvestment of distributions 340 4,950 -- -- - -------------------------------- Redeemed (4,282) (65,529) (12,490) (207,788) - -------------------------------------------------------------------------------- Net increase (decrease) 14,359 $222,279 (1,508) $ (24,212) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 400,000 800,000 ================================================================================ Sold 11,012 $ 135,331 46,432 $ 667,482 - -------------------------------- Redeemed (58,227) (702,050) (27,449) (399,867) - -------------------------------------------------------------------------------- Net increase (decrease) (47,215) $(566,719) 18,983 $ 267,615 ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 40,000 80,000 ================================================================================ Sold 419 $ 6,548 3,886 $ 67,578 - -------------------------------- Issued in reinvestment of distributions 18 271 -- -- - -------------------------------- Redeemed (192) (2,976) (1,026) (17,350) - -------------------------------------------------------------------------------- Net increase (decrease) 245 $ 3,843 2,860 $ 50,228 ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 40,000 80,000 ================================================================================ Sold 553 $ 6,941 4,660 $ 68,796 - -------------------------------- Redeemed (2,745) (37,194) (1,402) (20,697) - -------------------------------------------------------------------------------- Net increase (decrease) (2,192) $(30,253) 3,258 $ 48,099 ================================================================================ ADVISOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 100,000 210,000 ================================================================================ Sold 1,568 $23,763 2,766 $ 44,809 - -------------------------------- Issued in reinvestment of distributions 11 151 -- -- - -------------------------------- Redeemed (341) (5,154) (1,989) (32,566) - -------------------------------------------------------------------------------- Net increase (decrease) 1,238 $18,760 777 $ 12,243 ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 100,000 210,000 ================================================================================ Sold 592 $ 7,356 11,360 $161,446 - -------------------------------- Redeemed (558) (6,665) (6,659) (93,106) - -------------------------------------------------------------------------------- Net increase (decrease) 34 $ 691 4,701 $ 68,340 ================================================================================ (continued) - ------ 43 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- HERITAGE VISTA - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 100,000 100,000 ================================================================================ Sold 107 $1,550 30 $ 482 - ---------------------------------- Issued in reinvestment of distributions -- 6 -- -- - ---------------------------------- Redeemed (25) (366) (26) (412) - -------------------------------------------------------------------------------- Net increase (decrease) 82 $1,190 4 $ 70 ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 100,000 100,000 ================================================================================ Sold 16 $ 184 124 $1,742 - ---------------------------------- Redeemed (31) (372) (62) (868) - -------------------------------------------------------------------------------- Net increase (decrease) (15) $(188) 62 $ 874 ================================================================================ R CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED N/A 10,000 ================================================================================ Sold 7 $130 ================================================================================ PERIOD ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED N/A 60,000 ================================================================================ Sold 2 $25 ================================================================================ (1) July 29, 2005 (commencement of sale) through October 31, 2005 for Vista. (continued) - ------ 44 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 5. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM or ACGIM, have a $500 million unsecured bank line of credit agreement with JPMCB, which was renewed from $575 million effective December 14, 2005. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the six months ended April 30, 2006. 6. RISK FACTORS Focused Growth is considered nondiversified which may subject the fund to the following risks: a price change in one security may have a greater impact than would be the case if the fund were diversified; the fund's nondiversification could result in high portfolio turnover which could mean increased transaction costs, affecting both the fund's performance and capital gains tax liabilities to investors. 7. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- GROWTH FOCUSED GROWTH HERITAGE VISTA - -------------------------------------------------------------------------------- Federal tax cost of investments $4,252,795 $16,360 $1,059,100 $2,135,957 ================================================================================ Gross tax appreciation of investments $689,346 $1,122 $295,507 $585,924 - ------------------------ Gross tax depreciation of investments (78,965) (320) (5,433) (14,631) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $610,381 $802 $290,074 $571,293 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of October 31, 2005, Growth and Vista had accumulated capital losses of $1,254,901 and $69,515, respectively, which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: - -------------------------------------------------------------------------------- 2010 2011 - -------------------------------------------------------------------------------- Growth $(221,736) $(1,033,165) - -------------------------------------------------------------------------------- Vista $(69,515) -- - -------------------------------------------------------------------------------- - ------ 45 Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.80 $18.43 $17.26 $14.80 $17.85 $31.09 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) --(3) 0.08 (0.01) 0.01 (0.01) --(3) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 1.32 1.30 1.18 2.45 (3.04) (9.66) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 1.32 1.38 1.17 2.46 (3.05) (9.66) - -------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Investment Income (0.09) (0.01) -- -- -- -- - ------------------------------------- From Net Realized Gains -- -- -- -- -- (3.58) - -------------------------------------------------------------------------------------------------- Total Distributions (0.09) (0.01) -- -- -- (3.58) - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $21.03 $19.80 $18.43 $17.26 $14.80 $17.85 ================================================================================================== TOTAL RETURN(4) 6.65% 7.74% 6.78% 16.62% (17.09)% (34.14)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.00%(5) 1.00% 1.00% 1.00% 1.00% 1.00% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.01)%(5) 0.38% (0.07)% 0.05% (0.04)% (0.01)% - ------------------------------------- Portfolio Turnover Rate 64% 77% 131% 159% 135% 114% - ------------------------------------- Net Assets, End of Period (in millions) $4,055 $4,008 $4,176 $4,350 $3,951 $5,715 - -------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. - ------ 46 See Notes to Financial Statements. Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.98 $18.59 $17.38 $14.87 $17.90 $31.15 - ------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss)(2) 0.02 0.11 0.02 0.04 0.02 0.04 - ------------------------------------ Net Realized and Unrealized Gain (Loss) 1.32 1.33 1.19 2.47 (3.05) (9.65) - ------------------------------------------------------------------------------------------------- Total From Investment Operations 1.34 1.44 1.21 2.51 (3.03) (9.61) - ------------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Investment Income (0.12) (0.05) -- -- -- -- - ------------------------------------ From Net Realized Gains -- -- -- -- -- (3.64) - ------------------------------------------------------------------------------------------------- Total Distributions (0.12) (0.05) -- -- -- (3.64) - ------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $21.20 $19.98 $18.59 $17.38 $14.87 $17.90 ================================================================================================= TOTAL RETURN(3) 6.72% 7.72% 6.96% 16.88% (16.93)% (33.94)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.80%(4) 0.80% 0.80% 0.80% 0.80% 0.80% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.19%(4) 0.58% 0.13% 0.25% 0.16% 0.19% - ------------------------------------ Portfolio Turnover Rate 64% 77% 131% 159% 135% 114% - ------------------------------------ Net Assets, End of Period (in thousands) $762,433 $689,983 $685,090 $618,569 $455,807 $84,189 - ------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 47 Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.53 $18.22 $17.11 $14.70 $17.78 $31.01 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) (0.02) 0.02 (0.06) (0.03) (0.05) (0.06) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 1.29 1.29 1.17 2.44 (3.03) (9.66) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 1.27 1.31 1.11 2.41 (3.08) (9.72) - -------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Investment Income (0.04) -- -- -- -- -- - ------------------------------------- From Net Realized Gains -- -- -- -- -- (3.51) - -------------------------------------------------------------------------------------------------- Total Distributions (0.04) -- -- -- -- (3.51) - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $20.76 $19.53 $18.22 $17.11 $14.70 $17.78 ================================================================================================== TOTAL RETURN(3) 6.51% 7.19% 6.49% 16.39% (17.32)% (34.40)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.25%(4) 1.25% 1.25% 1.25% 1.25% 1.25% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.26)%(4) 0.13% (0.32)% (0.20)% (0.29)% (0.26)% - ------------------------------------- Portfolio Turnover Rate 64% 77% 131% 159% 135% 114% - ------------------------------------- Net Assets, End of Period (in thousands) $82,471 $86,303 $76,962 $55,010 $32,530 $25,272 - -------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. - ------ 48 See Notes to Financial Statements. Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------- C CLASS - --------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002(2) - --------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.06 $17.91 $16.95 $14.66 $19.38 - --------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(3) (0.10) (0.12) (0.19) (0.15) (0.16) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 1.27 1.27 1.15 2.44 (4.56) - --------------------------------------------------------------------------------------------- Total From Investment Operations 1.17 1.15 0.96 2.29 (4.72) - --------------------------------------------------------------------------------------------- Net Asset Value, End of Period $20.23 $19.06 $17.91 $16.95 $14.66 ============================================================================================= TOTAL RETURN(4) 6.14% 6.42% 5.66% 15.62% (24.36)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(5) 2.00% 2.00% 2.00% 2.00%(5) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.01)%(5) (0.62)% (1.07)% (0.95)% (0.99)%(5) - ----------------------------------------- Portfolio Turnover Rate 64% 77% 131% 159% 135%(6) - ----------------------------------------- Net Assets, End of Period (in thousands) $968 $779 $632 $623 $482 - --------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) November 28, 2001 (commencement of sale) through October 31, 2002. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2002. See Notes to Financial Statements. - ------ 49 Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.59 $18.32 $17.25 $16.56 - -------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(3) (0.05) (0.07) (0.13) (0.02) - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.30 1.34 1.20 0.71 - -------------------------------------------------------------------------------------- Total From Investment Operations 1.25 1.27 1.07 0.69 - -------------------------------------------------------------------------------------- Net Asset Value, End of Period $20.84 $19.59 $18.32 $17.25 ====================================================================================== TOTAL RETURN(4) 6.38% 6.93% 6.20% 4.17% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50% 1.50% 1.50%(5) - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.51)%(5) (0.12)% (0.57)% (0.58)%(5) - ------------------------------------------- Portfolio Turnover Rate 64% 77% 131% 159%(6) - ------------------------------------------- Net Assets, End of Period (in thousands) $87 $49 $12 $3 - -------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) August 29, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences becuause of the impact of calculating the net asset value to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 50 Focused Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.53 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(3) --(4) --(4) - -------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.76 0.53 - -------------------------------------------------------------------------------- Total From Investment Operations 0.76 0.53 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------- From Net Investment Income --(4) -- - -------------------------------------------- From Net Realized Gains (0.07) -- - -------------------------------------------------------------------------------- Total Distributions (0.07) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.22 $10.53 ================================================================================ TOTAL RETURN(5) 7.22% 5.30% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.00%(6) 1.00%(6) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.04)%(6) 0.00%(6) - -------------------------------------------- Portfolio Turnover Rate 168% 95% - -------------------------------------------- Net Assets, End of Period (in thousands) $17,369 $12,175 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) February 28, 2005 (fund inception) through October 31, 2005. (3) Computed using average shares outstanding during the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (6) Annualized. See Notes to Financial Statements. - ------ 51 Heritage - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $13.48 $10.76 $10.78 $9.11 $10.13 $19.10 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss)(2) (0.01) (0.06) (0.05) (0.04) (0.04) --(3) - ------------------------------------ Net Realized and Unrealized Gain (Loss) 3.23 2.78 0.03 1.71 (0.98) (5.33) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 3.22 2.72 (0.02) 1.67 (1.02) (5.33) - -------------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Realized Gains (0.09) -- -- -- -- (3.64) - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.61 $13.48 $10.76 $10.78 $9.11 $10.13 ================================================================================================== TOTAL RETURN(4) 23.94% 25.16% (0.09)% 18.33% (10.07)% (33.08)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.00%(5) 1.00% 1.00% 1.00% 1.00% 1.00% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.14)%(5) (0.46)% (0.44)% (0.39)% (0.37)% (0.02)% - ------------------------------------ Portfolio Turnover Rate 102% 236% 264% 129% 128% 152% - ------------------------------------ Net Assets, End of Period (in millions) $1,225 $801 $1,148 $1,227 $1,010 $1,206 - -------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 52 Heritage - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------ 2006(1) 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $13.63 $10.87 $10.86 $9.17 $10.17 $19.14 - ------------------------------------------------------------------------------------------------ Income From Investment Operations - -------------------------- Net Investment Income (Loss)(2) --(3) (0.03) (0.03) (0.01) (0.02) --(3) - ------------------------------------ Net Realized and Unrealized Gain (Loss) 3.28 2.79 0.04 1.70 (0.98) (5.30) - ------------------------------------------------------------------------------------------------ Total From Investment Operations 3.28 2.76 0.01 1.69 (1.00) (5.30) - ------------------------------------------------------------------------------------------------ Distributions - ------------------------------------ From Net Realized Gains (0.09) -- -- -- -- (3.67) - ------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $16.82 $13.63 $10.87 $10.86 $9.17 $10.17 ================================================================================================ TOTAL RETURN(4) 24.12% 25.39% 0.09% 18.43% (9.83)% (32.84)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 0.80%(5) 0.80% 0.80% 0.80% 0.80% 0.80% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.06%(5) (0.26)% (0.24)% (0.19)% (0.17)% 0.18% - ------------------------------------ Portfolio Turnover Rate 102% 236% 264% 129% 128% 152% - ------------------------------------ Net Assets, End of Period (in thousands) $57,430 $43,192 $58,259 $73,735 $152,256 $79,882 - ------------------------------------------------------------------------------------------------ (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 53 Heritage - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $13.29 $10.64 $10.68 $9.05 $10.09 $19.05 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) (0.03) (0.09) (0.07) (0.06) (0.06) (0.04) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 3.18 2.74 0.03 1.69 (0.98) (5.32) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 3.15 2.65 (0.04) 1.63 (1.04) (5.36) - --------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains (0.09) -- -- -- -- (3.60) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.35 $13.29 $10.64 $10.68 $9.05 $10.09 =================================================================================================== TOTAL RETURN(3) 23.83% 24.91% (0.37)% 18.01% (10.31)% (33.30)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.25%(4) 1.25% 1.25% 1.25% 1.25% 1.25% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.39)%(4) (0.71)% (0.69)% (0.64)% (0.62)% (0.27)% - ------------------------------------- Portfolio Turnover Rate 102% 236% 264% 129% 128% 152% - ------------------------------------- Net Assets, End of Period (in thousands) $44,818 $19,953 $15,623 $13,668 $3,737 $2,146 - --------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 54 Heritage - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------------- C CLASS - ----------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001(2) - ----------------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.91 $10.41 $10.54 $8.99 $10.10 $12.43 - ----------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(3) (0.08) (0.17) (0.15) (0.13) (0.13) (0.06) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 3.09 2.67 0.02 1.68 (0.98) (2.27) - ----------------------------------------------------------------------------------------------------- Total From Investment Operations 3.01 2.50 (0.13) 1.55 (1.11) (2.33) - ----------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains (0.09) -- -- -- -- -- - ----------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $15.83 $12.91 $10.41 $10.54 $8.99 $10.10 ===================================================================================================== TOTAL RETURN(4) 23.37% 24.02% (1.23)% 17.24% (10.99)% (18.74)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(5) 2.00% 2.00% 2.00% 2.00% 2.00%(5) - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.14)%(5) (1.46)% (1.44)% (1.39)% (1.37)% (1.50)%(5) - ------------------------------------- Portfolio Turnover Rate 102% 236% 264% 129% 128% 152%(6) - ------------------------------------- Net Assets, End of Period (in thousands) $2,405 $898 $889 $872 $146 $3 - ----------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) June 26, 2001 (commencement of sale) through October 31, 2001. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2001. See Notes to Financial Statements. - ------ 55 Vista - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.99 $13.14 $11.97 $9.25 $10.62 $24.37 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) 0.01 (0.04) (0.06) (0.06) (0.04) (0.04) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 2.82 1.89 1.23 2.78 (1.33) (7.38) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 2.83 1.85 1.17 2.72 (1.37) (7.42) - --------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains -- -- -- -- -- (6.33) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.82 $14.99 $13.14 $11.97 $9.25 $10.62 =================================================================================================== TOTAL RETURN(3) 18.88% 14.08% 9.77% 29.41% (12.90)% (37.48)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.00%(4) 1.00% 1.00% 1.00% 1.00% 1.00% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.06%(4) (0.26)% (0.48)% (0.57)% (0.34)% (0.31)% - ------------------------------------- Portfolio Turnover Rate 115% 284% 255% 280% 293% 290% - ------------------------------------- Net Assets, End of Period (in millions) $2,235 $1,902 $1,418 $1,240 $966 $1,222 - --------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 56 Vista - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------ 2006(1) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $15.22 $13.32 $12.11 $9.34 $10.70 $24.50 - ------------------------------------------------------------------------------------------------ Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) 0.02 (0.01) (0.04) (0.03) (0.02) (0.02) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 2.88 1.91 1.25 2.80 (1.34) (7.41) - ------------------------------------------------------------------------------------------------ Total From Investment Operations 2.90 1.90 1.21 2.77 (1.36) (7.43) - ------------------------------------------------------------------------------------------------ Distributions - ------------------------------------- From Net Realized Gains -- -- -- -- -- (6.37) - ------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $18.12 $15.22 $13.32 $12.11 $9.34 $10.70 ================================================================================================ TOTAL RETURN(3) 19.05% 14.26% 9.99% 29.66% (12.71)% (37.31)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 0.80%(4) 0.80% 0.80% 0.80% 0.80% 0.80% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.26%(4) (0.06)% (0.28)% (0.37)% (0.14)% (0.11)% - ------------------------------------- Portfolio Turnover Rate 115% 284% 255% 280% 293% 290% - ------------------------------------- Net Assets, End of Period (in thousands) $168,997 $98,439 $42,747 $34,177 $37,743 $46,069 - ------------------------------------------------------------------------------------------------ (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 57 Vista - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------------- ADVISOR CLASS - ----------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.73 $12.95 $11.82 $9.15 $10.53 $24.24 - ----------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) (0.01) (0.08) (0.11) (0.08) (0.06) (0.08) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 2.77 1.86 1.24 2.75 (1.32) (7.35) - ----------------------------------------------------------------------------------------------------- Total From Investment Operations 2.76 1.78 1.13 2.67 (1.38) (7.43) - ----------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains -- -- -- -- -- (6.28) - ----------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.49 $14.73 $12.95 $11.82 $9.15 $10.53 ===================================================================================================== TOTAL RETURN(3) 18.67% 13.75% 9.56% 29.18% (13.11)% (37.76)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.25%(4) 1.25% 1.25% 1.25% 1.25% 1.25% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.19)%(4) (0.51)% (0.73)% (0.82)% (0.59)% (0.56)% - ------------------------------------- Portfolio Turnover Rate 115% 284% 255% 280% 293% 290% - ------------------------------------- Net Assets, End of Period (in thousands) $240,012 $190,635 $106,750 $17,060 $11,333 $13,315 - ----------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 58 Vista - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- C CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001(2) - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.37 $12.73 $11.71 $9.12 $10.59 $12.07 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(3) (0.07) (0.18) (0.19) (0.16) (0.15) (0.06) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 2.70 1.82 1.21 2.75 (1.32) (1.42) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 2.63 1.64 1.02 2.59 (1.47) (1.48) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.00 $14.37 $12.73 $11.71 $9.12 $10.59 =================================================================================================== TOTAL RETURN(4) 18.30% 12.88% 8.71% 28.40% (13.88)% (12.26)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(5) 2.00% 2.00% 2.00% 2.00% 2.00%(5) - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.94)%(5) (1.26)% (1.48)% (1.57)% (1.34)% (1.77)%(5) - ------------------------------------- Portfolio Turnover Rate 115% 284% 255% 280% 293% 290%(6) - ------------------------------------- Net Assets, End of Period (in thousands) $3,053 $2,515 $1,439 $333 $110 $4 - --------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 18, 2001 (commencement of sale) through October 31, 2001. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2001. See Notes to Financial Statements. - ------ 59 Vista - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.97 $15.32 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(3) (0.06) (0.04) - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 2.85 (0.31) - -------------------------------------------------------------------------------- Total From Investment Operations 2.79 (0.35) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $17.76 $14.97 ================================================================================ TOTAL RETURN(4) 18.57% (2.28)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50%(5) - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.44)%(5) (0.92)(5) - ------------------------------------------- Portfolio Turnover Rate 115% 284%(6) - ------------------------------------------- Net Assets, End of Period (in thousands) $162 $24 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2005. See Notes to Financial Statements. - ------ 60 Share Class Information Five classes of shares are authorized for sale by Growth and Vista: Investor Class, Institutional Class, Advisor Class, C Class, and R Class. Focused Growth offers the Investor Class. Four classes of shares are authorized for sale by Heritage: Investor Class, Institutional Class, Advisor Class, and C Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratios of Advisor Class, C Class, and R Class shares are higher than that of Investor Class shares. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the unified management fee of Institutional Class shares is 0.20% less than the unified management fee of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. C CLASS shares are sold primarily through employer sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for C Class shares is the same as for Investor Class shares. C Class shares also are subject to a Rule 12b-1 service and distribution fee of 1.00%. R CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. The unified management fee for R Class shares is the same as for Investor Class shares. R Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 61 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the funds' investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. (continued) - ------ 62 Additional Information QUARTERLY PORTFOLIO DISCLOSURE The funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 63 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The BLENDED INDEX is considered the benchmark for Focused Growth. It combines two widely known indices, the S&P 500 Index and the Russell 1000 Growth Index, which are both weighted at 50%. DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The LIPPER LARGE-CAP GROWTH FUNDS INDEX is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Large Cap Growth fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The LIPPER MID-CAP GROWTH FUNDS INDEX is a non-weighted index of, typically, the 30 largest mutual funds within the Mid Cap Growth fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL MIDCAP(reg.tm) INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP(reg.tm) GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL MIDCAP(reg.tm) VALUE INDEX measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The RUSSELL 1000(reg.tm) INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest companies in the Russell 3000 Index (the 3,000 largest publicly traded U.S. companies, based on total market capitalization). The RUSSELL 1000(reg.tm) GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth rates. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 64 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Investment American Century Proprietary Holdings, Inc. Services, Inc., Distributor 0606 (c)2006 American Century Proprietary Holdings, Inc. SH-SAN-49695S All rights reserved.
[front cover] American Century Investments SEMIANNUAL REPORT [photo of boy and airplane] APRIL 30, 2006 Giftrust(reg.tm) Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Six-Month Total Returns . . . . . . . . . . . . . . . . . . . . . . . . 2 GIFTRUST Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 6 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 9 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .12 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .13 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .14 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .15 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .18 OTHER INFORMATION Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .19 The opinions expressed in the Market Perspective and the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century Giftrust Fund for the six months ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective BY MARK MALLON, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS WHAT HAPPENED IN THE ECONOMY A short-lived economic slowdown on the heels of last summer's devastating Gulf Coast hurricanes gave way to a strong rebound after the first of the year, providing fuel for a dose of investor enthusiasm that pushed U.S. broad market indices to solid gains in the six-month period ended April 30, 2006. As measured in gross domestic product (GDP), U.S. economic growth slowed to 1.7% in the fourth quarter of 2005 as energy supply interruptions caused by hurricanes Rita and Katrina - and a corresponding spike in oil and natural gas prices - filtered through the economy. Other temporary business and employment disruptions caused by those two storms further muted economic vitality in the final months of 2005. By January 2006, however, economic growth reaccelerated, with retailers reporting strong post-holiday sales and overall corporate profits remaining robust. Not even rising commodity prices and rising interest rates halted the momentum, with GDP growth of 5.3% in the first quarter of 2006 more than tripling the rate of the previous quarter. The surge in many commodity values gave the Federal Reserve one reason to keep its string of interest rate hikes intact, even though broader inflation remained modest. The Fed boosted its short-term rate target to 4.75% in the period with four consecutive quarter-point increases. WHAT HAPPENED IN THE MARKET The notion that the Fed might soon stop raising rates helped feed investors' appetites throughout the period, even after short-term interest rates briefly surpassed long-term yields in the final week of 2005. Such yield-curve inversions historically presage a recession. But long-term yields finally inched upward in early 2006, with the benchmark 10-year Treasury note topping the 5% level for the first time in four years. Investors normally disdain rising 10-year yields. Nevertheless, equity markets surged, and as they have since 1999, stocks with smaller capitalizations once more set the pace. But large-cap returns outperformed in the period's final month, when gasoline prices again crept to near $3 per gallon. Growth stocks also found more favor. Among small- and mid-cap stocks, returns on growth issues surpassed returns for value stocks in the 6-month period. Large-cap growth continued languishing behind large-cap value, though, with the latter garnering substantial support from energy conglomerates riding record profits and surging share prices. SIX-MONTH TOTAL RETURNS AS OF APRIL 30, 2006(1) - -------------------------------------------------------------------------------- S&P 500 Index 9.64% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 10.24% - -------------------------------------------------------------------------------- Nasdaq Composite Index 10.02% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. - ------ 2 Giftrust - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- GIFTRUST 24.13% 47.22% 3.75%(2) 1.53%(2) 12.69%(2) 11/25/83 - -------------------------------------------------------------------------------- RUSSELL MIDCAP GROWTH INDEX(3) 15.18% 28.27% 5.77% 8.92% N/A(4) -- - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Returns would have been lower if management fees had not been waived from 2/1/04 to 7/31/04. (3) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Lipper Fund Performance -- Performance data is total return, and is preliminary and subject to revision. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (4) Benchmark began 12/31/85. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 3 Giftrust - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made April 30, 1996
ONE-YEAR RETURNS OVER 10 YEARS Periods ended April 30 - --------------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------------- Giftrust -27.08% 36.76% -21.02% 113.18% -42.37% -14.35% -23.04% 19.73%* 3.48%* 47.22% - --------------------------------------------------------------------------------------------------------- Russell Midcap Growth Index 3.92% 40.84% 12.33% 53.02% -29.47% -15.01% -16.67% 36.14% 7.05% 28.27% - --------------------------------------------------------------------------------------------------------- *Returns would have been lower, along with the ending value, if management fees had not been waived from 2/1/04 to 7/31/04. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 4 Giftrust - Portfolio Commentary PORTFOLIO MANAGERS: KURT STALZER AND DAVID ROSE Giftrust continued to perform well during the six months ended April 30, 2006, when the portfolio returned 24.13%*. By comparison, the Russell Midcap Growth Index returned 15.18%, and the 599 funds in Lipper's Mid-Cap Growth peer group had an average return of 16.42%**. What's more, Giftrust's 47.22% return for the 12 months ended in April compared very favorable with its Lipper category, which had an average return of 30.45%. More detailed performance comparisons can be seen on the previous pages. SOLID GROWTH, STOCKS HIGHER The economy fared surprisingly well during the period, overcoming hurricanes, rising oil prices, and higher interest rates. In that environment, stocks managed double-digit gains, with shares of smaller, growth-oriented companies generally outperforming large, value-oriented stocks (see the Market Perspective on page 2). This trend benefited Giftrust, which invests in mid- and small-sized companies showing accelerating earnings. Some of the key reasons for Giftrust's strong performance against this market backdrop were positioning among the industrials, telecommunications services, and energy sectors. We were overweight in these sectors, and added value through our stock selection in all three. However, Giftrust's return would have been even better relative to its benchmark but for our stock selection among health care stocks, which detracted slightly from our relative results. INDUSTRIAL-STRENGTH WINNERS Solid economic growth both here and abroad fueled big gains among industrial firms. One example is construction-equipment maker Manitowoc Co. Demand for its industrial cranes has been so strong the firm experienced rapid earnings growth, while its stock price surged to an all-time high. Manitowoc and Foster Wheeler -- a heavy construction firm benefiting from surging global demand for big infrastructure projects -- were two of the biggest contributors to Giftrust's outperformance of its benchmark. DIALING FOR DOLLARS After energy, telecommunication services was the sector making the greatest contribution to portfolio performance. TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- NII Holdings, Inc. 6.7% 7.2% - -------------------------------------------------------------------------------- Precision Castparts Corp. 3.9% 2.9% - -------------------------------------------------------------------------------- America Movil SA de CV Series L ADR 3.3% 3.3% - -------------------------------------------------------------------------------- Diamond Offshore Drilling, Inc. 3.1% -- - -------------------------------------------------------------------------------- Alliance Data Systems Corp. 3.1% 0.4% - -------------------------------------------------------------------------------- Harrah's Entertainment, Inc. 3.0% -- - -------------------------------------------------------------------------------- Aker Kvaerner ASA ORD 2.9% 1.1% - -------------------------------------------------------------------------------- Weatherford International Ltd. 2.5% -- - -------------------------------------------------------------------------------- Manitowoc Co. 2.4% 1.0% - -------------------------------------------------------------------------------- Station Casinos Inc. 2.2% 2.2% - -------------------------------------------------------------------------------- *Total returns for periods less than one year are not annualized. **The Lipper Mid-Cap Growth Funds Average Returns returned 4.15% and 7.84% for the 5- and 10-year periods ended April 30, 2006, respectively. - ------ 5 Giftrust - Portfolio Commentary The top-contributing stock in both relative and absolute terms was Giftrust's largest holding, wireless phone company NII Holdings. Another big contributor in this space was America Movil, which benefited from tremendous growth in the Latin American market, as did NII. ENERGY ADDS PERFORMANCE Within the energy sector, the portfolio's biggest contributors were in the equipment and services industries. Strong global demand for energy led to record capital spending by oil and gas exploration companies. The best performer from this segment was Aker Kvaerner, a Norwegian oil-services firm. Diamond Offshore Drilling and Weatherford International were other big contributors to Giftrust's relative performance. Our biggest detractor from portfolio returns also came from the energy sector. Vestas Wind Systems -- a provider of alternative energy -- experienced project delays and cost overruns because of parts supply problems, which hurt profitability. HEALTH CARE HURTS Several of Giftrust's biggest detractors relative to its benchmark were health care providers, such as Aetna, Caremark Rx, and Humana. Aetna was the largest detractor from relative performance after a sharp sell-off on news of rising medical service costs. This despite the fact that the company announced solid profit and membership growth, as well as a stock buy-back plan. COMMITMENT TO GROWTH PHILOSOPHY Our investment process targets medium-sized and smaller companies with accelerating earnings growth rates and share price momentum. In this context, we believe effective stock selection following a thorough review of fundamentals can position Giftrust for long-term positive performance. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Energy Equipment & Services 13.9% 9.5% - -------------------------------------------------------------------------------- Wireless Telecommunication Services 9.9% 11.2% - -------------------------------------------------------------------------------- Hotels, Restaurants & Leisure 7.9% 3.8% - -------------------------------------------------------------------------------- Aerospace & Defense 6.4% 6.7% - -------------------------------------------------------------------------------- Health Care Providers & Services 5.2% 12.7% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 80.4% 80.9% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 19.5% 19.2% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 99.9% 100.1% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.7% --(2) - -------------------------------------------------------------------------------- Other Assets and Liabilities (0.6)% (0.1)%(3) - -------------------------------------------------------------------------------- (1) Includes depositary shares and foreign ordinary shares. (2) Category is less than 0.05% of total net assets. (3) Includes collateral received for securities lending and other assets and liabilities. - ------ 6 Shareholder Fee Example (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your (continued) - ------ 7 Shareholder Fee Example (Unaudited) ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - -------------------------------------------------------------------------------- GIFTRUST SHAREHOLDER FEE EXAMPLE Actual $1,000 $1,241.30 $5.56 1.00% - -------------------------------------------------------------------------------- Hypothetical $1,000 $1,019.84 $5.01 1.00% - -------------------------------------------------------------------------------- *Expenses are equal to the fund's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 8 Giftrust - Schedule of Investments APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS - 99.9% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE - 6.4% - -------------------------------------------------------------------------------- 352,308 BE Aerospace, Inc.(1) $ 9,171 - -------------------------------------------------------------------------------- 137,900 Boeing Co. 11,508 - -------------------------------------------------------------------------------- 687,000 Precision Castparts Corp. 43,266 - -------------------------------------------------------------------------------- 114,264 Rockwell Collins 6,536 - -------------------------------------------------------------------------------- 70,481 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS - 0.9% - -------------------------------------------------------------------------------- 43,513 EGL Inc.(1) 2,033 - -------------------------------------------------------------------------------- 261,224 UTI Worldwide Inc. 8,148 - -------------------------------------------------------------------------------- 10,181 - -------------------------------------------------------------------------------- BIOTECHNOLOGY - 2.1% - -------------------------------------------------------------------------------- 350,368 CSL Ltd. ORD 15,361 - -------------------------------------------------------------------------------- 127,300 Gilead Sciences, Inc.(1) 7,320 - -------------------------------------------------------------------------------- 22,681 - -------------------------------------------------------------------------------- BUILDING PRODUCTS - 2.7% - -------------------------------------------------------------------------------- 343,300 NCI Building Systems Inc.(1) 22,311 - -------------------------------------------------------------------------------- 67,600 USG Corp.(1) 7,231 - -------------------------------------------------------------------------------- 29,542 - -------------------------------------------------------------------------------- CAPITAL MARKETS - 3.9% - -------------------------------------------------------------------------------- 104,600 Goldman Sachs Group, Inc. (The) 16,766 - -------------------------------------------------------------------------------- 93,200 Investors Financial Services Corporation 4,461 - -------------------------------------------------------------------------------- 488,789 Lazard Ltd. Cl A 21,702 - -------------------------------------------------------------------------------- 42,929 - -------------------------------------------------------------------------------- CHEMICALS - 1.9% - -------------------------------------------------------------------------------- 254,994 Monsanto Co. 21,267 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES - 1.8% - -------------------------------------------------------------------------------- 147,200 Manpower Inc. 9,590 - -------------------------------------------------------------------------------- 178,624 Monster Worldwide Inc.(1) 10,253 - -------------------------------------------------------------------------------- 19,843 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 0.3% - -------------------------------------------------------------------------------- 804,300 Finisar Corp.(1) 3,780 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 1.4% - -------------------------------------------------------------------------------- 287,836 Rackable Systems, Inc.(1) 14,792 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING - 4.7% - -------------------------------------------------------------------------------- 881,000 Chiyoda Corporation ORD 19,825 - -------------------------------------------------------------------------------- 350,356 Foster Wheeler Ltd.(1) 15,612 - -------------------------------------------------------------------------------- 262,986 McDermott International, Inc.(1) 15,990 - -------------------------------------------------------------------------------- 51,427 - -------------------------------------------------------------------------------- CONSTRUCTION MATERIALS - 3.2% - -------------------------------------------------------------------------------- 185,353 Eagle Materials Inc. 12,280 - -------------------------------------------------------------------------------- 124,800 Martin Marietta Materials, Inc. 13,248 - -------------------------------------------------------------------------------- 114,500 Vulcan Materials Co. 9,728 - -------------------------------------------------------------------------------- 35,256 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- CONSUMER FINANCE - 1.1% - -------------------------------------------------------------------------------- 39,510 ORIX Corp. ORD $ 11,878 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 0.4% - -------------------------------------------------------------------------------- 63,403 AllianceBernstein Holding L.P.(1) 4,086 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.2% - -------------------------------------------------------------------------------- 151,916 Daktronics Inc. 5,958 - -------------------------------------------------------------------------------- 53,300 Multi-Fineline Electronix, Inc.(1) 3,106 - -------------------------------------------------------------------------------- 109,700 Tektronix, Inc. 3,875 - -------------------------------------------------------------------------------- 12,939 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES - 13.9% - -------------------------------------------------------------------------------- 331,400 Aker Kvaerner ASA ORD 32,232 - -------------------------------------------------------------------------------- 135,300 BJ Services Co. 5,148 - -------------------------------------------------------------------------------- 153,100 Cooper Cameron Corp.(1) 7,692 - -------------------------------------------------------------------------------- 375,600 Diamond Offshore Drilling, Inc. 34,094 - -------------------------------------------------------------------------------- 37,200 Dril-Quip Inc.(1) 2,678 - -------------------------------------------------------------------------------- 133,696 National Oilwell Varco, Inc.(1) 9,221 - -------------------------------------------------------------------------------- 235,400 Noble Corp. 18,582 - -------------------------------------------------------------------------------- 64,300 Technip SA ORD 4,059 - -------------------------------------------------------------------------------- 107,547 TETRA Technologies, Inc.(1) 5,291 - -------------------------------------------------------------------------------- 66,100 Transocean Inc.(1) 5,359 - -------------------------------------------------------------------------------- 525,787 Weatherford International Ltd.(1) 27,830 - -------------------------------------------------------------------------------- 152,186 - -------------------------------------------------------------------------------- FOOD PRODUCTS - 1.3% - -------------------------------------------------------------------------------- 377,179 Archer-Daniels-Midland Co. 13,707 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES - 0.7% - -------------------------------------------------------------------------------- 123,752 Hologic, Inc.(1) 5,899 - -------------------------------------------------------------------------------- 10,800 Intuitive Surgical Inc.(1) 1,372 - -------------------------------------------------------------------------------- 7,271 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 5.2% - -------------------------------------------------------------------------------- 524,656 Aetna Inc. 20,200 - -------------------------------------------------------------------------------- 264,580 Covance Inc.(1) 15,438 - -------------------------------------------------------------------------------- 250,916 Pharmaceutical Product Development, Inc. 9,000 - -------------------------------------------------------------------------------- 300,200 PSS World Medical Inc.(1) 5,416 - -------------------------------------------------------------------------------- 121,500 Quest Diagnostics Inc. 6,771 - -------------------------------------------------------------------------------- 56,825 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE - 7.9% - -------------------------------------------------------------------------------- 399,000 Harrah's Entertainment, Inc. 32,575 - -------------------------------------------------------------------------------- 360,600 Las Vegas Sands Corp.(1) 23,370 - -------------------------------------------------------------------------------- 41,873 Pinnacle Entertainment Inc.(1) 1,143 - -------------------------------------------------------------------------------- 156,600 Shuffle Master Inc.(1) 5,786 - -------------------------------------------------------------------------------- 308,651 Station Casinos Inc. 23,791 - -------------------------------------------------------------------------------- 86,665 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES - 0.5% - -------------------------------------------------------------------------------- 1,595,912 Corporacion GEO SA de CV, Series B ORD(1) 5,988 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 9 Giftrust - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INSURANCE - 2.1% - -------------------------------------------------------------------------------- 161,200 AON Corp. $ 6,756 - -------------------------------------------------------------------------------- 202,070 Berkley (W.R.) Corp. 7,561 - -------------------------------------------------------------------------------- 275,667 HCC Insurance Holdings, Inc. 9,232 - -------------------------------------------------------------------------------- 23,549 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL - 0.4% - -------------------------------------------------------------------------------- 63,400 NutriSystem, Inc.(1) 4,302 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES - 1.0% - -------------------------------------------------------------------------------- 242,700 Digital River Inc.(1) 10,567 - -------------------------------------------------------------------------------- IT SERVICES - 4.5% - -------------------------------------------------------------------------------- 617,727 Alliance Data Systems Corp.(1) 33,975 - -------------------------------------------------------------------------------- 143,376 Euronet Worldwide Inc.(1) 5,124 - -------------------------------------------------------------------------------- 298,200 MoneyGram International Inc. 10,109 - -------------------------------------------------------------------------------- 49,208 - -------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS - 0.2% - -------------------------------------------------------------------------------- 107,600 Aruze Corp. ORD 2,634 - -------------------------------------------------------------------------------- MACHINERY - 4.4% - -------------------------------------------------------------------------------- 86,458 Bucyrus International, Inc. Cl A 4,488 - -------------------------------------------------------------------------------- 63,297 Greenbrier Companies Inc. 2,541 - -------------------------------------------------------------------------------- 276,392 JLG Industries Inc. 7,927 - -------------------------------------------------------------------------------- 106,721 Joy Global Inc. 7,011 - -------------------------------------------------------------------------------- 520,644 Manitowoc Co. 25,819 - -------------------------------------------------------------------------------- 47,786 - -------------------------------------------------------------------------------- MARINE - 1.2% - -------------------------------------------------------------------------------- 172,720 American Commercial Lines Inc.(1) 9,315 - -------------------------------------------------------------------------------- 49,203 Kirby Corporation(1) 3,626 - -------------------------------------------------------------------------------- 12,941 - -------------------------------------------------------------------------------- MEDIA - 1.1% - -------------------------------------------------------------------------------- 207,260 Focus Media Holding Ltd. ADR(1) 12,516 - -------------------------------------------------------------------------------- METALS & MINING - 3.7% - -------------------------------------------------------------------------------- 84,900 Alcan Inc. 4,437 - -------------------------------------------------------------------------------- 23,800 Freeport-McMoRan Copper & Gold, Inc. Cl B 1,537 - -------------------------------------------------------------------------------- 280,311 Oregon Steel Mills, Inc.(1) 13,884 - -------------------------------------------------------------------------------- 244,600 Phelps Dodge Corp. 21,082 - -------------------------------------------------------------------------------- 40,940 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS - 2.1% - ------------------------------------------------------------------------- 294,039 Denbury Resources Inc.(1) 9,585 - -------------------------------------------------------------------------------- 115,841 Parallel Petroleum Corp.(1) 2,676 - -------------------------------------------------------------------------------- 101,500 Peabody Energy Corp. 6,482 - -------------------------------------------------------------------------------- 111,883 Southwestern Energy Company(1) 4,030 - -------------------------------------------------------------------------------- 22,773 - -------------------------------------------------------------------------------- PHARMACEUTICALS - 2.7% - -------------------------------------------------------------------------------- 138,126 Aspreva Pharmaceuticals Corp.(1) 4,696 - -------------------------------------------------------------------------------- 49,800 Schwarz Pharma AG ORD 4,413 - -------------------------------------------------------------------------------- 243,000 Shire plc ADR 11,509 - -------------------------------------------------------------------------------- 562,600 Shire plc ORD 8,762 - -------------------------------------------------------------------------------- 29,380 - -------------------------------------------------------------------------------- Shares/Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.4% - -------------------------------------------------------------------------------- 24,809 CB Richard Ellis Group, Inc. Cl A(1) $ 2,180 - -------------------------------------------------------------------------------- 31,894 Jones Lang LaSalle Inc. 2,704 - -------------------------------------------------------------------------------- 4,884 - -------------------------------------------------------------------------------- ROAD & RAIL - 0.6% - -------------------------------------------------------------------------------- 137,241 Genesee & Wyoming Inc. Cl A(1) 4,498 - -------------------------------------------------------------------------------- 75,300 Swift Transportation Co. Inc.(1) 2,255 - -------------------------------------------------------------------------------- 6,753 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.3% - -------------------------------------------------------------------------------- 184,350 Atheros Communications, Inc.(1) 4,681 - -------------------------------------------------------------------------------- 56,300 Cymer, Inc.(1) 2,910 - -------------------------------------------------------------------------------- 26,800 MEMC Electronic Materials Inc.(1) 1,088 - -------------------------------------------------------------------------------- 59,621 Microsemi Corporation(1) 1,629 - -------------------------------------------------------------------------------- 162,000 Trident Microsystems, Inc.(1) 4,309 - -------------------------------------------------------------------------------- 14,617 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS - 2.5% - -------------------------------------------------------------------------------- 196,839 Crocs, Inc.(1) 5,885 - -------------------------------------------------------------------------------- 228,900 Polo Ralph Lauren Corp. 13,900 - -------------------------------------------------------------------------------- 18,400 Puma AG Rudolf Dassler Sport ORD 7,415 - -------------------------------------------------------------------------------- 27,200 - -------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE - 0.3% - -------------------------------------------------------------------------------- 1,118,000 China Merchants Holdings International Co. Ltd. ORD 3,814 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES - 9.9% - -------------------------------------------------------------------------------- 970,300 America Movil SA de CV Series L ADR 35,814 - -------------------------------------------------------------------------------- 1,222,648 NII Holdings, Inc.(1) 73,236 - -------------------------------------------------------------------------------- 109,050 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $837,271) 1,096,638 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 0.7% $7,600 FNMA Discount Notes, 4.71%, 5/1/06(2) (Cost $7,600) 7,600 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 100.6% (Cost $844,871) 1,104,238 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - (0.6)% (6,440) - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $1,097,798 ================================================================================ See Notes to Financial Statements. (continued) - ------ 10 Giftrust - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* - ------------------------------------------------------------------------------- ($ IN THOUSANDS) Settlement Unrealized Contracts to Sell Date Value Gain (Loss) - ------------------------------------------------------------------------------- 6,560,640 AUD for USD 5/31/06 $ 4,983 $ (53) - ------------------------------------------------------------------------------- 1,977,364 Euro for USD 5/31/06 2,499 (37) - ------------------------------------------------------------------------------- 3,187,606 Euro for USD 5/31/06 4,029 (50) - ------------------------------------------------------------------------------- 1,675,704 GBP for USD 5/31/06 3,054 (63) - ------------------------------------------------------------------------------- 1,352,740,200 JPY for USD 5/31/06 11,941 (117) - ------------------------------------------------------------------------------- 66,501,653 MXN for USD 5/31/06 6,000 (58) - ------------------------------------------------------------------------------- 73,338,720 NOK for USD 5/31/06 11,914 (189) - ------------------------------------------------------------------------------- $44,420 $(567) =============================== (Value on Settlement Date $43,853) *FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future - and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt AUD = Australian Dollar FNMA = Federal National Mortgage Association GBP = British Pound JPY = Japanese Yen MXN = Mexican Nuevo Peso NOK = Norwegian Krona ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------ 11 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) - ------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------- Investment securities, at value (cost of $844,871) $1,104,238 - ----------------------------------------------------------- Receivable for investments sold 30,761 - ----------------------------------------------------------- Dividends and interest receivable 234 - ------------------------------------------------------------------------------- 1,135,233 - ------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------- Disbursements in excess of demand deposit cash 1,962 - ----------------------------------------------------------- Payable for investments purchased 34,002 - ----------------------------------------------------------- Payable for forward foreign currency exchange contracts 567 - ----------------------------------------------------------- Accrued management fees 904 - ------------------------------------------------------------------------------- 37,435 - ------------------------------------------------------------------------------- NET ASSETS $1,097,798 =============================================================================== CAPITAL SHARES, $0.01 PAR VALUE - ------------------------------------------------------------------------------- Authorized 200,000 =============================================================================== Outstanding 51,187 =============================================================================== NET ASSET VALUE PER SHARE $21.45 =============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $1,130,965 - ----------------------------------------------------------- Accumulated net investment loss (787) - ----------------------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (291,189) - ----------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 258,809 - ------------------------------------------------------------------------------- $1,097,798 =============================================================================== See Notes to Financial Statements. - ------ 12 Statement of Operations FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ----------------------------------------------------------- Dividends (net of foreign taxes withheld of $68) $ 4,033 - ----------------------------------------------------------- Interest 206 - ----------------------------------------------------------- Securities lending 71 - -------------------------------------------------------------------------------- 4,310 - -------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------- Management fees 5,085 - ----------------------------------------------------------- Directors' fees and expenses 7 - ----------------------------------------------------------- Other expenses 5 - -------------------------------------------------------------------------------- 5,097 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (787) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- Net realized gain (loss) on investment and foreign currency transactions 123,231 - ----------------------------------------------------------- Change in net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies 96,296 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 219,527 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $218,740 ================================================================================ See Notes to Financial Statements. - ------ 13 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ (787) $ (4,249) - --------------------------------------------- Net realized gain (loss) 123,231 149,744 - --------------------------------------------- Change in net unrealized appreciation (depreciation) 96,296 58,896 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 218,740 204,391 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 6,314 11,226 - --------------------------------------------- Payments for shares redeemed (54,295) (153,289) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (47,981) (142,063) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 170,759 62,328 - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 927,039 864,711 - -------------------------------------------------------------------------------- End of period $1,097,798 $927,039 ================================================================================ Accumulated net investment loss $(787) -- ================================================================================ TRANSACTIONS IN SHARES OF THE FUND - -------------------------------------------------------------------------------- Sold 325 720 - --------------------------------------------- Redeemed (2,776) (9,693) - -------------------------------------------------------------------------------- Net increase (decrease) in shares of the fund (2,451) (8,973) ================================================================================ See Notes to Financial Statements. - ------ 14 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Giftrust Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund's investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in equity securities of medium- and small-sized companies. The following is a summary of the fund's significant accounting policies. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the fund to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending agent to certain approved borrowers in order to earn additional income. The fund continues to recognize any gain or loss in the market price of the securities loaned and records any interest earned or dividends declared. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The fund may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the fund and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. The fund requires that the collateral, represented by securities, received in a (continued) - ------ 15 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee). The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The annual management fee for the fund is 1.00%. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation's transfer agent, American Century Services, LLC. The fund has a bank line of credit agreement and securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. (continued) - ------ 16 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2006, were $1,129,462 and $1,181,900, respectively. 4. SECURITIES LENDING As of April 30, 2006, the fund had no securities on loan. In the case of securities lending transactions, JPMCB receives and maintains collateral in the form of cash, and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The fund's risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the fund may be delayed or limited. 5. BANK LINE OF CREDIT The fund, along with certain other funds managed by ACIM or ACGIM, has a $500 million unsecured bank line of credit agreement with JPMCB, which was renewed from $575 million effective December 14, 2005. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the six months ended April 30, 2006. 6. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- Federal tax cost of investments $845,963 ================================================================================ Gross tax appreciation of investments $263,038 - ------------------------------------------------------- Gross tax depreciation of investments (4,763) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $258,275 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of October 31, 2005, the fund had accumulated capital losses of $412,450, which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: - -------------------------------------------------------------------------------- 2009 2010 2011 - -------------------------------------------------------------------------------- $(267,748) $(138,462) $(6,240) - -------------------------------------------------------------------------------- - ------ 17 Giftrust - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $17.28 $13.81 $14.04 $11.88 $14.04 $43.71 - ----------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------- Net Investment Income (Loss) (0.02) (0.08) (0.01)(2) (0.07)(2) (0.06)(2) (0.02)(2) - ----------------- Net Realized and Unrealized Gain (Loss) 4.19 3.55 (0.22) 2.23 (2.10) (21.07) - ----------------------------------------------------------------------------------------------- Total From Investment Operations 4.17 3.47 (0.23) 2.16 (2.16) (21.09) - ----------------------------------------------------------------------------------------------- Distributions - ----------------- From Net Realized Gains -- -- -- -- -- (8.58) - ----------------------------------------------------------------------------------------------- Net Asset Value, End of Period $21.45 $17.28 $13.81 $14.04 $11.88 $14.04 =============================================================================================== TOTAL RETURN(3) 24.13% 25.13% (1.64)% 18.18% (15.38)% (56.36)% - ----------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.00%(4) 1.00% 0.49%(5) 1.00% 1.00% 1.00% - ----------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.15)%(4) (0.46)% (0.09)%(5) (0.55)% (0.42)% (0.11)% - ----------------- Portfolio Turnover Rate 111% 223% 260% 140% 140% 196% - ----------------- Net Assets, End of Period (in millions) $1,098 $927 $865 $896 $756 $880 - ----------------------------------------------------------------------------------------------- (1) For the six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (4) Annualized. (5) During a portion of the year ended October 31, 2004, the manager voluntarily agreed to waive its management fee. The waiver was in effect from February 1, 2004 through July 31, 2004. Had fees not been waived the annualized ratio of operating expenses to average net assets and annualized ratio of net investment income (loss) to average net assets would have been 1.00% and (0.60)%, respectively. See Notes to Financial Statements. - ------ 18 Additional Information INDEX DEFINITIONS The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL MIDCAP(reg.tm) INDEX measures the performance of the 800 smallestof the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP(reg.tm) GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 19 Notes - ------ 20 [inside back cover - blank] [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0606 SH-SAN-49691S
American Century Investments SEMIANNUAL REPORT [photo of boy and airplane] APRIL 30, 2006 Select Fund Capital Growth Fund Fundamental Equity Fund New Opportunities II Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Six-Month Total Returns . . . . . . . . . . . . . . . . . . . . . . . . 2 SELECT Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries and Types of Investments in Portfolio . . . . . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 7 CAPITAL GROWTH Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Top Five Industries and Types of Investments in Portfolio . . . . . . .13 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .14 FUNDAMENTAL EQUITY Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Top Five Industries and Types of Investments in Portfolio . . . . . . .20 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .21 NEW OPPORTUNITIES II Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Top Five Industries and Types of Investments in Portfolio . . . . . . .26 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .27 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . . . .30 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .34 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .36 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .37 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .39 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .50 OTHER INFORMATION Approval of Management Agreement for Capital Growth . . . . . . . . . . . .73 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .78 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .80 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century Select, Capital Growth, Fundamental Equity and New Opportunities II funds for the six months ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective [photo of chief investment officer] BY MARK MALLON, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS WHAT HAPPENED IN THE ECONOMY A short-lived economic slowdown on the heels of last summer's devastating Gulf Coast hurricanes gave way to a strong rebound after the first of the year, providing fuel for a dose of investor enthusiasm that pushed U.S. broad market indices to solid gains in the 6-month period ended April 30, 2006. As measured in gross domestic product (GDP), U.S. economic growth slowed to 1.7% in the fourth quarter of 2005 as energy supply interruptions caused by hurricanes Rita and Katrina -- and a corresponding spike in oil and natural gas prices -- filtered through the economy. Other temporary business and employment disruptions caused by those two storms further muted economic vitality in the final months of 2005. By January 2006, however, economic growth reaccelerated, with retailers reporting strong post-holiday sales and overall corporate profits remaining robust. Not even rising commodity prices and rising interest rates halted the momentum, with GDP growth of 5.3% in the first quarter of 2006 more than tripling the rate of the previous quarter. The surge in many commodity values gave the Federal Reserve one reason to keep its string of interest rate hikes intact, even though broader inflation remained modest. The Fed boosted its short-term rate target to 4.75% in the period with four consecutive quarter-point increases. WHAT HAPPENED IN THE MARKET The notion that the Fed might soon stop raising rates helped feed investors' appetites throughout the period, even after short-term interest rates briefly surpassed long-term yields in the final week of 2005. Such yield-curve inversions historically presage a recession. But long-term yields finally inched upward in early 2006, with the benchmark 10-year Treasury note topping the 5% level for the first time in four years. Investors normally disdain rising 10-year yields. Nevertheless, equity markets surged, and as they have since 1999, stocks with smaller capitalizations once more set the pace. But large-cap returns outperformed in the period's final month, when gasoline prices again crept to near $3 per gallon. Growth stocks also found more favor. Among small- and mid-cap stocks, returns on growth issues surpassed returns for value stocks in the 6-month period. Large-cap growth continued languishing behind large-cap value, though, with the latter garnering substantial support from energy conglomerates riding record profits and surging share prices. SIX-MONTH TOTAL RETURNS AS OF APRIL 30, 2006(1) - -------------------------------------------------------------------------------- S&P 500 Index 9.64% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 10.24% - -------------------------------------------------------------------------------- Nasdaq Composite Index 10.02% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. - ------ 2 Select - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ---------------------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------------------ SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - ------------------------------------------------------------------------------------------ INVESTOR CLASS 2.03% 7.37% -1.65% 6.44% 13.55% 6/30/71(2) - ------------------------------------------------------------------------------------------ S&P 500 INDEX(3) 9.64% 15.42% 2.70% 8.94% 11.25% -- - ------------------------------------------------------------------------------------------ Institutional Class 2.13% 7.54% -1.44% -- 5.46% 3/13/97 - ------------------------------------------------------------------------------------------ Advisor Class 1.88% 7.06% -1.92% -- 2.89% 8/8/97 - ------------------------------------------------------------------------------------------ A Class 1/31/03 No sales charge* 1.90% 7.07% -- -- 9.78%(4) With sales charge* -3.96% 0.91% -- -- 7.80%(4) - ------------------------------------------------------------------------------------------ B Class 1/31/03 No sales charge* 1.52% 6.26% -- -- 8.96%(4) With sales charge* -3.48% 2.26% -- -- 8.20%(4) - ------------------------------------------------------------------------------------------ C Class 1/31/03 No sales charge* 1.52% 6.28% -- -- 8.99%(4) With sales charge* 0.52% 6.28% -- -- 8.99%(4) - ------------------------------------------------------------------------------------------ R Class 1.77% -- -- -- -1.79%(1) 7/29/05 - ------------------------------------------------------------------------------------------ *Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information pages for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Although the fund's actual inception date was 10/31/58, this inception date corresponds with the investment advisor's implementation of its current investment philosophy and practices. (3) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (4) Class returns would have been lower if service and distribution fees had not been waived from 2/1/03 to 3/11/03, 2/1/03 to 2/11/03, and 2/1/03 to 3/11/03 for the A Class, B Class, and C Class shares, respectively. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 3 Select - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made April 30, 1996
ONE-YEAR RETURNS OVER 10 YEARS Periods ended April 30 - --------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------- Investor Class 20.54% 40.19% 28.41% 13.38% -17.52% -15.63% -14.23% 19.70% -1.08% 7.37% - --------------------------------------------------------------------------------------------------- S&P 500 Index 25.13% 41.07% 21.82% 10.13% -12.97% -12.63% -13.31% 22.88% 6.34% 15.42% - --------------------------------------------------------------------------------------------------- Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 4 Select - Portfolio Commentary PORTFOLIO MANAGERS: HAROLD S. BRADLEY, KEITH LEE AND MICHAEL LI. American Century Select gained 2.03%* in the six months ended April 30, 2006, trailing the 9.64% return of its benchmark, the Standard & Poor's 500 Index, and the 7.06% gain of the Russell 1000 Growth Index**. Since inception of its current investment philosophy and practices on June 30, 1971, Select has returned an average of 13.55% annually, compared with 11.25% for the benchmark. Harold Bradley joined the Select team in April 2006 as lead portfolio manager. In addition, Michael Li, an investment analyst on the team since 2003, began working as co-portfolio manager for the fund in February 2006. Keith Lee, co-portfolio manager since 2003, retains that role. The management changes primarily reflect the departure of John Sykora, who resigned his role as portfolio manager effective March 31, 2006. Mr. Sykora, who had guided Select as lead portfolio manager since October 2002, left American Century after 12 years with the firm to spend more time with his family. UNDERWEIGHTS HAMPER RELATIVE PERFORMANCE In the period, Select essentially avoided sectors filled with companies that until recently have failed to earn returns high enough to cover their cost of capital -- namely utilities, energy and materials. Select's combined average weighting in those sectors during the 6-month period equaled just 1% of the portfolio, compared with the benchmark's 16% combined weight in those sectors. Avoiding utilities altogether proved helpful, as the decision provided the biggest relative boost for the portfolio. But the underweight positions in materials and energy proved detrimental on a relative basis, as soaring commodity prices directly benefited producers of raw materials and rising crude oil prices boosted energy stocks. Returns in those two sectors ranked first and second, respectively, among all sectors within the benchmark, with materials rising 23% and energy surging 17%. STOCK PICKS FURTHER HINDER RETURNS Security selection within energy actually aided the portfolio's return. But Select couldn't overcome poor selection in other areas, including health care, financials and industrials. Six of the portfolio's 10 leading relative individual stock detractors came from the health care sector. They included TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Weight Watchers International, Inc. 2.7% 4.0% - -------------------------------------------------------------------------------- 3M Co. 2.7% 1.3% - -------------------------------------------------------------------------------- International Game Technology 2.4% 1.4% - -------------------------------------------------------------------------------- Weatherford International Ltd. 2.3% -- - -------------------------------------------------------------------------------- Boeing Co. 2.2% -- - -------------------------------------------------------------------------------- Schlumberger Ltd. 2.2% -- - -------------------------------------------------------------------------------- Koninklijke Royal Philips Electronics N.V. ORD 2.1% 1.4% - -------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The) 2.1% -- - -------------------------------------------------------------------------------- General Dynamics Corp. 2.1% -- - -------------------------------------------------------------------------------- Northern Trust Corp. 2.1% -- - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. **The Russell 1000 Growth Index returned 15.18%, -0.76% and 6.21% for the 1-, 5- and 10-year periods ended April 30, 2006, respectively. (continued) - ------ 5 Select - Portfolio Commentary UnitedHealth Group, a top five portfolio average holding that topped Select's performance list in 2005 but whose stock lost 14% of its value in the period. In addition to suffering from concerns about slowing increases in managed care premiums, UnitedHealth received criticism for the way it grants certain stock options to executives. A federal investigation into the matter began in mid-May 2006; Select sold its stake in the company a month earlier. Another longtime holding that performed well throughout most of 2005, Weight Watchers International, also hurt the portfolio in the period. The company ranked as the portfolio's second-worst relative detractor after its shares fell 6%. Only Apollo Group had a bigger negative impact on Select's relative return. The parent company of the for-profit University of Phoenix, Apollo reported declining quarterly profits in March 2006, two months after the unexpected resignation of its chief executive. Its shares fell 13% in the 6-month period, and Select has shed its position in the company. HELP FROM TECHNOLOGY A slight overweight stake in information technology helped curb Select's relative underperformance in the period, and the sector accounted for half the portfolio's total return. Not only did Select benefit from some particular stock picks -- such as payment service provider First Data, whose shares surged 18% -- it mostly avoided several big names whose shares plunged, especially Yahoo! and Intel. A stake in International Game Technology led all individual performers, as its shares rallied 44%. The world's biggest slot machine maker reported strong fiscal second-quarter earnings near the end of the period and raised its profit outlook through 2007. The company's optimism reflects rising global demand for gaming machines -- exemplifying the type of long-term growth Select's management finds particularly appealing. INVESTMENT PHILOSOPHY Select seeks great companies with attractive risk/reward characteristics. Within that framework, the management team specifically desires companies that have accelerating growth in earnings and revenue and appear capable of sustaining such growth over time. The management team believes this strategy offers investors the best potential for long-term investment rewards. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Capital Markets 10.3% -- - -------------------------------------------------------------------------------- Energy Equipment & Services 7.1% -- - -------------------------------------------------------------------------------- Aerospace & Defense 6.4% -- - -------------------------------------------------------------------------------- Metals & Mining 6.0% -- - -------------------------------------------------------------------------------- Oil, Gas & Consumable Fuels 5.9% 0.1% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 71.6% 88.1% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 27.2% 10.1% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 98.8% 98.2% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.3% 1.8% - -------------------------------------------------------------------------------- Other Assets and Liabilities(2) 0.9% --(3) - -------------------------------------------------------------------------------- (1) Includes depositary shares and foreign ordinary shares. (2) Includes collateral received for securities lending and other assets and liabilities. (3) Category is less than 0.05% of total net assets. - ------ 6 Select - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.8% AEROSPACE & DEFENSE -- 6.4% - -------------------------------------------------------------------------------- 880,000 Boeing Co. $ 73,436,000 - -------------------------------------------------------------------------------- 1,070,000 General Dynamics Corp. 70,213,400 - -------------------------------------------------------------------------------- 1,210,000 Rockwell Collins 69,212,000 - -------------------------------------------------------------------------------- 212,861,400 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS -- 1.7% - -------------------------------------------------------------------------------- 696,284 United Parcel Service, Inc. Cl B 56,447,745 - -------------------------------------------------------------------------------- BEVERAGES -- 2.0% - -------------------------------------------------------------------------------- 4,125,000 Diageo plc ORD 68,000,738 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 0.9% - -------------------------------------------------------------------------------- 544,174 Gilead Sciences, Inc.(1) 31,290,005 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 10.3% - -------------------------------------------------------------------------------- 440,500 Goldman Sachs Group, Inc. (The) 70,607,744 - -------------------------------------------------------------------------------- 865,000 Merrill Lynch & Co., Inc. 65,964,900 - -------------------------------------------------------------------------------- 1,075,000 Morgan Stanley 69,122,500 - -------------------------------------------------------------------------------- 1,188,793 Northern Trust Corp. 70,008,020 - -------------------------------------------------------------------------------- 594,045 UBS AG(1)(2) 69,414,158 - -------------------------------------------------------------------------------- 345,117,322 - -------------------------------------------------------------------------------- CHEMICALS -- 1.9% - -------------------------------------------------------------------------------- 1,334,741 du Pont (E.I.) de Nemours & Co. 58,862,078 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 3.0% - -------------------------------------------------------------------------------- 412,604 Mitsubishi UFJ Financial Group, Inc. ADR(2) 6,461,379 - -------------------------------------------------------------------------------- 3,832 Mitsubishi UFJ Financial Group, Inc. ORD 60,296,060 - -------------------------------------------------------------------------------- 535,021 Wachovia Corp. 32,021,007 - -------------------------------------------------------------------------------- 98,778,446 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 2.7% - -------------------------------------------------------------------------------- 2,023,151 Aramark Corp. Cl B(2) 56,870,775 - -------------------------------------------------------------------------------- 605,000 CoStar Group, Inc.(1)(2) 34,152,250 - -------------------------------------------------------------------------------- 91,023,025 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 5.7% - -------------------------------------------------------------------------------- 2,953,200 Cisco Systems Inc.(1) 61,869,540 - -------------------------------------------------------------------------------- 2,925,544 Nokia Oyj ADR 66,292,827 - -------------------------------------------------------------------------------- 1,223,000 QUALCOMM Inc. 62,788,820 - -------------------------------------------------------------------------------- 190,951,187 - -------------------------------------------------------------------------------- CONSTRUCTION MATERIALS -- 1.0% - -------------------------------------------------------------------------------- 510,000 Cemex SA de CV ADR(2) 34,435,200 - -------------------------------------------------------------------------------- CONSUMER FINANCE -- 0.5% - -------------------------------------------------------------------------------- 60,000 ORIX Corp. ORD 18,037,975 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES -- 2.7% - -------------------------------------------------------------------------------- 1,857,991 Weight Watchers International, Inc.(2) $ 91,691,856 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 4.1% - -------------------------------------------------------------------------------- 1,398,064 Citigroup Inc. 69,833,297 - -------------------------------------------------------------------------------- 1,212,250 McGraw-Hill Companies, Inc. (The) 67,473,835 - -------------------------------------------------------------------------------- 137,307,132 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 1.1% - -------------------------------------------------------------------------------- 428,700 Emerson Electric Co. 36,418,065 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 5.0% - -------------------------------------------------------------------------------- 655,000 Amphenol Corp. Cl A(2) 37,859,000 - -------------------------------------------------------------------------------- 1,130,000 Hoya Corp. ORD 45,792,018 - -------------------------------------------------------------------------------- 1,766,622 Molex Inc. 65,577,009 - -------------------------------------------------------------------------------- 475,000 Tektronix, Inc. 16,777,000 - -------------------------------------------------------------------------------- 166,005,027 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 7.1% - -------------------------------------------------------------------------------- 1,330,433 BJ Services Co. 50,622,976 - -------------------------------------------------------------------------------- 442,900 Halliburton Co. 34,612,635 - -------------------------------------------------------------------------------- 1,050,000 Schlumberger Ltd. 72,597,000 - -------------------------------------------------------------------------------- 1,470,000 Weatherford International Ltd.(1) 77,807,099 - -------------------------------------------------------------------------------- 235,639,710 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 1.5% - -------------------------------------------------------------------------------- 1,155,000 Stryker Corp. 50,531,250 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 5.5% - -------------------------------------------------------------------------------- 1,273,136 Hilton Hotels Corporation 34,298,284 - -------------------------------------------------------------------------------- 2,105,000 International Game Technology 79,842,650 - -------------------------------------------------------------------------------- 1,055,000 Las Vegas Sands Corp.(1) 68,374,550 - -------------------------------------------------------------------------------- 182,515,484 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES -- 2.6% - -------------------------------------------------------------------------------- 465,000 Koninklijke Royal Philips Electronics N.V. New York Shares 16,033,200 - -------------------------------------------------------------------------------- 2,050,000 Koninklijke Royal Philips Electronics N.V. ORD 70,720,741 - -------------------------------------------------------------------------------- 86,753,941 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS -- 0.4% - -------------------------------------------------------------------------------- 245,000 Colgate-Palmolive Co. 14,484,400 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES -- 2.7% - -------------------------------------------------------------------------------- 1,055,000 3M Co. 90,128,650 - -------------------------------------------------------------------------------- INSURANCE -- 1.1% - -------------------------------------------------------------------------------- 450,000 Ambac Financial Group, Inc. 37,062,000 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 Select - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- IT SERVICES -- 0.9% - -------------------------------------------------------------------------------- 647,355 First Data Corp. $ 30,872,360 - -------------------------------------------------------------------------------- MACHINERY -- 0.3% - -------------------------------------------------------------------------------- 117,020 Deere & Co. 10,272,016 - -------------------------------------------------------------------------------- METALS & MINING -- 6.0% - -------------------------------------------------------------------------------- 1,951,343 Alcoa Inc. 65,916,367 - -------------------------------------------------------------------------------- 940,000 Falconbridge Ltd. ORD(1) 37,428,418 - -------------------------------------------------------------------------------- 745,000 Phelps Dodge Corp. 64,211,550 - -------------------------------------------------------------------------------- 610,000 Rio Tinto plc ORD 33,512,148 - -------------------------------------------------------------------------------- 201,068,483 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 5.9% - -------------------------------------------------------------------------------- 1,330,000 EnCana Corp. 66,566,500 - -------------------------------------------------------------------------------- 500,165 Occidental Petroleum Corp. 51,386,952 - -------------------------------------------------------------------------------- 194,648 Peabody Energy Corp. 12,430,221 - -------------------------------------------------------------------------------- 2,070,000 Statoil ASA ADR 67,854,600 - -------------------------------------------------------------------------------- 198,238,273 - -------------------------------------------------------------------------------- PERSONAL PRODUCTS -- 2.1% - -------------------------------------------------------------------------------- 2,143,419 Avon Products, Inc. 69,896,894 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 2.8% - -------------------------------------------------------------------------------- 445,404 Johnson & Johnson 26,105,128 - -------------------------------------------------------------------------------- 286,569 Novartis AG ORD 16,425,170 - -------------------------------------------------------------------------------- 1,233,696 Teva Pharmaceutical Industries Ltd. ADR 49,964,688 - -------------------------------------------------------------------------------- 92,494,986 - -------------------------------------------------------------------------------- ROAD & RAIL -- 2.0% - -------------------------------------------------------------------------------- 729,488 Union Pacific Corp. 66,536,600 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 3.4% - -------------------------------------------------------------------------------- 1,565,000 ASML Holding N.V. New York Shares(1) 33,099,750 - -------------------------------------------------------------------------------- 464,472 MEMC Electronic Materials Inc.(1) 18,857,563 - -------------------------------------------------------------------------------- 1,753,644 Texas Instruments Inc. 60,868,983 - -------------------------------------------------------------------------------- 112,826,296 - -------------------------------------------------------------------------------- SOFTWARE -- 0.6% - -------------------------------------------------------------------------------- 361,802 Electronic Arts Inc.(1) 20,550,354 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 1.7% - -------------------------------------------------------------------------------- 817,044 Cabela's Inc.(1)(2) 16,667,698 - -------------------------------------------------------------------------------- 1,009,121 Carmax, Inc.(1) 35,632,062 - -------------------------------------------------------------------------------- 212,309 Staples, Inc. 5,607,081 - -------------------------------------------------------------------------------- 57,906,841 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE -- 1.1% - -------------------------------------------------------------------------------- 2,995,432 China Merchants Holdings International Co. Ltd. ORD $ 10,218,834 - -------------------------------------------------------------------------------- 21,950,000 Hopewell Highway Infrastructure Ltd. ORD 16,561,765 - -------------------------------------------------------------------------------- 14,490,000 Zhejiang Expressway Co. Ltd. ORD 8,783,800 - -------------------------------------------------------------------------------- 35,564,399 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 2.1% - -------------------------------------------------------------------------------- 1,025,000 America Movil SA de CV Series L ADR 37,832,750 - -------------------------------------------------------------------------------- 1,346,571 Sprint Nextel Corp. 33,394,961 - -------------------------------------------------------------------------------- 71,227,711 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $3,125,759,197) 3,301,797,849 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.3% Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Treasury obligations, 7.50%, 11/15/16, valued at $11,197,081), in a joint trading account at 4.66%, dated 4/28/06, due 5/1/06 (Delivery value $11,004,272) (Cost $11,000,000) 11,000,000 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 2.0% REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.77%, dated 4/28/06, due 5/1/06 (Delivery value $10,003,975) 10,000,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.875%, dated 4/28/06, due 5/1/06 (Delivery value $55,758,810) 55,736,167 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $65,736,167) 65,736,167 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 101.1% (Cost $3,202,495,364) 3,378,534,016 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (1.1)% (36,258,603) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $3,342,275,413 ================================================================================ See Notes to Financial Statements. (continued) - ------ 8 Select - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - ------------------------------------------------------------------------------------------- 21,107,700 CAD for USD 5/31/06 $ 18,901,263 $ (156,858) - ------------------------------------------------------------------------------------------- 10,252,005 CHF for USD 5/31/06 8,287,116 (191,532) - ------------------------------------------------------------------------------------------- 10,602,979 Euro for USD 5/31/06 13,402,141 (196,660) - ------------------------------------------------------------------------------------------- 17,092,520 Euro for USD 5/31/06 21,604,905 (270,875) - ------------------------------------------------------------------------------------------- 28,472,987 GBP for USD 5/31/06 51,886,988 (1,027,684) - ------------------------------------------------------------------------------------------- 7,187,329,809 JPY for USD 5/31/06 63,442,302 (622,033) - ------------------------------------------------------------------------------------------- $177,524,715 $(2,465,642) =========================================== (Value on Settlement Date $175,059,073) *FORWARD FOREIGN CURRENCY EXCHANGE contracts are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future -- and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CAD = Canadian Dollar CHF = Swiss Franc GBP = British Pound JPY = Japanese Yen ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of April 30, 2006. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 9 Capital Growth - Performance TOTAL RETURNS AS OF APRIL 30, 2006 -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- A CLASS 2/27/04 No sales charge* 6.52% 12.69% 5.70% With sales charge* 0.36% 6.21% 2.86% - -------------------------------------------------------------------------------- RUSSELL 1000 GROWTH INDEX(2) 7.06% 15.18% 5.43% -- - -------------------------------------------------------------------------------- Investor Class 6.60% -- 4.63%(1) 7/29/05 - -------------------------------------------------------------------------------- Institutional Class 6.69% -- 4.81%(1) 7/29/05 - -------------------------------------------------------------------------------- B Class 2/27/04 No sales charge* 6.02% 11.79% 4.88% With sales charge* 1.02% 7.79% 3.56% - -------------------------------------------------------------------------------- C Class 2/27/04 No sales charge* 6.02% 11.79% 4.88% With sales charge* 5.02% 11.79% 4.88% - -------------------------------------------------------------------------------- R Class 6.33% -- 4.26%(1) 7/29/05 - -------------------------------------------------------------------------------- *Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information pages for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 10 Capital Growth - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made February 27, 2004
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended April 30 - -------------------------------------------------------------------------------- 2004* 2005 2006 - -------------------------------------------------------------------------------- A Class (No sales charge) -4.20% 4.49% 12.69% - -------------------------------------------------------------------------------- Russell 1000 Growth Index -3.00% 0.40% 15.18% - -------------------------------------------------------------------------------- *From 2/27/04, the A Class's inception date. Not annualized. Capital Growth A Class's initial investment is $9,425 to reflect the maximum 5.75% initial sales charge. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 11 Capital Growth - Portfolio Commentary PORTFOLIO MANAGERS: PRESCOTT LEGARD AND GREG WOODHAMS. Capital Growth returned 6.52%* during the six months ended April 30, 2006. The portfolio underperformed its benchmark, the Russell 1000 Growth Index, which gained 7.06%, and was just short of the 6.56% return of the Lipper Large-Cap Growth Funds Index**, a measure of the performance of leading large growth funds. The biggest contributors to Capital Growth's performance relative to its benchmark were the consumer staples, information technology, and materials sectors. Much of Capital Growth's underperformance relative to its benchmark stemmed from stock selection in the health care and consumer discretionary sectors. ADDING PERFORMANCE Capital Growth's strongest performance relative to its benchmark came from stock selection in the consumer staples sector. The largest contributor to performance was the avoidance of Wal-Mart, which has seen its growth rate decelerate. In addition, the fund held an overweight position in Archer-Daniels-Midland (ADM), which performed well during the period on the strength of its oilseed and corn processing businesses. Recently, ADM has drawn even more investor interest because it is a leading producer of ethanol, an alternative and additive to gasoline made from corn. Information technology was another area of strength. Stock selection in semiconductors, including overweights in Broadcom (a leading chip manufacturer experiencing strong growth in wireless networking) and Freescale Semiconductor (a spin-off from Motorola producing chips for a number of wireless and industrial applications) added the most value on an absolute basis. Coupled with an underweight to Intel, which performed poorly for the period, these three positions were among the largest contributors to relative returns as well. Capital Growth's performance also was lifted by stock selection in the materials sector. The portfolio's materials holdings gained 30%, doubling the benchmark's 15% return in this sector. The biggest contributor in this space was Monsanto, an agricultural biotechnology TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- General Electric Co. 4.2% 4.5% - -------------------------------------------------------------------------------- Cisco Systems Inc. 3.1% -- - -------------------------------------------------------------------------------- PepsiCo, Inc. 2.9% 3.3% - -------------------------------------------------------------------------------- United Technologies Corp. 2.5% 1.8% - -------------------------------------------------------------------------------- Emerson Electric Co. 2.4% 0.7% - -------------------------------------------------------------------------------- United Parcel Service, Inc. Cl B 2.3% 2.0% - -------------------------------------------------------------------------------- Textron Inc. 2.3% 1.6% - -------------------------------------------------------------------------------- International Business Machines Corp. 2.3% -- - -------------------------------------------------------------------------------- Amgen Inc. 2.1% 2.7% - -------------------------------------------------------------------------------- QUALCOMM Inc. 2.0% 1.5% - -------------------------------------------------------------------------------- * All portfolio returns referenced in this commentary are for A Class shares and are not reduced by sales charges. A Class shares are subject to a maximum sales charge of 5.75%. Had the sales charge been applied, returns would be lower than those shown. Total returns for periods less than one year are not annualized. **The Lipper Large-Cap Growth Funds Index returned 17.74% for the 1-year period ended April 30, 2006. (continued) - ------ 12 Capital Growth - Portfolio Commentary company experiencing strong demand for its genetically engineered seeds, here and abroad. Finally, our top absolute and relative contributor for the six months was Schlumberger, a global oil-field-services provider benefiting from increased exploration for oil and gas given higher energy prices. That helped Schlumberger gain more than 50% for the six-month period. HEALTH CARE, CONSUMER DISCRETIONARY DETRACT Capital Growth's return was negatively impacted by the health care sector. In particular, exposure to the biotechnology segment hurt performance for the six months, with Amgen and Genzyme both relative and absolute detractors. In addition, several of the fund's holdings in the medical device area performed poorly, due in part to uncertainty over the outlook for sales of heart implant devices and Medicare reimbursement rates. St. Jude Medical, a leading provider of such devices, was among the portfolio's top detractors. Stock selection in the consumer discretionary sector also hurt results compared with the benchmark. In particular, strong stock selection in textiles and apparel could not overcome the relative underweighting of hotels, restaurants, and the leisure industry, each of which performed well in the period. A LARGE GROWTH FUND In conclusion, the American Century Capital Growth Fund continues to invest in large companies that are showing improving results. We believe that this strategy will be rewarded over long periods of time and provide relative out-performance to our shareholders. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Industrial Conglomerates 6.5% 6.1% - -------------------------------------------------------------------------------- Communications Equipment 6.0% 3.1% - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 5.8% 5.4% - -------------------------------------------------------------------------------- IT Services 5.5% 2.4% - -------------------------------------------------------------------------------- Software 5.3% 7.4% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 88.0% 93.4% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 9.7% 4.2% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 97.7% 97.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities 2.3% 2.4% - -------------------------------------------------------------------------------- (1) Includes depositary shares and foreign ordinary shares. - ------ 13 Capital Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS - 97.7% AEROSPACE & DEFENSE - 4.9% - -------------------------------------------------------------------------------- 556 Boeing Co. $ 46,398 - -------------------------------------------------------------------------------- 607 Rockwell Collins 34,720 - -------------------------------------------------------------------------------- 1,348 United Technologies Corp. 84,668 - -------------------------------------------------------------------------------- 165,786 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS - 2.3% - -------------------------------------------------------------------------------- 979 United Parcel Service, Inc. Cl B 79,368 - -------------------------------------------------------------------------------- BEVERAGES - 2.9% - -------------------------------------------------------------------------------- 1,682 PepsiCo, Inc. 97,960 - -------------------------------------------------------------------------------- BIOTECHNOLOGY - 4.1% - -------------------------------------------------------------------------------- 1,029 Amgen Inc.(1) 69,684 - -------------------------------------------------------------------------------- 349 Genentech, Inc.(1) 27,819 - -------------------------------------------------------------------------------- 726 Gilead Sciences, Inc.(1) 41,745 - -------------------------------------------------------------------------------- 139,248 - -------------------------------------------------------------------------------- CAPITAL MARKETS - 2.4% - -------------------------------------------------------------------------------- 222 Bear Stearns Companies Inc. (The) 31,637 - -------------------------------------------------------------------------------- 224 Franklin Resources, Inc. 20,859 - -------------------------------------------------------------------------------- 191 Goldman Sachs Group, Inc. (The) 30,615 - -------------------------------------------------------------------------------- 83,111 - -------------------------------------------------------------------------------- CHEMICALS - 2.1% - -------------------------------------------------------------------------------- 702 Monsanto Co. 58,547 - -------------------------------------------------------------------------------- 152 Potash Corp. of Saskatchewan 14,391 - -------------------------------------------------------------------------------- 72,938 - -------------------------------------------------------------------------------- COMMERCIAL BANKS - 2.0% - -------------------------------------------------------------------------------- 1,010 Wells Fargo & Co. 69,377 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 6.0% - -------------------------------------------------------------------------------- 2,221 CIENA Corporation(1) 9,084 - -------------------------------------------------------------------------------- 4,965 Cisco Systems Inc.(1) 104,018 - -------------------------------------------------------------------------------- 1,053 Motorola, Inc. 22,482 - -------------------------------------------------------------------------------- 1,354 QUALCOMM Inc. 69,514 - -------------------------------------------------------------------------------- 205,098 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 4.7% - -------------------------------------------------------------------------------- 1,317 Brocade Communications System(1) 8,113 - -------------------------------------------------------------------------------- 3,120 EMC Corp.(1) 42,151 - -------------------------------------------------------------------------------- 1,980 Hewlett-Packard Co. 64,290 - -------------------------------------------------------------------------------- 170 Komag, Inc.(1) 7,147 - -------------------------------------------------------------------------------- 406 QLogic Corp.(1) 8,449 - -------------------------------------------------------------------------------- 1,068 Seagate Technology 28,366 - -------------------------------------------------------------------------------- 158,516 - -------------------------------------------------------------------------------- CONSUMER FINANCE - 1.7% - -------------------------------------------------------------------------------- 548 American Express Co. 29,487 - -------------------------------------------------------------------------------- 315 Capital One Financial Corp. 27,292 - -------------------------------------------------------------------------------- 56,779 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- CONTAINERS & PACKAGING - 0.5% - -------------------------------------------------------------------------------- 1,103 Crown Holdings Inc.(1) $ 17,681 - -------------------------------------------------------------------------------- DIVERSIFIED - 0.6% - -------------------------------------------------------------------------------- 370 iShares Russell 1000 Growth Index Fund 19,399 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT - 4.7% - -------------------------------------------------------------------------------- 533 Cooper Industries, Ltd. Cl A 48,743 - -------------------------------------------------------------------------------- 969 Emerson Electric Co. 82,317 - -------------------------------------------------------------------------------- 618 Roper Industries Inc. 29,330 - -------------------------------------------------------------------------------- 160,390 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5% - -------------------------------------------------------------------------------- 252 Itron Inc.(1) 16,897 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES - 2.4% - -------------------------------------------------------------------------------- 361 Cooper Cameron Corp.(1) 18,137 - -------------------------------------------------------------------------------- 932 Schlumberger Ltd. 64,438 - -------------------------------------------------------------------------------- 82,575 - -------------------------------------------------------------------------------- FOOD PRODUCTS - 3.2% - -------------------------------------------------------------------------------- 1,861 Archer-Daniels-Midland Co. 67,628 - -------------------------------------------------------------------------------- 828 General Mills, Inc. 40,854 - -------------------------------------------------------------------------------- 108,482 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES - 5.8% - -------------------------------------------------------------------------------- 248 Alcon Inc.(1) 25,224 - -------------------------------------------------------------------------------- 1,376 Baxter International, Inc. 51,875 - -------------------------------------------------------------------------------- 966 Becton Dickinson & Co. 60,897 - -------------------------------------------------------------------------------- 229 Cytyc Corp.(1) 5,920 - -------------------------------------------------------------------------------- 206 DJ Orthopedics Inc.(1) 8,191 - -------------------------------------------------------------------------------- 583 Edwards Lifesciences Corporation(1) 25,909 - -------------------------------------------------------------------------------- 501 St. Jude Medical, Inc.(1) 19,779 - -------------------------------------------------------------------------------- 197,795 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 1.5% - -------------------------------------------------------------------------------- 415 Caremark Rx Inc.(1) 18,903 - -------------------------------------------------------------------------------- 300 Express Scripts, Inc.(1) 23,443 - -------------------------------------------------------------------------------- 222 Sunrise Senior Living Inc.(1) 8,258 - -------------------------------------------------------------------------------- 50,604 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES - 0.1% - -------------------------------------------------------------------------------- 185 Newell Rubbermaid Inc. 5,073 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS - 1.7% - -------------------------------------------------------------------------------- 926 Procter & Gamble Co. (The) 53,902 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES - 6.5% - -------------------------------------------------------------------------------- 4,110 General Electric Co. 142,166 - -------------------------------------------------------------------------------- 866 Textron Inc. 77,897 - -------------------------------------------------------------------------------- 220,063 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 14 Capital Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- INSURANCE - 2.0% - -------------------------------------------------------------------------------- 754 American International Group, Inc. $ 49,199 - -------------------------------------------------------------------------------- 304 Endurance Specialty Holdings Ltd. 9,412 - -------------------------------------------------------------------------------- 146 PartnerRe Ltd. 9,132 - -------------------------------------------------------------------------------- 67,743 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES - 2.5% - -------------------------------------------------------------------------------- 941 eBay Inc.(1) 32,380 - -------------------------------------------------------------------------------- 124 Google Inc. Cl A(1) 51,824 - -------------------------------------------------------------------------------- 84,204 - -------------------------------------------------------------------------------- IT SERVICES - 5.5% - -------------------------------------------------------------------------------- 1,414 Accenture Ltd. Cl A 41,105 - -------------------------------------------------------------------------------- 872 Ceridian Corp.(1) 21,129 - -------------------------------------------------------------------------------- 613 Global Payments Inc. 29,075 - -------------------------------------------------------------------------------- 937 International Business Machines Corp. 77,152 - -------------------------------------------------------------------------------- 562 VeriFone Holdings Inc.(1) 17,400 - -------------------------------------------------------------------------------- 185,861 - -------------------------------------------------------------------------------- MEDIA - 0.6% - -------------------------------------------------------------------------------- 354 Lamar Advertising Co. Cl A(1) 19,466 - -------------------------------------------------------------------------------- METALS & MINING - 1.9% - -------------------------------------------------------------------------------- 348 Carpenter Technology 41,394 - -------------------------------------------------------------------------------- 367 Freeport-McMoRan Copper & Gold, Inc. Cl B 23,701 - -------------------------------------------------------------------------------- 65,095 - -------------------------------------------------------------------------------- MULTILINE RETAIL - 3.0% - -------------------------------------------------------------------------------- 701 J.C. Penney Co. Inc. 45,887 - -------------------------------------------------------------------------------- 1,070 Target Corp. 56,817 - -------------------------------------------------------------------------------- 102,704 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS - 1.7% - -------------------------------------------------------------------------------- 162 Anadarko Petroleum Corp. 16,981 - -------------------------------------------------------------------------------- 395 Occidental Petroleum Corp. 40,582 - -------------------------------------------------------------------------------- 57,563 - -------------------------------------------------------------------------------- PHARMACEUTICALS - 3.1% - -------------------------------------------------------------------------------- 726 Novartis AG ORD 41,612 - -------------------------------------------------------------------------------- 343 Novo Nordisk AS Cl B ORD 22,267 - -------------------------------------------------------------------------------- 278 Roche Holding AG ORD 42,707 - -------------------------------------------------------------------------------- 106,586 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.6% - -------------------------------------------------------------------------------- 563 Broadcom Corp. Cl A(1) $ 23,145 - -------------------------------------------------------------------------------- 1,809 Freescale Semiconductor Inc. Cl B(1) 57,291 - -------------------------------------------------------------------------------- 238 Marvell Technology Group Ltd.(1) 13,587 - -------------------------------------------------------------------------------- 897 Maxim Integrated Products, Inc. 31,628 - -------------------------------------------------------------------------------- 1,244 Novellus Systems, Inc.(1) 30,727 - -------------------------------------------------------------------------------- 156,378 - -------------------------------------------------------------------------------- SOFTWARE - 5.3% - -------------------------------------------------------------------------------- 1,589 BEA Systems Inc.(1) 21,054 - -------------------------------------------------------------------------------- 1,163 Cadence Design Systems Inc.(1) 22,016 - -------------------------------------------------------------------------------- 426 Citrix Systems, Inc.(1) 17,006 - -------------------------------------------------------------------------------- 2,096 Microsoft Corporation 50,618 - -------------------------------------------------------------------------------- 2,443 Oracle Corp.(1) 35,643 - -------------------------------------------------------------------------------- 575 Red Hat Inc.(1) 16,899 - -------------------------------------------------------------------------------- 293 SAP AG ADR 16,007 - -------------------------------------------------------------------------------- 179,243 - -------------------------------------------------------------------------------- SPECIALTY RETAIL - 4.0% - -------------------------------------------------------------------------------- 466 AnnTaylor Stores Corporation(1) 17,396 - -------------------------------------------------------------------------------- 601 Chico's FAS, Inc.(1) 22,273 - -------------------------------------------------------------------------------- 360 Dress Barn Inc.(1) 9,104 - -------------------------------------------------------------------------------- 887 Foot Locker, Inc. 20,561 - -------------------------------------------------------------------------------- 189 Guess?, Inc.(1) 7,490 - -------------------------------------------------------------------------------- 759 Payless ShoeSource, Inc.(1) 17,434 - -------------------------------------------------------------------------------- 989 Ross Stores, Inc. 30,303 - -------------------------------------------------------------------------------- 306 Williams-Sonoma, Inc. 12,812 - -------------------------------------------------------------------------------- 137,373 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS - 1.8% - -------------------------------------------------------------------------------- 124 Carter's, Inc.(1) 8,353 - -------------------------------------------------------------------------------- 179 Phillips-Van Heusen 7,196 - -------------------------------------------------------------------------------- 732 Polo Ralph Lauren Corp. 44,446 - -------------------------------------------------------------------------------- 59,995 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES - 1.1% - -------------------------------------------------------------------------------- 1,088 American Tower Corp. Cl A(1) 37,144 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 97.7% (Cost $3,052,710) 3,320,397 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 2.3% 78,072 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $3,398,469 ================================================================================ See Notes to Financial Statements. (continued) - ------ 15 Capital Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - -------------------------------------------------------------------------------- 62,659 CHF for USD 5/31/06 $50,650 $(1,171) - -------------------------------------------------------------------------------- 81,291 DKK for USD 5/31/06 13,769 (203) - -------------------------------------------------------------------------------- $64,419 $(1,374) ====================================== (Value on Settlement Date $63,045) *FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future - and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CHF = Swiss Franc DKK = Danish Krone ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. See Notes to Financial Statements. - ------ 16 Fundamental Equity - Performance TOTAL RETURNS AS OF APRIL 30, 2006 -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- A CLASS 11/30/04 No sales charge* 12.17% 23.97% 16.25% With sales charge* 5.75% 16.83% 11.48% - -------------------------------------------------------------------------------- S&P 500 INDEX(2) 9.64% 15.42% 10.07% -- - -------------------------------------------------------------------------------- Investor Class 12.24% -- 13.89%(1) 7/29/05 - -------------------------------------------------------------------------------- Institutional Class 12.29% -- 14.04%(1) 7/29/05 - -------------------------------------------------------------------------------- B Class 11/30/04 No sales charge* 11.65% 22.99% 15.35% With sales charge* 6.65% 18.99% 12.67% - -------------------------------------------------------------------------------- C Class 11/30/04 No sales charge* 11.65% 22.99% 15.35% With sales charge* 10.65% 22.99% 15.35% - -------------------------------------------------------------------------------- R Class 11.92% -- 13.46%(1) 7/29/05 - -------------------------------------------------------------------------------- *Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information pages for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Lipper Fund Performance -- Performance data is total return, and is preliminary and subject to revision. Lipper Rankings -- Rankings are based only on the universe shown and are based on average annual total returns. This listing might not represent the complete universe of funds tracked by Lipper. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 17 Fundamental Equity - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made November 30, 2004
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended April 30 - -------------------------------------------------------------------------------- 2005* 2006 - -------------------------------------------------------------------------------- A Class (No sales charge) -0.20% 23.97% - -------------------------------------------------------------------------------- S&P 500 Index -0.74% 15.42% - -------------------------------------------------------------------------------- *From 11/30/04, the A Class's inception date. Not annualized. Fundamental Equity A Class's initial investment is $9,425 to reflect the maximum 5.75% initial sales charge. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 18 Fundamental Equity - Portfolio Commentary PORTFOLIO MANAGERS: ROBERT BROOKBY AND JERRY SULLIVAN. Fundamental Equity returned 12.17%* during the six months ended April 30, 2006, when stocks managed solid gains despite hurricanes, rising oil prices, and higher interest rates (see the Market Perspective on page 2 for a detailed discussion of the economic and market environment). We're proud to report that the portfolio outperformed the 9.64% return of its benchmark, the Standard & Poor's 500 index, and the 9.23% average return of the 896 Large-Cap Core funds** tracked by Lipper Inc. The portfolio's performance was just as impressive for the 12 months ended in April, when Fundamental Equity's 23.97% return outpaced the S&P 500 and ranked in the top 7% of the Lipper group (see page 17 for more detailed performance comparisons). The portfolio's one-year Lipper ranking is based on the average annual total return of 864 Large-Cap Core funds. A LARGE-CAP CORE FUND We manage Fundamental Equity as a large-cap core fund, investing the bulk of assets in stocks of large companies we believe are attractively priced relative to their prospects for earnings growth and income production. With that in mind, some of the biggest contributions to Fundamental Equity's return relative to the S&P 500 were a result of our positioning in the consumer discretionary, industrials, utilities, and materials sectors. However, the portfolio's performance relative to its benchmark would have been even better but for our stock selection in the energy and information technology sectors. PICKING STOCKS WITH DISCRETION Stock selection among consumer discretionary shares contributed to the portfolio's outperformance of the S&P 500. Such stocks in the portfolio returned almost 11%; by comparison, the S&P 500's consumer discretionary stocks returned about 7.5%. It's also worth pointing out that adding value relative to the index in this sector was as much about what you didn't own as what you did. For example, we had no exposure to the big, troubled American automakers Ford and General Motors, and were careful about how we picked our exposure to auto parts suppliers. Overall, the TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Exxon Mobil Corp. 3.8% 3.2% - -------------------------------------------------------------------------------- Citigroup Inc. 3.2% 2.5% - -------------------------------------------------------------------------------- Bank of America Corp. 2.7% 2.1% - -------------------------------------------------------------------------------- Merrill Lynch & Co., Inc. 2.5% -- - -------------------------------------------------------------------------------- J.P. Morgan Chase & Co. 2.4% 1.4% - -------------------------------------------------------------------------------- First Data Corp. 2.1% 2.2% - -------------------------------------------------------------------------------- Standard and Poor's 500 Depositary Receipt 1.9% 1.3% - -------------------------------------------------------------------------------- Laboratory Corporation of America Holdings 1.8% 1.4% - -------------------------------------------------------------------------------- Novartis AG ADR 1.7% 1.5% - -------------------------------------------------------------------------------- Procter & Gamble Co. (The) 1.6% 0.7% - -------------------------------------------------------------------------------- * All portfolio returns referenced in this commentary are for A Class shares and are not reduced by sales charges. A Class shares are subject to a maximum sales charge of 5.75%. Had the sales charge been applied, returns would be lower than those shown. Total returns for periods less than one year are not annualized. **The Lipper Large-Cap Core funds returned 15.51% for the period ended April 30, 2006. (continued) - ------ 19 Fundamental Equity - Portfolio Commentary return of the automobile stocks in the S&P 500 was -9% for the six months. INDUSTRIAL-STRENGTH WINNERS The strength of the economy boosted many industrial and materials companies, which account for some of Fundamental Equity's biggest contributors. A good example is Republic Services, which provides solid waste disposal and recycling services. It benefited from renewed pricing power in the waste management industry, with its stock rising 25% during the six months. Good global growth also kept demand for commodities running high, boosting metals and mining firms. Freeport-McMoRan Copper & Gold was a leading contributor in the portfolio as its stock climbed along with the price of its namesake metals. ENERGY & IT DETRACT We were overweight the energy sector, which performed well overall in this period of soaring energy costs and record profits for many firms. Among the big refiners, we liked Exxon Mobil--it was Fundamental Equity's single largest holding, and its biggest contributor to portfolio performance on an absolute basis. But while many of these stocks performed well, our positioning among natural gas shares limited the portfolio's return relative to the S&P 500. Kinder Morgan is a good example--it outperformed the market by a wide margin over the last several years, but returns for the last six months were flat as financial results were impacted by a big acquisition and aggressive expansion projects. Information Technology was another area we were overweight in the portfolio, but some of the stocks we held in this sector underperformed, limiting Fundamental Equity's return relative to its benchmark. OUR COMMITMENT We manage the portfolio for capital growth and current income by investing in large companies that are attractively priced relative to their prospects for earnings growth and income production. We believe this process and our demonstrated performance can make Fundamental Equity a good fit as a core equity holding in an investor's portfolio. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Insurance 9.7% 8.2% - -------------------------------------------------------------------------------- Oil, Gas and Consumable Fuels 8.4% 8.3% - -------------------------------------------------------------------------------- Pharmaceuticals 5.9% 7.1% - -------------------------------------------------------------------------------- Diversified Financial Services 5.6% 3.9% - -------------------------------------------------------------------------------- Chemicals 4.8% 1.7% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 88.6% 87.4% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 6.8% 7.5% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 95.4% 94.9% - -------------------------------------------------------------------------------- Temporary Cash Investments 4.1% 3.5% - -------------------------------------------------------------------------------- Other Assets and Liabilities 0.5% 1.6% - -------------------------------------------------------------------------------- (1) Includes depositary shares and foreign ordinary shares. - ------ 20 Fundamental Equity - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 95.4% AEROSPACE & DEFENSE -- 2.3% - -------------------------------------------------------------------------------- 1,545 Boeing Co. $ 128,930 - -------------------------------------------------------------------------------- 4,204 United Technologies Corp. 264,053 - -------------------------------------------------------------------------------- 392,983 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS -- 0.8% - -------------------------------------------------------------------------------- 1,701 United Parcel Service, Inc. Cl B 137,900 - -------------------------------------------------------------------------------- BEVERAGES -- 1.6% - -------------------------------------------------------------------------------- 2,301 Coca-Cola Company (The) 96,550 - -------------------------------------------------------------------------------- 2,940 PepsiCo, Inc. 171,226 - -------------------------------------------------------------------------------- 267,776 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 0.8% - -------------------------------------------------------------------------------- 1,967 Amgen Inc.(1) 133,166 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 4.0% - -------------------------------------------------------------------------------- 1,135 Goldman Sachs Group, Inc. (The) 181,929 - -------------------------------------------------------------------------------- 5,549 Merrill Lynch & Co., Inc. 423,167 - -------------------------------------------------------------------------------- 1,313 Morgan Stanley 84,426 - -------------------------------------------------------------------------------- 689,522 - -------------------------------------------------------------------------------- CHEMICALS -- 4.8% - -------------------------------------------------------------------------------- 2,892 Air Products & Chemicals, Inc. 198,160 - -------------------------------------------------------------------------------- 2,874 du Pont (E.I.) de Nemours & Co. 126,743 - -------------------------------------------------------------------------------- 1,694 Monsanto Co. 141,280 - -------------------------------------------------------------------------------- 3,369 PPG Industries, Inc. 226,127 - -------------------------------------------------------------------------------- 2,602 Rohm and Haas Co. 131,661 - -------------------------------------------------------------------------------- 823,971 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 3.0% - -------------------------------------------------------------------------------- 7,016 American Banknote SA ORD(1) 58,817 - -------------------------------------------------------------------------------- 9,050 Bank of America Corp. 451,776 - -------------------------------------------------------------------------------- 510,593 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 1.7% - -------------------------------------------------------------------------------- 1,701 Aramark Corp. Cl B 47,815 - -------------------------------------------------------------------------------- 5,640 Republic Services, Inc. Cl A 248,217 - -------------------------------------------------------------------------------- 296,032 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 1.8% - -------------------------------------------------------------------------------- 7,084 Cisco Systems Inc.(1) 148,410 - -------------------------------------------------------------------------------- 4,844 Motorola, Inc. 103,419 - -------------------------------------------------------------------------------- 1,192 QUALCOMM Inc. 61,197 - -------------------------------------------------------------------------------- 313,026 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 1.5% - -------------------------------------------------------------------------------- 1,166 Apple Computer, Inc.(1) 82,075 - -------------------------------------------------------------------------------- 4,943 EMC Corp.(1) 66,780 - -------------------------------------------------------------------------------- 3,520 Hewlett-Packard Co. 114,294 - -------------------------------------------------------------------------------- 263,149 - -------------------------------------------------------------------------------- CONSUMER FINANCE -- 0.6% - -------------------------------------------------------------------------------- 1,813 SLM Corporation 95,871 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- DIVERSIFIED -- 1.9% - -------------------------------------------------------------------------------- 2,486 Standard and Poor's 500 Depositary Receipt $ 326,412 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 5.6% - -------------------------------------------------------------------------------- 10,748 Citigroup Inc. 536,862 - -------------------------------------------------------------------------------- 9,139 J.P. Morgan Chase & Co. 414,728 - -------------------------------------------------------------------------------- 951,590 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 0.8% - -------------------------------------------------------------------------------- 7,800 CPI International Inc.(1) 140,400 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 2.9% - -------------------------------------------------------------------------------- 1,457 Complete Production Services Inc.(1) 38,509 - -------------------------------------------------------------------------------- 2,108 Schlumberger Ltd. 145,747 - -------------------------------------------------------------------------------- 2,083 Transocean Inc.(1) 168,868 - -------------------------------------------------------------------------------- 4,500 Warrior Energy Service Corp.(1) 135,000 - -------------------------------------------------------------------------------- 488,124 - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING -- 0.5% - -------------------------------------------------------------------------------- 1,720 Wal-Mart Stores, Inc. 77,452 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 1.3% - -------------------------------------------------------------------------------- 4,397 General Mills, Inc. 216,948 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 1.7% - -------------------------------------------------------------------------------- 2,566 Fisher Scientific International(1) 181,032 - -------------------------------------------------------------------------------- 2,683 Varian Inc.(1) 116,093 - -------------------------------------------------------------------------------- 297,125 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 3.7% - -------------------------------------------------------------------------------- 4,268 Aetna Inc. 164,318 - -------------------------------------------------------------------------------- 2,894 IMS Health Inc. 78,659 - -------------------------------------------------------------------------------- 5,463 Laboratory Corporation of America Holdings(1) 311,937 - -------------------------------------------------------------------------------- 1,370 UnitedHealth Group Incorporated 68,144 - -------------------------------------------------------------------------------- 623,058 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 3.1% - -------------------------------------------------------------------------------- 3,676 Carnival Corporation 172,110 - -------------------------------------------------------------------------------- 5,259 McDonald's Corporation 181,804 - -------------------------------------------------------------------------------- 3,221 Yum! Brands, Inc. 166,461 - -------------------------------------------------------------------------------- 520,375 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES -- 0.6% - -------------------------------------------------------------------------------- 3,891 Newell Rubbermaid Inc. 106,691 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS -- 2.3% - -------------------------------------------------------------------------------- 2,178 Colgate-Palmolive Co. 128,763 - -------------------------------------------------------------------------------- 4,607 Procter & Gamble Co. (The) 268,174 - -------------------------------------------------------------------------------- 396,937 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES -- 1.7% - -------------------------------------------------------------------------------- 4,642 General Electric Co. 160,567 - -------------------------------------------------------------------------------- 4,611 Tyco International Ltd. 121,500 - -------------------------------------------------------------------------------- 282,067 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 21 Fundamental Equity - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- INSURANCE -- 9.7% - -------------------------------------------------------------------------------- 3,834 Ace, Ltd. $ 212,940 - -------------------------------------------------------------------------------- 2,927 Ambac Financial Group, Inc. 241,068 - -------------------------------------------------------------------------------- 3,946 American International Group, Inc. 257,476 - -------------------------------------------------------------------------------- 50 Berkshire Hathaway Inc. Cl B(1) 147,600 - -------------------------------------------------------------------------------- 5,832 Genworth Financial Inc. Cl A 193,622 - -------------------------------------------------------------------------------- 1,549 Hartford Financial Services Group Inc. (The) 142,400 - -------------------------------------------------------------------------------- 4,267 Old Republic International Corp. 94,941 - -------------------------------------------------------------------------------- 3,271 Prudential Financial, Inc. 255,563 - -------------------------------------------------------------------------------- 2,268 St. Paul Travelers Companies, Inc. (The) 99,860 - -------------------------------------------------------------------------------- 1,645,470 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 1.2% - -------------------------------------------------------------------------------- 3,196 eBay Inc.(1) 109,974 - -------------------------------------------------------------------------------- 2,790 Traffic.com Inc.(1) 17,493 - -------------------------------------------------------------------------------- 3,182 VeriSign, Inc.(1) 74,841 - -------------------------------------------------------------------------------- 202,308 - -------------------------------------------------------------------------------- IT SERVICES -- 4.2% - -------------------------------------------------------------------------------- 7,742 Accenture Ltd. Cl A 225,060 - -------------------------------------------------------------------------------- 4,030 CGI Group Inc. Cl A(1) 29,056 - -------------------------------------------------------------------------------- 7,669 First Data Corp. 365,735 - -------------------------------------------------------------------------------- 1,127 International Business Machines Corp. 92,797 - -------------------------------------------------------------------------------- 712,648 - -------------------------------------------------------------------------------- MACHINERY -- 1.6% - -------------------------------------------------------------------------------- 1,751 Caterpillar Inc. 132,621 - -------------------------------------------------------------------------------- 1,568 Deere & Co. 137,639 - -------------------------------------------------------------------------------- 270,260 - -------------------------------------------------------------------------------- MEDIA -- 0.9% - -------------------------------------------------------------------------------- 5,282 Disney (Walt) Co. 147,685 - -------------------------------------------------------------------------------- METALS & MINING -- 0.8% - -------------------------------------------------------------------------------- 1,603 Phelps Dodge Corp. 138,163 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 8.4% - -------------------------------------------------------------------------------- 1,318 Amerada Hess Corp. 188,830 - -------------------------------------------------------------------------------- 1,669 Chesapeake Energy Corp. 52,874 - -------------------------------------------------------------------------------- 2,304 ConocoPhillips 154,138 - -------------------------------------------------------------------------------- 10,225 Exxon Mobil Corp. 644,993 - -------------------------------------------------------------------------------- 2,299 Kinder Morgan, Inc. 202,358 - -------------------------------------------------------------------------------- 2,787 Valero Energy Corp. 180,430 - -------------------------------------------------------------------------------- 1,423,623 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 5.9% - -------------------------------------------------------------------------------- 5,584 Abbott Laboratories 238,660 - -------------------------------------------------------------------------------- 857 Abraxis BioScience Inc.(1) 26,773 - -------------------------------------------------------------------------------- 3,289 Johnson & Johnson 192,768 - -------------------------------------------------------------------------------- 5,028 Novartis AG ADR 289,161 - -------------------------------------------------------------------------------- 10,349 Pfizer Inc. 262,140 - -------------------------------------------------------------------------------- 1,009,502 - -------------------------------------------------------------------------------- Shares/Principal Amount Value - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 4.1% - -------------------------------------------------------------------------------- 4,662 Analog Devices, Inc. $ 176,783 - -------------------------------------------------------------------------------- 8,000 Himax Technologies Inc. ADR(1) 71,200 - -------------------------------------------------------------------------------- 12,819 Kulicke and Soffa Industries, Inc.(1) 116,140 - -------------------------------------------------------------------------------- 5,829 Linear Technology Corp. 206,930 - -------------------------------------------------------------------------------- 3,602 Texas Instruments Inc. 125,025 - -------------------------------------------------------------------------------- 696,078 - -------------------------------------------------------------------------------- SOFTWARE -- 1.5% - -------------------------------------------------------------------------------- 1,768 Intuit Inc.(1) 95,773 - -------------------------------------------------------------------------------- 11,326 Oracle Corp.(1) 165,246 - -------------------------------------------------------------------------------- 261,019 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 4.2% - -------------------------------------------------------------------------------- 2,309 Best Buy Co., Inc. 130,828 - -------------------------------------------------------------------------------- 11,333 Gap, Inc. (The) 205,013 - -------------------------------------------------------------------------------- 2,861 Home Depot, Inc. (The) 114,240 - -------------------------------------------------------------------------------- 3,799 Michaels Stores, Inc. 143,716 - -------------------------------------------------------------------------------- 1,299 Sherwin-Williams Co. 66,171 - -------------------------------------------------------------------------------- 2,258 TJX Companies, Inc. (The) 54,486 - -------------------------------------------------------------------------------- 714,454 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS -- 1.4% - -------------------------------------------------------------------------------- 2,861 NIKE, Inc. Cl B 234,144 - -------------------------------------------------------------------------------- TOBACCO -- 1.3% - -------------------------------------------------------------------------------- 3,050 Altria Group Inc. 223,138 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 1.2% - -------------------------------------------------------------------------------- 8,422 Sprint Nextel Corp. 208,866 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $15,686,767) 16,238,526 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 4.1% $700,000 FNMA Discount Notes, 4.71%, 5/1/06(2) (Cost $700,000) 700,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.5% (Cost $16,386,767) 16,938,526 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.5% 88,657 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $17,027,183 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt FNMA = Federal National Mortgage Association ORD = Foreign Ordinary Share (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------ 22 New Opportunities II - Performance TOTAL RETURNS AS OF APRIL 30, 2006 -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 23.55% 39.69% 11.56% 6/1/01 - -------------------------------------------------------------------------------- RUSSELL 2000 GROWTH INDEX(2) 20.31% 36.13% 5.66%(3) -- - -------------------------------------------------------------------------------- A Class 1/31/03 No sales charge* 23.42% 39.39% 24.67%(4) With sales charge* 16.32% 31.44% 22.45%(4) - -------------------------------------------------------------------------------- B Class 1/31/03 No sales charge* 23.01% 38.23% 23.75%(4) With sales charge* 18.01% 34.23% 23.17%(4) - -------------------------------------------------------------------------------- C Class 1/31/03 No sales charge* 22.90% 38.27% 23.88%(4) With sales charge* 21.90% 38.27% 23.88%(4) - -------------------------------------------------------------------------------- *Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information pages for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Since 5/31/01, the date nearest the Investor Class's inception for which data are available. (4) Class returns would have been lower if service and distribution fees had not been waived from 2/1/03 to 2/21/03, 2/1/03 to 2/10/03, and 2/1/03 to 6/30/03 for the A Class, B Class, and C Class shares, respectively. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically small company stocks have been more volatile than the stocks of larger, more established companies. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 23 New Opportunities II - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made June 1, 2001
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended April 30 - -------------------------------------------------------------------------------- 2002* 2003 2004 2005 2006 - -------------------------------------------------------------------------------- Investor Class 6.00% -21.51% 49.04% -1.18% 39.69% - -------------------------------------------------------------------------------- Russell 2000 Growth Index -10.59% -23.50% 41.57% -0.55% 36.13% - -------------------------------------------------------------------------------- *From 6/1/01, the Investor Class's inception date. Index data from 5/31/01, the date nearest the Investor Class's inception for which data are available. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically small company stocks have been more volatile than the stocks of larger, more established companies. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 24 New Opportunities II - Portfolio Commentary PORTFOLIO MANAGERS: HAROLD S. BRADLEY, TOM TELFORD AND STAFFORD SOUTHWICK. American Century New Opportunities II gained 23.55%* during the six months ended April 30, 2006, outpacing the both the 20.31% return of its benchmark, the Russell 2000 Growth Index, and the 18.53% surge of the Lipper Small-Cap Growth Funds Index** measuring its portfolio peers. The portfolio, which turns five years old June 1, 2006, has posted a 1-year return of 39.69% and a return of 11.56% since its inception. Each figure tops comparable time-period returns for its benchmark and Lipper peer index. In April 2006, Stafford Southwick, formerly an investment analyst on the New Opportunities II team, joined Tom Telford and Harold Bradley as co-portfolio managers of the fund. NON-TRADITIONAL RETURN TO GROWTH Heading into the period, value stocks in the small-cap space had outpaced growth stocks substantially during the previous 5-year stretch. But small-cap investors finally moved toward growth stocks late in 2005. That allowed the Russell 2000 Growth's return for the 6-month period to exceed the Russell 2000 Value's gain of 17.52% by 279 bps. Global economic growth has paved the way for strong demand in sectors not normally associated with growth stocks. Materials and industrials ranked as the benchmark's top two sectors, respectively, in terms of total return -- and New Opportunities II maintained beneficial overweight stakes in each of those areas. FLYING HIGH Those two sectors accounted for about 40% of New Opportunities II's total return in the period. The overweight in materials and sound stock selection in that sector played a particularly important role in the portfolio's relative outperformance. That sector, of course, houses New Opportunities II's best-performing stock since the beginning of 2005, Titanium Metals. The portfolio's biggest average holding and largest individual overweight position, Titanium continues benefiting from a large-scale move to lightweight components by airline manufacturers. Its share price tripled in the period and now has increased by a factor of 12 since the beginning of 2005. That's exactly the type of upward price momentum that New Opportunities II's TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Titanium Metals Corp. 4.2% 3.6% - -------------------------------------------------------------------------------- Matrix Service Co. 2.0% 1.7% - -------------------------------------------------------------------------------- Ladish Co., Inc. 1.9% 1.4% - -------------------------------------------------------------------------------- Zoltek Companies, Inc. 1.6% -- - -------------------------------------------------------------------------------- Smith Micro Software Inc. 1.6% 1.2% - -------------------------------------------------------------------------------- NutriSystem, Inc. 1.6% 0.5% - -------------------------------------------------------------------------------- Socotherm SpA ORD 1.6% -- - -------------------------------------------------------------------------------- SunOpta Inc. 1.5% -- - -------------------------------------------------------------------------------- Hansen Natural Corp. 1.5% -- - -------------------------------------------------------------------------------- Dress Barn Inc. 1.5% -- - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares Total returns for periods less than one year are not annualized. **The Lipper Small-Cap Growth Funds Index returned 32.48% and 5.45% for the 1-year and since inception periods ended April 30, 2006, respectively. (continued) - ------ 25 New Opportunities II - Portfolio Commentary management will let ride, as long as a stock's underlying financial picture continues improving. In addition, Titanium fits one of the portfolio's key 2006 investment themes of finding stocks that will benefit from the current aerospace expansion cycle. The portfolio's second-best relative and absolute performer, Ladish Co., also ties into that theme. The Milwaukee-area maker of aerospace components reported a three-fold increase in its first-quarter 2006 profit, and the company's shares surged 78%. New Opportunities II quickly built its position in the company, which ended the period as its third-largest holding. HEALTH CARE, TECH CRIMP RESULTS Somewhat ironically, weak security selection in two traditional growth sectors, health care and information technology, did more than anything to crimp New Opportunities II's relative return in the period. The portfolio realized absolute contributions from both, but they fell short of what the benchmark received. Combined, the two sectors accounted for six of the portfolio's 10 worst relative detractors. The health care sector struggled from a lack of new drugs in the pharmaceutical industry, government reimbursement issues and rising costs that hurt health care providers and a general malaise on the part of investors. Its total return within the benchmark trailed all other sectors. Though the portfolio maintained an average underweight position in health care, it couldn't overcome several individual stock losses. But not all health care investments hurt the portfolio. Shares in Air Methods, a provider of emergency helicopter services, surged 137% as the company ranked among the portfolio's five leading relative performers. INVESTMENT PHILOSOPHY The management team of New Opportunities II pursues a two-pronged investment approach of 1) identifying smaller companies that appear to have accelerating earnings and revenue growth rates and 2) improving relative stock price performance. The team continues to find companies that meet its investment criteria. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Energy Equipment & Services 8.9% 5.0% - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 6.6% 5.1% - -------------------------------------------------------------------------------- Capital Markets 5.7% 8.7% - -------------------------------------------------------------------------------- Machinery 4.9% 3.5% - -------------------------------------------------------------------------------- Specialty Retail 4.9% 1.0% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 79.0% 92.8% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 17.0% 7.3% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 96.0% 100.1% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.4% 1.7% - -------------------------------------------------------------------------------- Other Assets and Liabilities 3.6% (1.8)% - -------------------------------------------------------------------------------- (1) Includes depositary shares and foreign ordinary shares. - ------ 26 New Opportunities II - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 96.0% AEROSPACE & DEFENSE -- 3.8% - -------------------------------------------------------------------------------- 29,376 Aviall Inc.(1) $ 1,107,475 - -------------------------------------------------------------------------------- 63,726 Ladish Co., Inc.(1) 2,273,107 - -------------------------------------------------------------------------------- 110,896 Taser International Inc.(1) 1,186,587 - -------------------------------------------------------------------------------- 4,567,169 - -------------------------------------------------------------------------------- BEVERAGES -- 1.5% - -------------------------------------------------------------------------------- 14,102 Hansen Natural Corp.(1) 1,825,645 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 1.1% - -------------------------------------------------------------------------------- 6,586 Nuvelo Inc.(1) 107,813 - -------------------------------------------------------------------------------- 76,125 QIAGEN N.V.(1) 1,134,262 - -------------------------------------------------------------------------------- 20,947 Sangamo Biosciences Inc.(1) 111,648 - -------------------------------------------------------------------------------- 1,353,723 - -------------------------------------------------------------------------------- BUILDING PRODUCTS -- 1.1% - -------------------------------------------------------------------------------- 25,120 AAON Inc.(1) 688,790 - -------------------------------------------------------------------------------- 26,497 Imperial Industries Inc.(1) 664,810 - -------------------------------------------------------------------------------- 1,353,600 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 5.7% - -------------------------------------------------------------------------------- 9,795 Affiliated Managers Group Inc.(1) 992,234 - -------------------------------------------------------------------------------- 16,701 Greenhill & Co. Inc. 1,184,435 - -------------------------------------------------------------------------------- 72,000 Marusan Securities Co. Ltd. ORD 1,103,797 - -------------------------------------------------------------------------------- 20,077 Nuveen Investments Inc. Cl A 966,105 - -------------------------------------------------------------------------------- 42,387 OptionsXpress Holdings, Inc. 1,335,191 - -------------------------------------------------------------------------------- 16,318 Piper Jaffray Companies(1) 1,140,628 - -------------------------------------------------------------------------------- 6,722,390 - -------------------------------------------------------------------------------- CHEMICALS -- 3.8% - -------------------------------------------------------------------------------- 55,959 Celanese Corp., Series A 1,228,300 - -------------------------------------------------------------------------------- 158,731 PolyOne Corp.(1) 1,409,531 - -------------------------------------------------------------------------------- 75,572 Zoltek Companies, Inc.(1) 1,926,331 - -------------------------------------------------------------------------------- 4,564,162 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 2.5% - -------------------------------------------------------------------------------- 28,538 Intervest Bancshares Corp.(1) 1,141,235 - -------------------------------------------------------------------------------- 15,372 Sterling Bancshares, Inc. 254,560 - -------------------------------------------------------------------------------- 20,238 Trico Bancshares 552,295 - -------------------------------------------------------------------------------- 27,676 Virginia Commerce Bancorp(1) 1,004,639 - -------------------------------------------------------------------------------- 2,952,729 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 4.9% - -------------------------------------------------------------------------------- 52,623 51job, Inc. ADR(1) 1,325,047 - -------------------------------------------------------------------------------- 25,536 American Ecology Corp. 683,088 - -------------------------------------------------------------------------------- 39,606 American Reprographics Co.(1) 1,404,824 - -------------------------------------------------------------------------------- 49,471 NCO Group, Inc.(1) 1,061,153 - -------------------------------------------------------------------------------- 40,382 Watson Wyatt Worldwide Inc. 1,331,395 - -------------------------------------------------------------------------------- 5,805,507 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 2.8% - -------------------------------------------------------------------------------- 61,567 Ceragon Networks Ltd.(1) $ 331,846 - -------------------------------------------------------------------------------- 455,072 JDS Uniphase Corp.(1) 1,588,201 - -------------------------------------------------------------------------------- 231,197 MRV Communications Inc.(1) 880,861 - -------------------------------------------------------------------------------- 31,256 Sierra Wireless(1) 562,921 - -------------------------------------------------------------------------------- 3,363,829 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 0.9% - -------------------------------------------------------------------------------- 61,086 LaserCard Corp.(1) 1,038,462 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING -- 1.2% - -------------------------------------------------------------------------------- 16,787 Jacobs Engineering Group Inc.(1) 1,388,285 - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.5% - -------------------------------------------------------------------------------- 376,806 Mpower Holding Corp.(1) 629,266 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 4.3% - -------------------------------------------------------------------------------- 26,168 AZZ Inc.(1) 628,032 - -------------------------------------------------------------------------------- 34,641 Baldor Electric Co. 1,150,081 - -------------------------------------------------------------------------------- 67,036 BTU International, Inc.(1) 1,354,798 - -------------------------------------------------------------------------------- 52,278 Color Kinetics Inc.(1) 1,107,771 - -------------------------------------------------------------------------------- 18,016 Energy Conversion Devices Inc.(1) 900,980 - -------------------------------------------------------------------------------- 5,141,662 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 3.6% - -------------------------------------------------------------------------------- 34,857 Daktronics Inc. 1,367,091 - -------------------------------------------------------------------------------- 17,672 Itron Inc.(1) 1,184,908 - -------------------------------------------------------------------------------- 28,492 Littelfuse, Inc.(1) 920,007 - -------------------------------------------------------------------------------- 12,435 OYO Geospace Corp.(1) 724,214 - -------------------------------------------------------------------------------- 4,196,220 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 8.9% - -------------------------------------------------------------------------------- 94,766 Awilco Offshore ASA ORD(1) 887,121 - -------------------------------------------------------------------------------- 12,046 Helmerich & Payne, Inc. 876,226 - -------------------------------------------------------------------------------- 209,814 Matrix Service Co.(1) 2,393,977 - -------------------------------------------------------------------------------- 29,479 Oil States International, Inc.(1) 1,190,067 - -------------------------------------------------------------------------------- 14,387 Schoeller-Bleckmann Oilfield Equipment AG ORD 598,852 - -------------------------------------------------------------------------------- 101,087 Socotherm SpA ORD 1,860,313 - -------------------------------------------------------------------------------- 23,143 TETRA Technologies, Inc.(1) 1,138,636 - -------------------------------------------------------------------------------- 29,263 Universal Compression Holdings Inc.(1) 1,635,802 - -------------------------------------------------------------------------------- 10,580,994 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 1.5% - -------------------------------------------------------------------------------- 179,170 SunOpta Inc.(1) 1,825,742 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 2.9% - -------------------------------------------------------------------------------- 62,519 Abaxis, Inc.(1) 1,632,996 - -------------------------------------------------------------------------------- 63,249 Biolase Technology Inc. 673,602 - -------------------------------------------------------------------------------- 24,488 Neogen Corp.(1) 594,324 - -------------------------------------------------------------------------------- 33,621 Nutraceutical International Corp.(1) 531,548 - -------------------------------------------------------------------------------- 3,432,470 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 27 New Opportunities II - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 1.3% - -------------------------------------------------------------------------------- 44,230 Air Methods Corp.(1) $ 1,217,652 - -------------------------------------------------------------------------------- 32,916 Five Star Quality Care Inc.(1) 339,035 - -------------------------------------------------------------------------------- 1,556,687 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 4.4% - -------------------------------------------------------------------------------- 13,627 Buffalo Wild Wings Inc.(1) 588,414 - -------------------------------------------------------------------------------- 33,893 Gaming Partners International Corp. 566,013 - -------------------------------------------------------------------------------- 32,019 Penn National Gaming, Inc.(1) 1,303,814 - -------------------------------------------------------------------------------- 44,984 Pinnacle Entertainment Inc.(1) 1,228,063 - -------------------------------------------------------------------------------- 4,094,000 Regal Hotels International Holdings Ltd. ORD 390,747 - -------------------------------------------------------------------------------- 32,337 Shuffle Master Inc.(1) 1,194,852 - -------------------------------------------------------------------------------- 5,271,903 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES -- 0.2% - -------------------------------------------------------------------------------- 12,500 Acme United Corp. 187,875 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 3.4% - -------------------------------------------------------------------------------- 18,274 Alloy Inc.(1) 227,694 - -------------------------------------------------------------------------------- 56,014 dELiA*s Inc.(1) 595,429 - -------------------------------------------------------------------------------- 27,907 NutriSystem, Inc.(1) 1,893,769 - -------------------------------------------------------------------------------- 41,048 VistaPrint Ltd.(1) 1,312,715 - -------------------------------------------------------------------------------- 4,029,607 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 1.9% - -------------------------------------------------------------------------------- 23,757 Digital River Inc.(1) 1,034,380 - -------------------------------------------------------------------------------- 30,227 Travelzoo Inc.(1) 1,164,344 - -------------------------------------------------------------------------------- 2,198,724 - -------------------------------------------------------------------------------- IT SERVICES -- 2.8% - -------------------------------------------------------------------------------- 30,745 Euronet Worldwide Inc.(1) 1,098,826 - -------------------------------------------------------------------------------- 92,665 Ness Technologies, Inc.(1) 1,125,880 - -------------------------------------------------------------------------------- 142,422 Sapient Corp.(1) 1,115,164 - -------------------------------------------------------------------------------- 3,339,870 - -------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS -- 0.5% - -------------------------------------------------------------------------------- 45,457 K2 Inc.(1) 535,938 - -------------------------------------------------------------------------------- MACHINERY -- 4.9% - -------------------------------------------------------------------------------- 88,000 Aichi Corp. ORD 977,004 - -------------------------------------------------------------------------------- 13,137 American Science and Engineering Inc.(1) 1,125,972 - -------------------------------------------------------------------------------- 167,835 Deutz AG ORD(1) 1,536,933 - -------------------------------------------------------------------------------- 18,703 Gardner Denver Inc.(1) 1,393,935 - -------------------------------------------------------------------------------- 7,818 Komax Holding AG ORD(1) 809,920 - -------------------------------------------------------------------------------- 5,843,764 - -------------------------------------------------------------------------------- MEDIA -- 0.6% - -------------------------------------------------------------------------------- 82,668 MDC Partners Inc. Cl A(1) 739,879 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- METALS & MINING -- 4.9% - -------------------------------------------------------------------------------- 2,989 Olympic Steel Inc. $ 94,183 - -------------------------------------------------------------------------------- 14,153 Oregon Steel Mills, Inc.(1) 700,998 - -------------------------------------------------------------------------------- 69,758 Titanium Metals Corp.(1) 4,998,161 - -------------------------------------------------------------------------------- 5,793,342 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 0.7% - -------------------------------------------------------------------------------- 58,620 MC Shipping Inc. 773,784 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 2.2% - -------------------------------------------------------------------------------- 85,536 Caraco Pharmaceutical Laboratories Ltd.(1) 1,017,878 - -------------------------------------------------------------------------------- 50,066 First Horizon Pharmaceutical Corporation(1) 1,114,970 - -------------------------------------------------------------------------------- 653,100 Tempo Scan Pacific Tbk., PT ORD 531,489 - -------------------------------------------------------------------------------- 2,664,337 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS- 3.5% - -------------------------------------------------------------------------------- 40,010 Eagle Hospitality Properties Trust Inc. 359,690 - -------------------------------------------------------------------------------- 67,749 Education Realty Trust, Inc. 1,010,815 - -------------------------------------------------------------------------------- 78,223 FelCor Lodging Trust Inc. 1,693,528 - -------------------------------------------------------------------------------- 88,843 Highland Hospitality Corp. 1,146,075 - -------------------------------------------------------------------------------- 4,210,108 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 6.6% - -------------------------------------------------------------------------------- 138,815 Anadigics, Inc.(1) 1,242,394 - -------------------------------------------------------------------------------- 108,375 Chartered Semiconductor Manufacturing Ltd. ADR(1) 1,227,889 - -------------------------------------------------------------------------------- 28,606 Nextest Systems Corp.(1) 444,251 - -------------------------------------------------------------------------------- 136,664 ON Semiconductor Corp.(1) 979,881 - -------------------------------------------------------------------------------- 157,619 Skyworks Solutions, Inc.(1) 1,126,976 - -------------------------------------------------------------------------------- 140,965 STATS ChipPAC Ltd. ADR(1) 1,199,612 - -------------------------------------------------------------------------------- 36,796 Trident Microsystems, Inc.(1) 978,774 - -------------------------------------------------------------------------------- 189,090 Tvia, Inc.(1) 623,997 - -------------------------------------------------------------------------------- 7,823,774 - -------------------------------------------------------------------------------- SOFTWARE -- 2.2% - -------------------------------------------------------------------------------- 74,107 Opsware Inc.(1) 626,945 - -------------------------------------------------------------------------------- 152,761 Smith Micro Software Inc.(1) 1,897,292 - -------------------------------------------------------------------------------- 2,524,237 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 4.9% - -------------------------------------------------------------------------------- 37,362 Aeropostale Inc.(1) 1,147,387 - -------------------------------------------------------------------------------- 70,354 Dress Barn Inc.(1) 1,779,252 - -------------------------------------------------------------------------------- 21,948 Pantry Inc. (The)(1) 1,452,738 - -------------------------------------------------------------------------------- 73,096 United Retail Group Inc.(1) 1,433,413 - -------------------------------------------------------------------------------- 5,812,790 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $88,293,697) 114,048,474 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 28 New Opportunities II - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.4% Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 7.125% - 8.125%, 8/15/19 - 2/15/23, valued at $508,898), in a joint trading account at 4.67%, dated 4/28/06, due 5/1/06 (Delivery value $500,195) (Cost $500,000) $ 500,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 96.4% (Cost $88,793,697) 114,548,474 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 3.6% 4,303,888 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $118,852,362 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt ORD = Foreign Ordinary Share (1) Non-income producing. See Notes to Financial Statements. - ------ 29 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. (continued) - ------ 30 Shareholder Fee Examples (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - -------------------------------------------------------------------------------- SELECT SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,020.30 $5.01 1.00% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,021.30 $4.01 0.80% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,018.80 $6.26 1.25% - -------------------------------------------------------------------------------- A Class $1,000 $1,019.00 $6.26 1.25% - -------------------------------------------------------------------------------- B Class $1,000 $1,015.20 $9.99 2.00% - -------------------------------------------------------------------------------- C Class $1,000 $1,015.20 $9.99 2.00% - -------------------------------------------------------------------------------- R Class $1,000 $1,017.70 $7.50 1.50% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,019.84 $5.01 1.00% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,020.83 $4.01 0.80% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,018.60 $6.26 1.25% - -------------------------------------------------------------------------------- A Class $1,000 $1,018.60 $6.26 1.25% - -------------------------------------------------------------------------------- B Class $1,000 $1,014.88 $9.99 2.00% - -------------------------------------------------------------------------------- C Class $1,000 $1,014.88 $9.99 2.00% - -------------------------------------------------------------------------------- R Class $1,000 $1,017.36 $7.50 1.50% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 31 Shareholder Fee Examples (Unaudited) - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - -------------------------------------------------------------------------------- CAPITAL GROWTH SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,066.00 $5.12 1.00% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,066.90 $4.10 0.80% - -------------------------------------------------------------------------------- A Class $1,000 $1,065.20 $6.40 1.25% - -------------------------------------------------------------------------------- B Class $1,000 $1,060.20 $10.22 2.00% - -------------------------------------------------------------------------------- C Class $1,000 $1,060.20 $10.22 2.00% - -------------------------------------------------------------------------------- R Class $1,000 $1,063.30 $7.67 1.50% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,019.84 $5.01 1.00% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,020.83 $4.01 0.80% - -------------------------------------------------------------------------------- A Class $1,000 $1,018.60 $6.26 1.25% - -------------------------------------------------------------------------------- B Class $1,000 $1,014.88 $9.99 2.00% - -------------------------------------------------------------------------------- C Class $1,000 $1,014.88 $9.99 2.00% - -------------------------------------------------------------------------------- R Class $1,000 $1,017.36 $7.50 1.50% - -------------------------------------------------------------------------------- FUNDAMENTAL EQUITY SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,122.40 $5.26 1.00% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,122.90 $4.21 0.80% - -------------------------------------------------------------------------------- A Class $1,000 $1,121.70 $6.58 1.25% - -------------------------------------------------------------------------------- B Class $1,000 $1,116.50 $10.50 2.00% - -------------------------------------------------------------------------------- C Class $1,000 $1,116.50 $10.50 2.00% - -------------------------------------------------------------------------------- R Class $1,000 $1,119.20 $7.88 1.50% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,019.84 $5.01 1.00% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,020.83 $4.01 0.80% - -------------------------------------------------------------------------------- A Class $1,000 $1,018.60 $6.26 1.25% - -------------------------------------------------------------------------------- B Class $1,000 $1,014.88 $9.99 2.00% - -------------------------------------------------------------------------------- C Class $1,000 $1,014.88 $9.99 2.00% - -------------------------------------------------------------------------------- R Class $1,000 $1,017.36 $7.50 1.50% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 32 Shareholder Fee Examples (Unaudited) - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - -------------------------------------------------------------------------------- NEW OPPORTUNITIES II SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,235.50 $8.31 1.50% - -------------------------------------------------------------------------------- A Class $1,000 $1,234.20 $9.69 1.75% - -------------------------------------------------------------------------------- B Class $1,000 $1,230.10 $13.82 2.50% - -------------------------------------------------------------------------------- C Class $1,000 $1,229.00 $13.82 2.50% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.36 $7.50 1.50% - -------------------------------------------------------------------------------- A Class $1,000 $1,016.12 $8.75 1.75% - -------------------------------------------------------------------------------- B Class $1,000 $1,012.40 $12.47 2.50% - -------------------------------------------------------------------------------- C Class $1,000 $1,012.40 $12.47 2.50% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 33 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) - --------------------------------------------------------------------------------------------------- FUNDAMENTAL NEW SELECT CAPITAL GROWTH EQUITY OPPORTUNITIES II - --------------------------------------------------------------------------------------------------- ASSETS - --------------------------------------------------------------------------------------------------- Investment securities - at value (cost of $3,136,759,197, $3,052,710, $16,386,767 and $88,793,697, respectively) -- including $64,748,720, $- , $- and $- of securities on loan, respectively $3,312,797,849 $3,320,397 $16,938,526 $114,548,474 - ----------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $65,736,167, $-, $- and $-, respectively) 65,736,167 -- -- -- - --------------------------------------------------------------------------------------------------- Total investment securities, at value (cost of $3,202,495,364, $3,052,710, $16,386,767 and $88,793,697, respectively) 3,378,534,016 3,320,397 16,938,526 114,548,474 - ----------------------------------- Cash -- 46,138 193,345 2,486,458 - ----------------------------------- Receivable for investments sold 300,702,059 124,753 726,890 8,188,135 - ----------------------------------- Receivable for capital shares sold 12,015 200 203,682 65,785 - ----------------------------------- Dividends and interest receivable 1,827,258 1,632 17,206 43,065 - --------------------------------------------------------------------------------------------------- 3,681,075,348 3,493,120 18,079,649 125,331,917 - --------------------------------------------------------------------------------------------------- LIABILITIES - --------------------------------------------------------------------------------------------------- Payable for collateral received for securities on loan 65,736,167 -- -- -- - ----------------------------------- Disbursements in excess of demand deposit cash 6,509,824 -- -- -- - ----------------------------------- Payable for investments purchased 261,252,921 88,815 1,021,172 6,314,579 - ----------------------------------- Payable for forward foreign currency exchange contracts 2,465,642 1,374 -- -- - ----------------------------------- Payable for capital shares redeemed 45,169 -- 13,000 3,648 - ----------------------------------- Accrued management fees 2,757,416 2,790 12,742 143,515 - ----------------------------------- Distribution fees payable 12,265 995 2,422 4,223 - ----------------------------------- Service fees (and distribution fees -- A and R Class) payable 20,531 677 3,130 13,590 - --------------------------------------------------------------------------------------------------- 338,799,935 94,651 1,052,466 6,479,555 - --------------------------------------------------------------------------------------------------- NET ASSETS $3,342,275,413 $3,398,469 $17,027,183 $118,852,362 =================================================================================================== See Notes to Financial Statements. (continued) - ------ 34 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) - --------------------------------------------------------------------------------------------------- FUNDAMENTAL NEW SELECT CAPITAL GROWTH EQUITY OPPORTUNITIES II - --------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - --------------------------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $2,974,571,502 $3,112,491 $16,120,236 $85,535,393 - ----------------------------------- Accumulated undistributed net investment income (loss) 5,788,753 (10,775) 16,934 (744,414) - ----------------------------------- Undistributed net realized gain on investment and foreign currency transactions 188,350,715 30,436 339,099 8,306,918 - ----------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 173,564,443 266,317 550,914 25,754,465 - ------------------------------------------------------------------------------------------------------ $3,342,275,413 $3,398,469 $17,027,183 $118,852,362 ====================================================================================================== INVESTOR CLASS, $0.01 PAR VALUE - ------------------------------------------------------------------------------------------------------ Net assets $3,028,268,965 $50,365 $276,801 $51,168,907 - ----------------------------------- Shares outstanding 80,684,312 4,457 23,032 6,321,824 - ----------------------------------- Net asset value per share $37.53 $11.30 $12.02 $8.09 - ------------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS, $0.01 PAR VALUE - ------------------------------------------------------------------------------------------------------ Net assets $232,078,439 $26,200 $28,525 -- - ----------------------------------- Shares outstanding 6,137,073 2,315 2,372 -- - ----------------------------------- Net asset value per share $37.82 $11.32 $12.03 -- - ------------------------------------------------------------------------------------------------------ ADVISOR CLASS, $0.01 PAR VALUE - ------------------------------------------------------------------------------------------------------ Net assets $26,974,179 N/A N/A N/A - ----------------------------------- Shares outstanding 726,282 N/A N/A N/A - ----------------------------------- Net asset value per share $37.14 N/A N/A N/A - ------------------------------------------------------------------------------------------------------ A CLASS, $0.01 PAR VALUE - ------------------------------------------------------------------------------------------------------ Net assets $44,590,276 $1,680,133 $12,513,584 $60,589,631 - ----------------------------------- Shares outstanding 1,192,782 148,981 1,042,035 7,513,203 - ----------------------------------- Net asset value per share $37.38 $11.28 $12.01 $8.06 - ----------------------------------- Maximum offering price (net asset value divided by 0.9425) $39.66 $11.97 $12.74 $8.55 - ------------------------------------------------------------------------------------------------------ B CLASS, $0.01 PAR VALUE - ------------------------------------------------------------------------------------------------------ Net assets $7,740,615 $905,900 $1,086,635 $3,009,664 - ----------------------------------- Shares outstanding 211,116 81,646 90,888 376,459 - ----------------------------------- Net asset value per share $36.67 $11.10 $11.96 $7.99 - ------------------------------------------------------------------------------------------------------ C CLASS, $0.01 PAR VALUE - ------------------------------------------------------------------------------------------------------ Net assets $2,598,379 $709,812 $3,093,256 $4,084,160 - ----------------------------------- Shares outstanding 70,809 63,973 258,672 508,850 - ----------------------------------- Net asset value per share $36.70 $11.10 $11.96 $8.03 - ------------------------------------------------------------------------------------------------------ R CLASS, $0.01 PAR VALUE - ------------------------------------------------------------------------------------------------------ Net assets $24,560 $26,059 $28,382 N/A - ----------------------------------- Shares outstanding 656 2,315 2,368 N/A - ----------------------------------- Net asset value per share $37.44 $11.26 $11.99 N/A - ------------------------------------------------------------------------------------------------------ See Notes to Financial Statements. - ------ 35 Statement of Operations FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) - --------------------------------------------------------------------------------------------------- FUNDAMENTAL NEW SELECT CAPITAL GROWTH EQUITY OPPORTUNITIES II - --------------------------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - --------------------------------------------------------------------------------------------------- INCOME: - ----------------------------------- Dividends (including net of foreign taxes withheld of $525,989, $218, $433 and $639, respectively) $ 21,378,681 $ 14,285 $ 65,759 $ 130,757 - ----------------------------------- Interest 1,708,028 168 13,006 25,861 - ----------------------------------- Securities lending 406,273 -- -- -- - --------------------------------------------------------------------------------------------------- 23,492,982 14,453 78,765 156,618 - --------------------------------------------------------------------------------------------------- EXPENSES: - ----------------------------------- Management fees 17,283,332 15,603 42,039 800,047 - ----------------------------------- Distribution fees: - ----------------------------------- Advisor Class 35,633 -- -- -- - ----------------------------------- B Class 12,866 3,220 2,700 9,947 - ----------------------------------- C Class 12,419 2,479 6,560 13,597 - ----------------------------------- Service fees: - ----------------------------------- Advisor Class 35,633 -- -- -- - ----------------------------------- B Class 4,289 1,073 900 3,316 - ----------------------------------- C Class 4,140 826 2,187 4,532 - ----------------------------------- Distribution and service fees: - ----------------------------------- A Class 51,954 1,903 7,258 66,951 - ----------------------------------- R Class 62 65 67 -- - ----------------------------------- Directors' fees and expenses 25,625 53 106 1,185 - ----------------------------------- Other expenses 8,536 6 14 1,457 - --------------------------------------------------------------------------------------------------- 17,474,489 25,228 61,831 901,032 - --------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 6,018,493 (10,775) 16,934 (744,414) - --------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - --------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ----------------------------------- Investment transactions 471,616,745 105,700 350,905 8,602,176 - ----------------------------------- Foreign currency transactions (1,053,458) 42 (209) (21,702) - --------------------------------------------------------------------------------------------------- 470,563,287 105,742 350,696 8,580,474 - --------------------------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - ----------------------------------- Investments (394,846,325) 72,509 505,721 14,690,926 - ----------------------------------- Translation of assets and liabilities in foreign currencies (2,638,071) (1,875) (845) (313) - --------------------------------------------------------------------------------------------------- (397,484,396) 70,634 504,876 14,690,613 - --------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 73,078,891 176,376 855,572 23,271,087 - --------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 79,097,384 $165,601 $872,506 $22,526,673 =================================================================================================== See Notes to Financial Statements. - ------ 36 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------- SELECT CAPITAL GROWTH - --------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005 - --------------------------------------------------------------------------------------------------- OPERATIONS - --------------------------------------------------------------------------------------------------- Net investment income (loss) $ 6,018,493 $ 16,221,792 $ (10,775) $ (9,094) - ----------------------------------- Net realized gain (loss) 470,563,287 374,124,251 105,742 (35,967) - ----------------------------------- Change in net unrealized appreciation (depreciation) (397,484,396) (132,726,740) 70,634 155,191 - --------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 79,097,384 257,619,303 165,601 110,130 - --------------------------------------------------------------------------------------------------- DISTRIBUTION TO SHAREHOLDERS - --------------------------------------------------------------------------------------------------- From net investment income: - ----------------------------------- Investor Class (23,121,577) (8,222,603) -- -- - ----------------------------------- Institutional Class (1,850,095) (906,228) -- -- - ----------------------------------- Advisor Class (141,382) -- -- -- - ----------------------------------- A Class (197,118) -- -- -- - ----------------------------------- R Class (138) -- -- -- - --------------------------------------------------------------------------------------------------- Decrease in net assets from distributions (25,310,310) (9,128,831) -- -- - --------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - --------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (312,085,559) (509,449,921) 562,072 1,075,137 - --------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (258,298,485) (260,959,449) 727,673 1,185,267 NET ASSETS - --------------------------------------------------------------------------------------------------- Beginning of period 3,600,573,898 3,861,533,347 2,670,796 1,485,529 - --------------------------------------------------------------------------------------------------- End of period $3,342,275,413 $3,600,573,898 $3,398,469 $2,670,796 =================================================================================================== Accumulated undistributed net investment income (loss) $5,788,753 $25,079,614 $(10,775) -- =================================================================================================== See Notes to Financial Statements. (continued) - ------ 37 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- FUNDAMENTAL EQUITY NEW OPPORTUNITIES II - --------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005(1) 2006 2005 - --------------------------------------------------------------------------------------------------- OPERATIONS - --------------------------------------------------------------------------------------------------- Net investment income (loss) $ 16,934 $ (3,454) $ (744,414) $ (939,415) - ----------------------------------- Net realized gain (loss) 350,696 112,336 8,580,474 3,652,851 - ----------------------------------- Change in net unrealized appreciation (depreciation) 504,876 46,038 14,690,613 4,324,566 - --------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 872,506 154,920 22,526,673 7,038,002 - --------------------------------------------------------------------------------------------------- DISTRIBUTION TO SHAREHOLDERS - --------------------------------------------------------------------------------------------------- From net realized gains: - ----------------------------------- Investor Class (1,402) -- (1,390,699) (1,089,667) - ----------------------------------- Institutional Class (841) -- -- -- - ----------------------------------- A Class (84,337) -- (1,464,542) (642,139) - ----------------------------------- B Class (13,834) -- (52,347) (23,007) - ----------------------------------- C Class (19,272) -- (75,960) (25,472) - ----------------------------------- R Class (793) -- -- -- - --------------------------------------------------------------------------------------------------- Decrease in net assets from distributions (120,479) -- (2,983,548) (1,780,285) - --------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - --------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 13,400,916 2,719,320 2,434,784 29,905,813 - --------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 14,152,943 2,874,240 21,977,909 35,163,530 NET ASSETS - --------------------------------------------------------------------------------------------------- Beginning of period 2,874,240 -- 96,874,453 61,710,923 - --------------------------------------------------------------------------------------------------- End of period $17,027,183 $2,874,240 $118,852,362 $96,874,453 =================================================================================================== Accumulated undistributed net investment income (loss) $16,934 -- $(744,414) -- =================================================================================================== (1) November 30, 2004 (fund inception) through October 31, 2005. See Notes to Financial Statements. - ------ 38 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Select Fund (Select), Capital Growth Fund (Capital Growth), Fundamental Equity Fund (Fundamental Equity) and New Opportunities II Fund (New Opportunities II) (collectively, the funds) are four funds in a series issued by the corporation. The funds are diversified under the 1940 Act. The funds' investment objective is to seek long-term capital growth. Income is a secondary objective of Fundamental Equity. Select and Capital Growth pursue their objective by purchasing stocks of larger-sized companies that they believe will increase in value over time. Fundamental Equity looks for common stocks that the fund's manager believes are attractively priced relative to the companies' earnings growth potential and dividend yields. New Opportunities II pursues its objective by purchasing stocks of smaller-sized companies that it believes will increase in value over time. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- Select is authorized to issue the Investor Class, the Institutional Class, the Advisor Class, the A Class, the B Class, C Class and R Class. Capital Growth and Fundamental Equity are authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. New Opportunities II is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class and the C Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of each fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the funds are allocated to each class of shares based on their relative net assets. Sale of Fundamental Equity's A Class, B Class and C Class commenced on November 30, 2004. Sale of Fundamental Equity's and Capital Growth's Investor Class, Institutional Class and R Class commenced on July 29, 2005. Sale of Select's R Class commenced on July 29, 2005. Sale of New Opportunities II's Institutional Class had not commenced as of April 30, 2006. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the funds determine that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the funds to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The funds estimate the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- Select may lend portfolio securities through its lending agent to certain approved borrowers in order to earn additional income. Select continues to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. (continued) - ------ 39 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to each fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is each fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. (continued) - ------ 40 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for each class of Select, Capital Growth and Fundamental Equity, as applicable, is as follows: - ---------------------------------------------------------------------- INVESTOR, A, B, C & R INSTITUTIONAL ADVISOR - ---------------------------------------------------------------------- STRATEGY ASSETS - ---------------------------------------------------------------------- First $5 billion 1.000% 0.800% 0.750% - ---------------------------------------------------------------------- Next $5 billion 0.990% 0.790% 0.740% - ---------------------------------------------------------------------- Next $5 billion 0.980% 0.780% 0.730% - ---------------------------------------------------------------------- Next $5 billion 0.970% 0.770% 0.720% - ---------------------------------------------------------------------- Next $5 billion 0.950% 0.750% 0.700% - ---------------------------------------------------------------------- Next $5 billion 0.900% 0.700% 0.650% - ---------------------------------------------------------------------- Over $30 billion 0.800% 0.600% 0.550% - ---------------------------------------------------------------------- The annual management fee schedule for each class of New Opportunities II is as follows: - -------------------------------------------------------- INVESTOR, A, B & C INSTITUTIONAL - -------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------- First $250 million 1.50% 1.30% - -------------------------------------------------------- Next $250 million 1.30% 1.10% - -------------------------------------------------------- Over $500 million 1.10% 0.90% - -------------------------------------------------------- The effective annual management fee for each class of the funds for the six months ended April 30, 2006 was as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B & C INSTITUTIONAL ADVISOR R - -------------------------------------------------------------------------------- Select 1.00% 0.80% 0.75% 1.00% - -------------------------------------------------------------------------------- Capital Growth 1.00% 0.80% N/A 1.00% - -------------------------------------------------------------------------------- Fundamental Equity 1.00% 0.80% N/A 1.00% - -------------------------------------------------------------------------------- New Opportunities II 1.50% -- N/A N/A - -------------------------------------------------------------------------------- (continued) - ------ 41 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class (the Advisor Class plan) and a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively with the Advisor Class Plan, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class, B Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR B & C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------------------------------------------------- Service Fee 0.25% 0.25% - -------------------------------------------------------------------------------- The plans provide that the A Class and the R Class will pay ACIS an annual distribution and service fee of 0.25% for the A Class and 0.50% for the R Class. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for A Class, B Class, C Class and R Class shares. Fees incurred under the plans during the six months ended April 30, 2006, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. As of April 30, 2006 the outstanding shares owned by the investment advisor of Capital Growth and Fundamental Equity is 35% and 5%, respectively. The funds have a bank line of credit agreement and Select has a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended April 30, 2006, were as follows: - ----------------------------------------------------------------------------------------- FUNDAMENTAL NEW SELECT CAPITAL GROWTH EQUITY OPPORTUNITIES II - ----------------------------------------------------------------------------------------- Purchases $3,264,660,164 $2,765,925 $18,307,267 $128,183,272 - ----------------------------------------------------------------------------------------- Proceeds from sales $3,710,648,213 $2,229,251 $5,652,535 $134,332,946 - ----------------------------------------------------------------------------------------- (continued) - ------ 42 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - ------------------------------------------------------------------------------------------------------ SELECT CAPITAL GROWTH - ------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 300,000,000 300,000,000 ====================================================================================================== Sold 940,003 $ 35,869,727 2,142 $24,328 - ----------------------------------- Issued in reinvestment of distributions 566,811 22,043,286 -- -- - ----------------------------------- Redeemed (10,705,751) (408,575,301) -- -- - ------------------------------------------------------------------------------------------------------ Net increase (decrease) (9,198,937) $(350,662,288) 2,142 $24,328 ====================================================================================================== YEAR ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED 400,000,000 200,000,000 ====================================================================================================== Sold 2,329,186 $ 86,028,299 2,315 $25,000 - ----------------------------------- Issued in reinvestment of distributions 205,594 7,839,288 -- -- - ----------------------------------- Redeemed (15,105,345) (559,650,047) -- -- - ------------------------------------------------------------------------------------------------------ Net increase (decrease) (12,570,565) $(465,782,460) 2,315 $25,000 ====================================================================================================== INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 40,000,000 50,000,000 ====================================================================================================== Sold 3,484,037 $ 133,738,153 -- -- - ----------------------------------- Issued in reinvestment of distributions 47,217 1,849,034 -- -- - ----------------------------------- Redeemed (2,700,962) (104,607,172) -- -- - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 830,292 $ 30,980,015 -- -- ====================================================================================================== YEAR ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED 40,000,000 50,000,000 ====================================================================================================== Sold 787,845 $ 29,427,489 2,315 $25,000 - ----------------------------------- Issued in reinvestment of distributions 23,580 904,984 -- -- - ----------------------------------- Redeemed (2,196,445) (82,020,207) -- -- - ------------------------------------------------------------------------------------------------------ Net increase (decrease) (1,385,020) $(51,687,734) 2,315 $25,000 ====================================================================================================== ADVISOR CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000,000 N/A ====================================================================================================== Sold 198,565 $ 7,467,088 - ----------------------------------- Issued in reinvestment of distributions 3,366 129,641 - ----------------------------------- Redeemed (233,004) (8,778,730) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) (31,073) $(1,182,001) ====================================================================================================== YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 100,000,000 N/A ====================================================================================================== Sold 370,390 $13,556,620 - ----------------------------------- Redeemed (270,260) (9,880,731) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 100,130 $ 3,675,889 ====================================================================================================== (1) July 29, 2005 (commencement of sale) through October 31, 2005 for Capital Growth. (continued) - ------ 43 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------ SELECT CAPITAL GROWTH - ------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ A CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 25,000,000 100,000,000 ====================================================================================================== Sold 51,968 $ 1,981,108 46,547 $ 527,422 - ----------------------------------- Issued in connection with acquisition (Note 8) 3,570,242 135,355,199 - ----------------------------------- Issued in reinvestment of distributions 4,961 192,384 -- -- - ----------------------------------- Redeemed (3,502,267) (133,049,737) (12,382) (139,594) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 124,904 $ 4,478,954 34,165 $ 387,828 ====================================================================================================== YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 25,000,000 100,000,000 ====================================================================================================== Sold 387,713 $14,274,351 74,965 $ 781,912 - ----------------------------------- Redeemed (261,180) (9,636,831) (30,129) (315,023) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 126,533 $ 4,637,520 44,836 $ 466,889 ====================================================================================================== B CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 25,000,000 100,000,000 ====================================================================================================== Sold 629 $ 21,613 8,174 $89,647 - ----------------------------------- Issued in connection with acquisition (Note 8) 155,909 5,800,482 - ----------------------------------- Redeemed (14,657) (543,282) (289) (3,204) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 141,881 $5,278,813 7,885 $86,443 ====================================================================================================== YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 25,000,000 100,000,000 ====================================================================================================== Sold 12,793 $ 462,676 29,996 $310,296 - ----------------------------------- Redeemed (9,993) (361,099) (1,968) (20,033) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 2,800 $ 101,577 28,028 $290,263 ====================================================================================================== C CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 25,000,000 100,000,000 ====================================================================================================== Sold 7,781 $ 293,018 5,725 $63,594 - ----------------------------------- Redeemed (34,091) (1,272,208) (11) (121) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) (26,310) $ (979,190) 5,714 $63,473 ====================================================================================================== YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 25,000,000 100,000,000 ====================================================================================================== Sold 34,085 $ 1,240,344 23,437 $243,705 - ----------------------------------- Redeemed (46,000) (1,660,057) (69) (720) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) (11,915) $ (419,713) 23,368 $242,985 ====================================================================================================== (continued) - ------ 44 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------ SELECT CAPITAL GROWTH - ------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ R CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000,000 60,000,000 ====================================================================================================== Issued in reinvestment of distributions 4 $138 -- -- ====================================================================================================== PERIOD ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED 60,000,000 60,000,000 ====================================================================================================== Sold 652 $25,000 2,315 $25,000 ====================================================================================================== (1) July 29, 2005 (commencement of sale) through October 31, 2005. - ------------------------------------------------------------------------------------------------------ FUNDAMENTAL EQUITY NEW OPPORTUNITIES II - ------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 200,000,000 250,000,000 ====================================================================================================== Sold 21,401 $250,750 353,696 $ 2,640,700 - ----------------------------------- Issued in reinvestment of distributions 123 1,402 170,452 1,227,252 - ----------------------------------- Redeemed (790) (9,065) (596,178) (4,403,841) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 20,734 $243,087 (72,030) $ (535,889) ====================================================================================================== YEAR ENDED OCTOBER 31, 2005(2) SHARES AUTHORIZED 200,000,000 250,000,000 ====================================================================================================== Sold 2,298 $25,000 1,455,830 $ 9,655,038 - ----------------------------------- Issued in reinvestment of distributions -- -- 149,816 991,781 - ----------------------------------- Redeemed -- -- (1,401,320) (9,196,936) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 2,298 $25,000 204,326 $ 1,449,883 ====================================================================================================== INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000,000 50,000,000 ====================================================================================================== Issued in reinvestment of distributions 74 $835 -- -- ====================================================================================================== YEAR ENDED OCTOBER 31, 2005(2) SHARES AUTHORIZED 50,000,000 50,000,000 ====================================================================================================== Sold 2,298 $25,000 -- -- ====================================================================================================== (2) July 29, 2005 (commencement of sale) through October 31, 2005 for Fundamental Equity. (continued) - ------ 45 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------ FUNDAMENTAL EQUITY NEW OPPORTUNITIES II - ------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ A CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000,000 25,000,000 ====================================================================================================== Sold 937,224 $10,872,985 1,384,316 $10,287,766 - ----------------------------------- Issued in reinvestment of distributions 6,893 78,235 200,465 1,439,338 - ----------------------------------- Redeemed (50,404) (592,042) (1,203,972) (8,894,400) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 893,713 $10,359,178 380,809 $ 2,832,704 ====================================================================================================== YEAR ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED 50,000,000 25,000,000 ====================================================================================================== Sold 150,138 $1,576,978 5,225,025 $34,107,420 - ----------------------------------- Issued in reinvestment of distributions -- -- 95,581 631,788 - ----------------------------------- Redeemed (1,816) (18,703) (1,436,356) (9,368,616) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 148,322 $1,558,275 3,884,250 $25,370,592 ====================================================================================================== B CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000,000 25,000,000 ====================================================================================================== Sold 46,924 $541,621 29,878 $ 219,955 - ----------------------------------- Issued in reinvestment of distributions 1,179 13,357 6,983 49,789 - ----------------------------------- Redeemed (8) (95) (17,173) (123,156) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 48,095 $554,883 19,688 $ 146,588 ====================================================================================================== YEAR ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED 50,000,000 25,000,000 ====================================================================================================== Sold 42,793 $434,494 174,231 $1,127,541 - ----------------------------------- Issued in reinvestment of distributions -- -- 3,232 21,235 - ----------------------------------- Redeemed -- -- (8,896) (58,520) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 42,793 $434,494 168,567 $1,090,256 ====================================================================================================== C CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000,000 25,000,000 ====================================================================================================== Sold 198,713 $2,280,827 79,707 $ 590,001 - ----------------------------------- Issued in reinvestment of distributions 1,422 16,128 7,017 50,239 - ----------------------------------- Redeemed (4,719) (54,810) (90,555) (648,859) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 195,416 $2,242,145 (3,831) $ (8,619) ====================================================================================================== YEAR ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED 50,000,000 25,000,000 ====================================================================================================== Sold 63,517 $654,278 370,046 $2,417,865 - ----------------------------------- Issued in reinvestment of distributions -- -- 2,993 19,722 - ----------------------------------- Redeemed (261) (2,727) (68,888) (442,505) - ------------------------------------------------------------------------------------------------------ Net increase (decrease) 63,256 $651,551 304,151 $1,995,082 ====================================================================================================== (1) November 30, 2004 (fund inception) through October 31, 2005 for Fundamental Equity. (continued) - ------ 46 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------ FUNDAMENTAL EQUITY NEW OPPORTUNITIES II - ------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ R CLASS - ------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 60,000,000 N/A ====================================================================================================== Issued in reinvestment of distributions 70 $788 ====================================================================================================== PERIOD ENDED OCTOBER 31, 2005(1) SHARES AUTHORIZED 60,000,000 N/A ====================================================================================================== Sold 2,298 $25,000 ====================================================================================================== (1) July 29, 2005 (commencement of sale) through October 31, 2005 for Fundamental Equity. 5. SECURITIES LENDING As of April 30, 2006, securities in Select valued at $64,748,720, were on loan through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives and maintains collateral in the form of cash, and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total value of all collateral received, at this date, was $65,736,167. Select's risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by Select may be delayed or limited. 6. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM or ACGIM, have a $500,000,000 unsecured bank line of credit agreement with JPMCB, which was renewed from $575,000,000 effective December 14, 2005. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the six months ended April 30, 2006. 7. RISK FACTORS New Opportunities II concentrates its investments in common stocks of small companies. Because of this, New Opportunities II may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies. (continued) - ------ 47 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 8. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: - ------------------------------------------------------------------------------------------------- FUNDAMENTAL NEW SELECT CAPITAL GROWTH EQUITY OPPORTUNITIES II - ------------------------------------------------------------------------------------------------- Federal tax cost of investments $3,209,866,597 $3,060,033 $16,408,434 $88,883,111 ================================================================================================= Gross tax appreciation of investments $209,451,779 $320,786 $734,619 $26,313,170 - ------------------------------ Gross tax depreciation of investments (40,784,360) (60,422) (204,527) (647,807) - ------------------------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $168,667,419 $260,364 $530,092 $25,665,363 ================================================================================================= The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and return of capital dividends received. Following are the capital loss carryover amounts as of October 31, 2005: - -------------------------------------------------------------------------------- SELECT CAPITAL GROWTH - -------------------------------------------------------------------------------- Accumulated capital losses $(273,611,570) $(66,374) - -------------------------------------------------------------------------------- The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: - -------------------------------------------------------------------------------- 2010 2011 2012 2013 - -------------------------------------------------------------------------------- Select $(273,611,570) -- -- -- - -------------------------------------------------------------------------------- Capital Growth -- -- $(28,366) $(38,008) - -------------------------------------------------------------------------------- (continued) - ------ 48 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 9. REORGANIZATION PLAN On December 14, 2005, the Board of Directors of Mason Street Growth Stock Fund (Growth Stock), one fund in a series issued by Mason Street Funds, Inc., approved a plan of reorganization (the reorganization) pursuant to which Select acquired all of the assets of Growth Stock in exchange for shares of equal value of Select and the assumption by Select of all liabilities of Growth Stock. The financial statements and performance history of Select will be carried over in the post-reorganization. The reorganization was approved by shareholders on March 15, 2006. The reorganization was effective at the close of business on March 31, 2006. New shares in connection with the reorganization were issued by Select on April 3, 2006. The acquisition was accomplished by a tax-free exchange of shares. On April 3, 2006, Growth Stock exchanged its shares for shares of Select as follows: - -------------------------------------------------------------------------------- ORIGINAL FUND/CLASS SHARES EXCHANGED NEW FUND/CLASS SHARES RECEIVED - -------------------------------------------------------------------------------- Growth Stock -- A Class 9,879,722 Select -- A Class 3,564,222 - -------------------------------------------------------------------------------- Growth Stock -- C Class 17,465 Select -- A Class 6,020 - -------------------------------------------------------------------------------- Growth Stock -- B Class 443,869 Select -- B Class 155,909 - -------------------------------------------------------------------------------- The net assets of Growth Stock and Select immediately before the acquisition were $141,155,681 and $3,336,122,073, respectively. Growth Stock's unrealized appreciation of $26,507,502 was combined with that of Select. Immediately after the acquisition, the combined net assets were $3,477,277,754. - ------ 49 Select - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $37.04 $34.80 $33.77 $28.91 $34.94 $52.20 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss)(2) 0.07 0.15 --(3) 0.01 0.07 0.06 - ----------------------------------- Net Realized and Unrealized Gain (Loss) 0.68 2.17 1.03 4.92 (6.04) (14.53) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 0.75 2.32 1.03 4.93 (5.97) (14.47) - -------------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Investment Income (0.26) (0.08) -- (0.07) (0.06) -- - ----------------------------------- From Net Realized Gains -- -- -- -- -- (2.79) - -------------------------------------------------------------------------------------------------- Total Distributions (0.26) (0.08) -- (0.07) (0.06) (2.79) - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $37.53 $37.04 $34.80 $33.77 $28.91 $34.94 ================================================================================================== TOTAL RETURN(4) 2.03% 6.67% 3.05% 17.11% (17.11)% (28.93)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.00%(5) 1.00% 1.00% 1.00% 1.00% 1.00% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.34%(5) 0.42% (0.01)% 0.03% 0.21% 0.15% - ----------------------------------- Portfolio Turnover Rate 95% 55% 48% 84% 168% 98% - ----------------------------------- Net Assets, End of Period (in millions) $3,028 $3,329 $3,565 $3,828 $3,522 $4,745 - -------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount is less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 50 Select - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $37.35 $35.09 $33.99 $29.10 $35.16 $52.36 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------- Net Investment Income (Loss)(2) 0.10 0.24 0.07 0.07 0.13 0.14 - ------------------------------- Net Realized and Unrealized Gain (Loss) 0.71 2.18 1.03 4.95 (6.06) (14.55) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 0.81 2.42 1.10 5.02 (5.93) (14.41) - -------------------------------------------------------------------------------------------------- Distributions - ------------------------------- From Net Investment Income (0.34) (0.16) -- (0.13) (0.13) -- - ------------------------------- From Net Realized Gains -- -- -- -- -- (2.79) - -------------------------------------------------------------------------------------------------- Total Distributions (0.34) (0.16) -- (0.13) (0.13) (2.79) - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $37.82 $37.35 $35.09 $33.99 $29.10 $35.16 ================================================================================================== TOTAL RETURN(3) 2.13% 6.87% 3.24% 17.34% (16.93)% (28.71)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.80%(4) 0.80% 0.80% 0.80% 0.80% 0.80% - ------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.54%(4) 0.62% 0.19% 0.23% 0.41% 0.35% - ------------------------------- Portfolio Turnover Rate 95% 55% 48% 84% 168% 98% - ------------------------------- Net Assets, End of Period (in thousands) $232,078 $198,212 $234,815 $229,596 $185,897 $181,708 - -------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense difference because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 51 Select - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $36.63 $34.43 $33.49 $28.66 $34.68 $52.01 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss)(2) 0.02 0.04 (0.09) (0.07) (0.02) (0.04) - ----------------------------------- Net Realized and Unrealized Gain (Loss) 0.68 2.16 1.03 4.90 (6.00) (14.50) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 0.70 2.20 0.94 4.83 (6.02) (14.54) - -------------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Investment Income (0.19) -- -- --(3) -- -- - ----------------------------------- From Net Realized Gains -- -- -- -- -- (2.79) - -------------------------------------------------------------------------------------------------- Total Distributions (0.19) -- -- --(3) -- (2.79) - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $37.14 $36.63 $34.43 $33.49 $28.66 $34.68 ================================================================================================== TOTAL RETURN(4) 1.88% 6.39% 2.81% 16.86% (17.36)% (29.18)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.25%(5) 1.25% 1.25% 1.25% 1.25% 1.25% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.09%(5) 0.17% (0.26)% (0.22)% (0.04)% (0.10)% - ----------------------------------- Portfolio Turnover Rate 95% 55% 48% 84% 168% 98% - ----------------------------------- Net Assets, End of Period (in thousands) $26,974 $27,741 $22,626 $29,152 $20,432 $23,389 - -------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount is less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 52 Select - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $36.87 $34.66 $33.72 $27.75 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------- Net Investment Income (Loss)(3) --(4) 0.04 (0.10) (0.14) - -------------------------------- Net Realized and Unrealized Gain (Loss) 0.70 2.17 1.04 6.11 - -------------------------------------------------------------------------------- Total From Investment Operations 0.70 2.21 0.94 5.97 - -------------------------------------------------------------------------------- Distributions - -------------------------------- From Net Investment Income (0.19) -- -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $37.38 $36.87 $34.66 $33.72 ================================================================================ TOTAL RETURN(5) 1.90% 6.38% 2.79% 21.51% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.25%(6) 1.25% 1.25% 1.25%(6) - -------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.09%(6) 0.17% (0.26)% (0.56)%(6) - -------------------------------- Portfolio Turnover Rate 95% 55% 48% 84%(7) - -------------------------------- Net Assets, End of Period (in thousands) $44,590 $39,376 $32,624 $10,305 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) January 31, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount is less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 53 Select - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $36.12 $34.21 $33.53 $27.75 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------- Net Investment Income (Loss)(3) (0.13) (0.22) (0.35) (0.31) - -------------------------------- Net Realized and Unrealized Gain (Loss) 0.68 2.13 1.03 6.09 - -------------------------------------------------------------------------------- Total From Investment Operations 0.55 1.91 0.68 5.78 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $36.67 $36.12 $34.21 $33.53 ================================================================================ TOTAL RETURN(4) 1.52% 5.58% 2.03% 20.83% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(5) 2.00% 2.00% 2.00%(5) - -------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.66)%(5) (0.58)% (1.01)% (1.28)%(5) - -------------------------------- Portfolio Turnover Rate 95% 55% 48% 84%(6) - -------------------------------- Net Assets, End of Period (in thousands) $7,741 $2,501 $2,273 $1,032 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) January 31, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 54 Select - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $36.15 $34.23 $33.56 $27.75 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------- Net Investment Income (Loss)(3) (0.12) (0.22) (0.36) (0.31) - -------------------------------- Net Realized and Unrealized Gain (Loss) 0.67 2.14 1.03 6.12 - -------------------------------------------------------------------------------- Total From Investment Operations 0.55 1.92 0.67 5.81 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $36.70 $36.15 $34.23 $33.56 ================================================================================ TOTAL RETURN(4) 1.52% 5.58% 2.03% 20.94% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(5) 2.00% 2.00% 2.00%(5) - -------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.66)%(5) (0.58)% (1.01)% (1.28)%(5) - -------------------------------- Portfolio Turnover Rate 95% 55% 48% 84%(6) - -------------------------------- Net Assets, End of Period (in thousands) $2,598 $3,511 $3,733 $1,136 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) January 31, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 55 Select - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $37.00 $38.34 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) (0.03) (0.05) - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.68 (1.29) - -------------------------------------------------------------------------------- Total From Investment Operations 0.65 (1.34) - -------------------------------------------------------------------------------- Distributions - --------------------------------------------------- From Net Investment Income (0.21) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $37.44 $37.00 ================================================================================ TOTAL RETURN(4) 1.77% (3.50)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50%(5) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.16)%(5) (0.50)%(5) - --------------------------------------------------- Portfolio Turnover Rate 95% 55%(6) - --------------------------------------------------- Net Assets, End of Period (in thousands) $25 $24 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2005. See Notes to Financial Statements. - ------ 56 Capital Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.60 $10.80 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) (0.01) --(4) - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.71 (0.20) - -------------------------------------------------------------------------------- Total From Investment Operations 0.70 (0.20) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.30 $10.60 ================================================================================ TOTAL RETURN(5) 6.60% (1.85)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.00%(6) 1.00%(6) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.08)%(6) (0.12)%(6) - --------------------------------------------------- Portfolio Turnover Rate 72% 110%(7) - --------------------------------------------------- Net Assets, End of Period (in thousands) $50 $25 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2005. See Notes to Financial Statements. - ------ 57 Capital Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.61 $10.80 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) 0.01 --(4) - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.70 (0.19) - -------------------------------------------------------------------------------- Total From Investment Operations 0.71 (0.19) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.32 $10.61 ================================================================================ TOTAL RETURN(5) 6.69% (1.76)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.80%(6) 0.80%(6) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.12%(6) 0.08%(6) - --------------------------------------------------- Portfolio Turnover Rate 72% 110%(7) - --------------------------------------------------- Net Assets, End of Period (in thousands) $26 $25 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2005. See Notes to Financial Statements. - ------ 58 Capital Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.59 $9.89 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(3) (0.02) --(4) (0.03) - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.71 0.70 (0.08) - -------------------------------------------------------------------------------- Total From Investment Operations 0.69 0.70 (0.11) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.28 $10.59 $9.89 ================================================================================ TOTAL RETURN(5) 6.52% 7.08% (1.10)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.25%(6) 1.27% 1.25%(6) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.33)%(6) (0.03)% (0.43)%(6) - -------------------------------------------- Portfolio Turnover Rate 72% 110% 87% - -------------------------------------------- Net Assets, End of Period (in thousands) $1,680 $1,216 $692 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) February 27, 2004 (fund inception) through October 31, 2004. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 59 Capital Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.46 $9.84 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------- Net Investment Income (Loss)(3) (0.06) (0.08) (0.08) - ---------------------------------------- Net Realized and Unrealized Gain (Loss) 0.70 0.70 (0.08) - -------------------------------------------------------------------------------- Total From Investment Operations 0.64 0.62 (0.16) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.10 $10.46 $9.84 ================================================================================ TOTAL RETURN(4) 6.02% 6.30% (1.60)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(5) 2.02% 2.00%(5) - ---------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.08)%(5) (0.78)% (1.17)%(5) - ---------------------------------------- Portfolio Turnover Rate 72% 110% 87% - ---------------------------------------- Net Assets, End of Period (in thousands) $906 $772 $450 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) February 27, 2004 (fund inception) through October 31, 2004. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 60 Capital Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.46 $9.84 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(3) (0.06) (0.08) (0.08) - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.70 0.70 (0.08) - -------------------------------------------------------------------------------- Total From Investment Operations 0.64 0.62 (0.16) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.10 $10.46 $9.84 ================================================================================ TOTAL RETURN(4) 6.02% 6.30% (1.60)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(5) 2.02% 2.00%(5) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.08)%(5) (0.78)% (1.18)%(5) - -------------------------------------------- Portfolio Turnover Rate 72% 110% 87% - -------------------------------------------- Net Assets, End of Period (in thousands) $710 $609 $343 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) February 27, 2004 (fund inception) through October 31, 2004. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 61 Capital Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.59 $10.80 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) (0.03) (0.02) - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.70 (0.19) - -------------------------------------------------------------------------------- Total From Investment Operations 0.67 (0.21) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.26 $10.59 ================================================================================ TOTAL RETURN(4) 6.33% (1.94)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50%(5) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.58)%(5) (0.62)%(5) - --------------------------------------------------- Portfolio Turnover Rate 72% 110%(6) - --------------------------------------------------- Net Assets, End of Period (in thousands) $26 $25 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2005. See Notes to Financial Statements. - ------ 62 Fundamental Equity - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.04 $10.88 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) 0.05 0.02 - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.29 0.14 - -------------------------------------------------------------------------------- Total From Investment Operations 1.34 0.16 - -------------------------------------------------------------------------------- Distributions - --------------------------------------------------- From Net Realized Gains (0.36) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.02 $11.04 ================================================================================ TOTAL RETURN(4) 12.24% 1.47% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.00%(5) 1.00%(5) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.87%(5) 0.59%(5) - --------------------------------------------------- Portfolio Turnover Rate 70% 101%(6) - --------------------------------------------------- Net Assets, End of Period (in thousands) $277 $25 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period November 30, 2004 (fund inception) through October 31, 2005. See Notes to Financial Statements. - ------ 63 Fundamental Equity - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.05 $10.88 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) 0.07 0.02 - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.28 0.15 - -------------------------------------------------------------------------------- Total From Investment Operations 1.35 0.17 - -------------------------------------------------------------------------------- Distributions - --------------------------------------------------- From Net Realized Gains (0.37) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.03 $11.05 ================================================================================ TOTAL RETURN(4) 12.29% 1.56% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.80%(5) 0.80%(5) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.07%(5) 0.79%(5) - --------------------------------------------------- Portfolio Turnover Rate 70% 101%(6) - --------------------------------------------------- Net Assets, End of Period (in thousands) $29 $25 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period November 30, 2004 (fund inception) through October 31, 2005. See Notes to Financial Statements. - ------ 64 Fundamental Equity - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.03 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) 0.04 0.02 - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.29 1.01 - -------------------------------------------------------------------------------- Total From Investment Operations 1.33 1.03 - -------------------------------------------------------------------------------- Distributions - --------------------------------------------------- From Net Realized Gains (0.35) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.01 $11.03 ================================================================================ TOTAL RETURN(4) 12.17% 10.30% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.25%(5) 1.28%(5) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.62%(5) 0.17%(5) - --------------------------------------------------- Portfolio Turnover Rate 70% 101% - --------------------------------------------------- Net Assets, End of Period (in thousands) $12,514 $1,636 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) November 30, 2004 (fund inception) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 65 Fundamental Equity - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.96 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) --(4) (0.06) - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.27 1.02 - -------------------------------------------------------------------------------- Total From Investment Operations 1.27 0.96 - -------------------------------------------------------------------------------- Distributions - --------------------------------------------------- From Net Realized Gains (0.27) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.96 $10.96 ================================================================================ TOTAL RETURN(5) 11.65% 9.60% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(6) 2.03%(6) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.13)%(6) (0.58)%(6) - --------------------------------------------------- Portfolio Turnover Rate 70% 101% - --------------------------------------------------- Net Assets, End of Period (in thousands) $1,087 $469 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) November 30, 2004 (fund inception) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount is less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 66 Fundamental Equity - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.96 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) (0.01) (0.06) - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.28 1.02 - -------------------------------------------------------------------------------- Total From Investment Operations 1.27 0.96 - -------------------------------------------------------------------------------- Distributions - --------------------------------------------------- From Net Realized Gains (0.27) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.96 $10.96 ================================================================================ TOTAL RETURN(4) 11.65% 9.60% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00%(5) 2.03%(5) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.13)%(5) (0.58)%(5) - --------------------------------------------------- Portfolio Turnover Rate 70% 101% - --------------------------------------------------- Net Assets, End of Period (in thousands) $3,093 $693 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) November 30, 2004 (fund inception) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 67 Fundamental Equity - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.03 $10.88 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Income (Loss)(3) 0.03 --(4) - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.27 0.15 - -------------------------------------------------------------------------------- Total From Investment Operations 1.30 0.15 - -------------------------------------------------------------------------------- Distributions - --------------------------------------------------- From Net Realized Gains (0.34) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.99 $11.03 ================================================================================ TOTAL RETURN(5) 11.92% 1.38% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(6) 1.50%(6) - --------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.37%(6) 0.09%(6) - --------------------------------------------------- Portfolio Turnover Rate 70% 101%(7) - --------------------------------------------------- Net Assets, End of Period (in thousands) $28 $25 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through October 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount is less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period November 30, 2004 (fund inception) through October 31, 2005. See Notes to Financial Statements. - ------ 68 New Opportunities II - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001(2) - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.75 $6.29 $5.75 $4.15 $4.52 $5.00 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------- Net Investment Income (Loss)(3) (0.04) (0.06) (0.07) (0.05) (0.05) (0.01) - ------------------------------- Net Realized and Unrealized Gain (Loss) 1.60 0.69 0.61 1.65 (0.32) (0.47) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 1.56 0.63 0.54 1.60 (0.37) (0.48) - -------------------------------------------------------------------------------------------------- Distributions - ------------------------------- From Net Realized Gains (0.22) (0.17) -- -- -- -- - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.09 $6.75 $6.29 $5.75 $4.15 $4.52 ================================================================================================== TOTAL RETURN(4) 23.55% 10.14% 9.39% 38.55% (8.19)% (9.60)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50% 1.50% 1.50% 1.50% 1.50%(5) - ------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.21)%(5) (0.93)% (1.09)% (1.11)% (1.02)% (0.81)%(5) - ------------------------------- Portfolio Turnover Rate 120% 269% 255% 236% 182% 89% - ------------------------------- Net Assets, End of Period (in thousands) $51,169 $43,157 $38,917 $32,512 $25,479 $18,217 - -------------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) June 1, 2001 (fund inception) through October 31, 2001. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 69 New Opportunities II - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.72 $6.26 $5.74 $4.15 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------- Net Investment Income (Loss)(3) (0.05) (0.08) (0.08) (0.05) - ---------------------------------- Net Realized and Unrealized Gain (Loss) 1.60 0.70 0.60 1.64 - -------------------------------------------------------------------------------- Total From Investment Operations 1.55 0.62 0.52 1.59 - -------------------------------------------------------------------------------- Distributions - ---------------------------------- From Net Realized Gains (0.21) (0.16) -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.06 $6.72 $6.26 $5.74 ================================================================================ TOTAL RETURN(4) 23.42% 9.91% 9.06% 38.31% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.75%(5) 1.75% 1.75% 1.75%(5) - ---------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.46)%(5) (1.18)% (1.34)% (1.47)%(5) - ---------------------------------- Portfolio Turnover Rate 120% 269% 255% 236%(6) - ---------------------------------- Net Assets, End of Period (in thousands) $60,590 $47,937 $20,337 $891 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) January 31, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 70 New Opportunities II - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.63 $6.18 $5.71 $4.15 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------- Net Investment Income (Loss)(3) (0.08) (0.13) (0.13) (0.08) - --------------------------------- Net Realized and Unrealized Gain (Loss) 1.59 0.69 0.60 1.64 - -------------------------------------------------------------------------------- Total From Investment Operations 1.51 0.56 0.47 1.56 - -------------------------------------------------------------------------------- Distributions - --------------------------------- From Net Realized Gains (0.15) (0.11) -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.99 $6.63 $6.18 $5.71 ================================================================================ TOTAL RETURN(4) 23.01% 9.03% 8.23% 37.59% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.50%(5) 2.50% 2.50% 2.50%(5) - --------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (2.21)%(5) (1.93)% (2.09)% (2.20)%(5) - --------------------------------- Portfolio Turnover Rate 120% 269% 255% 236%(6) - --------------------------------- Net Assets, End of Period (in thousands) $3,010 $2,367 $1,163 $215 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) January 31, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 71 New Opportunities II - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.66 $6.20 $5.73 $4.15 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------- Net Investment Income (Loss)(3) (0.08) (0.13) (0.13) (0.07) - ------------------------------- Net Realized and Unrealized Gain (Loss) 1.60 0.70 0.60 1.65 - -------------------------------------------------------------------------------- Total From Investment Operations 1.52 0.57 0.47 1.58 - -------------------------------------------------------------------------------- Distributions - ------------------------------- From Net Realized Gains (0.15) (0.11) -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.03 $6.66 $6.20 $5.73 ================================================================================ TOTAL RETURN(4) 22.90% 9.16% 8.20% 38.07% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.50%(5) 2.50% 2.50% 2.22%(5)(6) - ------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (2.21)%(5) (1.93)% (2.09)% (1.97)%(5)(6) - ------------------------------- Portfolio Turnover Rate 120% 269% 255% 236%(7) - ------------------------------- Net Assets, End of Period (in thousands) $4,084 $3,414 $1,294 $34 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) January 31, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) During a portion of the period ended October 31, 2003, the distributor agreed to voluntarily waive the distribution and service fees. Had fees not been waived the annualized ratio of operating expenses to average net assets and the annualized ratio of net investment income (loss) to average net assets would have been 2.50% and (2.25)%, respectively. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 72 Approval of Management Agreement for Capital Growth Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors (the "Directors") each year. At American Century, this process -- referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services the advisor performs on behalf of the fund. Under a Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for its board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning the fund and the services provided to the fund under the management agreement. The information included, but was not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the fund under the management agreement; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the fund and its shareholders on a routine and non-routine basis; * data comparing the cost of owning the fund to the cost of owning similar funds; * data comparing the fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the fund to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. The fund's board of directors met to review and discuss the information provided by the advisor and to complete its negotiations with the advisor regarding the renewal of the management agreement, including the setting of the applicable advisory fee. FACTORS CONSIDERED The Directors considered all of the information provided by the advisor and the 15(c) Providers and evaluated such information for each fund managed by the advisor. The Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the (continued) - ------ 73 Approval of Management Agreement for Capital Growth agreement, the Directors' decision was based on the following factors. NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management agreement, the advisor is responsible for providing or arranging for all services necessary for the operation of the fund. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including, but not limited to: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the fund's portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of these services have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes, and liquidity. In evaluating investment performance, the board expects the advisor to manage the fund in accordance with its investment objective and approved strategies. In providing these services, the advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance and other systems to conduct their business. At each quarterly meeting the Directors review investment performance information for the fund, together with comparative information for appropriate benchmarks and a peer group of funds managed similarly to the fund. If performance concerns are identified, the Directors discuss with the advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. Annually, the Directors review detailed performance information, as provided by the 15(c) Providers, comparing the fund's performance with that of similar funds not managed by the advisor. The fund's performance for the one year period was below the median of its peer group. SHAREHOLDER AND OTHER SERVICES. The advisor provides the fund with a comprehensive package of transfer agency, shareholder, and other services. The (continued) - ------ 74 Approval of Management Agreement for Capital Growth Directors review reports and evaluations of such services at its regular quarterly meetings, including the annual meeting concerning contract review. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the advisor. COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor provides detailed information concerning its cost of providing various services to the fund, its profitability in managing the fund, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate the advisor's financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. ETHICS OF THE ADVISOR. The Directors generally considered the advisor's commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the advisor's practices generally meet or exceed industry best practices and that the advisor was not implicated in the industry scandals of 2003 and 2004. ECONOMIES OF SCALE. The Directors reviewed reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the fund specifically, and the breakpoint fees of competitive funds not managed by the advisor over a range of asset sizes. The Directors believe the advisor is appropriately sharing any economies of scale through its competitive fee structure, fee breakpoints as the fund increases in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. The fund pays the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the fund, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the fund's (continued) - ------ 75 Approval of Management Agreement for Capital Growth independent directors (including their independent legal counsel). Under the unified fee structure, the advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other fund groups are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges and other expenses. Other than their investment advisory fees and Rule 12b-1 distribution fees, all other components of the total fees charged by these other fund groups may be increased without shareholder approval. The board believes the unified fee structure is a benefit to fund shareholders because it clearly discloses to shareholders the cost of owning fund shares, and, since the unified fee cannot be increased without a vote of fund shareholders, it shifts to the advisor the increased costs of operating the funds and the risk of administrative inefficiencies. Part of the Directors' analysis of fee levels involves comparing the fund's unified fee to the total expense ratio of other funds in a group of similar funds that was compiled by a 15(c) Provider independent of the advisor. The unified fee charged to shareholders of the fund was in the lowest quartile of the total expense ratios of this peer group. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the fund. The Directors analyzed this information and concluded that the fees charged and services provided to the fund were reasonable by comparison. COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the fund. They concluded that the advisor's primary business is managing mutual funds and it generally does not use the fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors noted that the advisor receives proprietary research from broker dealers that execute fund portfolio transactions and concluded that this research is likely to benefit fund shareholders. The Directors also determined that the advisor is able to provide investment management services to clients other than the fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and, in any event, are added to the assets of the funds within the fund complex that use substantially the same investment management team to determine whether the fund has reached breakpoints in its fee schedule. (continued) - ------ 76 Approval of Management Agreement for Capital Growth CONCLUSIONS OF THE DIRECTORS As a result of this process, the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor, concluded that the investment management agreement between the fund and the advisor is fair and reasonable in light of the services provided and should be renewed. - ------ 77 Share Class Information Seven classes of shares are authorized for sale by Select: Investor Class, Institutional Class, Advisor Class, A Class, B Class, C Class and R Class. Six classes of shares are authorized for sale by Capital Growth and Fundamental Equity: Investor Class, Institutional Class, A Class, B Class, C Class and R Class. Five classes of shares are authorized for sale by New Opportunities II: Investor Class, Institutional Class, A Class, B Class and C Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratios of Advisor Class, A Class, B Class, C Class and R Class shares are higher than that of Investor Class shares. Select and New Opportunities II are available for purchase only through financial intermediaries by investors who seek advice from them. The funds are closed to other investors, but those with open accounts may make additional investments and reinvest dividends and capital gains distributions as long as such accounts remain open. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the unified management fee of Institutional Class shares is 0.20% less than the unified management fee of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. A CLASS shares are sold primarily through employer-sponsored retirement plans through institutions such as investment advisors, banks, broker-dealers, and insurance companies. A Class shares are sold at their offering price, which is net asset value plus an initial sales charge that ranges from 5.75% to 0.00% for equity funds, depending on the amount invested. The initial sales charge is deducted from the purchase amount before it is invested. A Class shares may be subject to a contingent deferred sales charge (CDSC). There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The prospectus contains information regarding reductions and waivers of sales charges for A Class shares. The unified management fee for A Class shares is the same as for Investor Class shares. A Class shares also are subject to a 0.25% annual Rule 12b-1 service and distribution fee. (continued) - ------ 78 Share Class Information B CLASS shares are sold primarily through employer-sponsored retirement plans through institutions such as investment advisors, banks, broker-dealers, and insurance companies. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% after the sixth year. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for B Class shares is the same as for Investor Class shares. B Class shares also are subject to a 1.00% annual Rule 12b-1 service and distribution fee. B Class shares automatically convert to A Class shares (with lower expenses) eight years after their purchase date. C CLASS shares are sold primarily through employer-sponsored retirement plans through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a CDSC of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for C Class shares is the same as for Investor Class shares. C Class shares also are subject to a Rule 12b-1 service and distribution fee of 1.00%. R CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. The unified management fee for R Class shares is the same as for Investor Class shares. R Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 79 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the funds' investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 80 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The LIPPER LARGE-CAP GROWTH FUNDS INDEX is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Large Cap Growth fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The LIPPER SMALL-CAP GROWTH FUNDS INDEX is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Small Cap Growth fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL 1000(reg.tm) INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest companies in the Russell 3000 Index (the 3,000 largest publicly traded U.S. companies, based on total market capitalization). The RUSSELL 1000(reg.tm) GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth rates. The RUSSELL 2000(reg.tm) INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000(reg.tm) GROWTH INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth rates. The RUSSELL 2000(reg.tm) VALUE INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth rates. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 81 Notes - ------ 82 Notes - ------ 83 Notes - ------ 84 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 INVESTORS USING ADVISORS: 1-800-378-9878 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0606 SH-SAN-49689S
American Century Investments SEMIANNUAL REPORT APRIL 30, 2006 [photo of boy and airplane] New Opportunities Fund [american century investments logo and text logo] Table of Contents Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Six-Month Total Returns . . . . . . . . . . . . . . . . . . . . . . . . 2 NEW OPPORTUNITIES Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 6 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 9 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . 11 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 12 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . 13 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 14 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 OTHER INFORMATION Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 The opinions expressed in the Market Perspective and the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century New Opportunities Fund for the six months ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of Fortune magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective [photo of Mark Mallon] BY MARK MALLON, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS WHAT HAPPENED IN THE ECONOMY A short-lived economic slowdown on the heels of last summer's devastating Gulf Coast hurricanes gave way to a strong rebound after the first of the year, providing fuel for a dose of investor enthusiasm that pushed U.S. broad market indices to solid gains in the six-month period ended April 30, 2006. As measured in gross domestic product (GDP), U.S. economic growth slowed to 1.7% in the fourth quarter of 2005 as energy supply interruptions caused by hurricanes Rita and Katrina -- and a corresponding spike in oil and natural gas prices -- filtered through the economy. Other temporary business and employment disruptions caused by those two storms further muted economic vitality in the final months of 2005. By January 2006, however, economic growth reaccelerated, with retailers reporting strong post-holiday sales and overall corporate profits remaining robust. Not even rising commodity prices and rising interest rates halted the momentum, with GDP growth of 5.3% in the first quarter of 2006 more than tripling the rate of the previous quarter. The surge in many commodity values gave the Federal Reserve one reason to keep its string of interest rate hikes intact, even though broader inflation remained modest. The Fed boosted its short-term rate target to 4.75% in the period with four consecutive quarter-point increases. WHAT HAPPENED IN THE MARKET The notion that the Fed might soon stop raising rates helped feed investors' appetites throughout the period, even after short-term interest rates briefly surpassed long-term yields in the final week of 2005. Such yield-curve inversions historically presage a recession. But long-term yields finally inched upward in early 2006, with the benchmark 10-year Treasury note topping the 5% level for the first time in four years. Investors normally disdain rising 10-year yields. Nevertheless, equity markets surged, and as they have since 1999, stocks with smaller capitalizations once more set the pace. But large-cap returns outperformed in the period's final month, when gasoline prices again crept to near $3 per gallon. Growth stocks also found more favor. Among small- and mid-cap stocks, returns on growth issues surpassed returns for value stocks in the 6-month period. Large-cap growth continued languishing behind large-cap value, though, with the latter garnering substantial support from energy conglomerates riding record profits and surging share prices. SIX-MONTH TOTAL RETURNS AS OF APRIL 30, 2006(1) - -------------------------------------------------------------------------------- S&P 500 Index 9.64% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 10.24% - -------------------------------------------------------------------------------- Nasdaq Composite Index 10.02% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. - ------ 2 New Opportunities - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ---------------------- AVERAGE ANNUAL RETURNS - --------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS INCEPTION DATE - --------------------------------------------------------------------------- NEW OPPORTUNITIES 23.80% 42.24% 3.96% 9.07% 12/26/96 - --------------------------------------------------------------------------- RUSSELL 2000 GROWTH INDEX(2) 20.31% 36.13% 6.05% 5.31%(3) -- - --------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Since 12/31/96, the date nearest the fund's inception for which data are available. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 3 New Opportunities - Performance GROWTH OF $10,000 OVER LIFE OF FUND $10,000 investment made December 26, 1996
ONE-YEAR RETURNS OVER LIFE OF FUND Periods ended April 30 - ---------------------------------------------------------------------------------------------------------------- 1997* 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------------------------------- New Opportunities -20.00% 50.50% 5.15% 172.82% -46.30% -7.32% -26.32% 29.85% -3.73% 42.24% - ---------------------------------------------------------------------------------------------------------------- Russell 2000 Growth Index -11.52% 43.70% -3.77% 31.39% -24.85% -8.52% -23.50% 41.57% -0.55% 36.13% - ---------------------------------------------------------------------------------------------------------------- *From 12/26/96, the fund's inception date. Index data from 12/31/96, the date nearest the fund's inception date for which data are available. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 4 New Opportunities - Portfolio Commentary PORTFOLIO MANAGERS TOM TELFORD, HAROLD BRADLEY AND STAFFORD SOUTHWICK American Century New Opportunities gained 23.80%* during the six months ended April 30, 2006, outpacing the both the 20.31% return of its benchmark, the Russell 2000 Growth Index, and the 18.53%** surge of the Lipper Small-Cap Growth Funds Index measuring its portfolio peers. In April 2006, Stafford Southwick, formerly an investment analyst on the New Opportunities team, joined Tom Telford and Harold Bradley as co-portfolio managers of the fund. NON-TRADITIONAL RETURN TO GROWTH Heading into the period, value stocks in the small-cap space had outpaced growth stocks substantially during the previous 5-year stretch. But small-cap investors finally moved toward growth stocks late in 2005. That allowed the Russell 2000 Growth's return for the six-month period to exceed the Russell 2000 Value's gain of 17.52% by 279 bps. Global economic growth has paved the way for strong demand in sectors not normally associated with growth stocks, such as materials, industrials and energy. In fact, materials ranked as the benchmark's top sector in terms of total return--and New Opportunities maintained a beneficial overweight stake in that area. FLYING HIGH That sector, of course, houses New Opportunities' best-performing stock since the beginning of 2005, Titanium Metals. The portfolio's biggest average holding and largest individual overweight position, Titanium continues benefiting from a large-scale move to lightweight components by airline manufacturers. Its share price tripled in the period and now has increased by a factor of 12 since the beginning of 2005. That's exactly the type of upward price momentum that New Opportunities' management will let ride, as long as a stock's underlying financial picture continues improving. In addition, Titanium fits one of the portfolio's key 2006 investment themes of finding stocks that will benefit from the current aerospace expansion cycle. The portfolio's second-biggest average holding also constituted its second-best relative performer. Plexus Corp., a maker of circuit boards and other specialized electronic equipment, boosted its earnings guidance after a pair of strong TOP TEN HOLDINGS AS OF APRIL 30, 2006 - ------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - ------------------------------------------------------------------------------- Titanium Metals Corp. 4.2% 3.6% - ------------------------------------------------------------------------------- Plexus Corp. 2.7% 1.5% - ------------------------------------------------------------------------------- Aspreva Pharmaceuticals Corp. 2.2% -- - ------------------------------------------------------------------------------- Jacobs Engineering Group Inc. 1.9% 1.8% - ------------------------------------------------------------------------------- Matrix Service Co. 1.8% 1.4% - ------------------------------------------------------------------------------- NutriSystem, Inc. 1.7% 0.4% - ------------------------------------------------------------------------------- FelCor Lodging Trust Inc. 1.7% 1.2% - ------------------------------------------------------------------------------- Hansen Natural Corp. 1.6% -- - ------------------------------------------------------------------------------- Zoltek Companies, Inc. 1.6% -- - ------------------------------------------------------------------------------- Smith Micro Software Inc. 1.6% 1.1% - ------------------------------------------------------------------------------- *Total returns for periods less than one year are not annualized. **The Lipper Small-Cap Growth Funds Index returned 32.48% and 5.92% for the 1- and 5-year periods ended April 30, 2006, respectively. (continued) - ------ 5 New Opportunities - Portfolio Commentary quarterly profit reports in the period. Combined, those reports and the new guidance sent its shares up 147%. HEALTH CARE, TECH CRIMP RESULTS Somewhat ironically, weak security selection in two traditional growth sectors, health care and information technology, did more than anything to crimp New Opportunities' relative return in the period. The portfolio realized absolute contributions from both, but they fell short of what the benchmark received. Combined, the two sectors accounted for five of the portfolio's 10 worst relative detractors. The health care sector struggled from a lack of new drugs in the pharmaceutical industry, government reimbursement issues and rising costs that hurt health care providers and a general malaise on the part of investors. Its total return within the benchmark trailed all other sectors. Though New Opportunities maintained an advantageous underweight in health care, it couldn't overcome several individual stock losses. Quidel Corp., a maker of diagnostic tests for a variety of medical applications, led the portfolio's list of relative detractors. The company's shares stumbled after a disappointing earnings report in late 2005, and New Opportunities shed its investment stake. Meanwhile, the portfolio's technology investments suffered on a relative basis primarily from stock picks in semiconductors and Internet software. Nevertheless, New Opportunities enjoyed a 20% return from the sector as a whole, which ranked second only to materials in absolute contributions to the portfolio. INVESTMENT PHILOSOPHY The management team of New Opportunities pursues a two-pronged investment approach of 1) identifying smaller companies that appear to have accelerating earnings and revenue growth rates and 2) improving relative stock price performance. The team continues to find companies that meet its investment criteria. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Energy Equipment & Services 9.3% 4.8% - -------------------------------------------------------------------------------- Capital Markets 6.4% 8.5% - -------------------------------------------------------------------------------- Specialty Retail 6.0% 0.9% - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 5.9% 5.3% - -------------------------------------------------------------------------------- Energy Equipment & Instruments 5.3% 2.0% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 79.7% 91.1% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 17.5% 6.9% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 97.2% 98.0% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.7% 0.9% - -------------------------------------------------------------------------------- Other Assets and Liabilities 2.1% 1.1% - -------------------------------------------------------------------------------- (1) Includes depositary shares and foreign ordinary shares. Shareholder Fee Example (Unaudited) - ------ 6 Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. (continued) - ------ 7 Shareholder Fee Example (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - ------------------------------------------------------------------------------- NEW OPPORTUNITIES SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------- Actual $1,000 $1,238.00 $8.27 1.49% - ------------------------------------------------------------------------------- Hypothetical $1,000 $1,017.41 $7.45 1.49% - ------------------------------------------------------------------------------- *Expenses are equal to the fund's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 8 New Opportunities - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.2% AEROSPACE & DEFENSE -- 3.8% - -------------------------------------------------------------------------------- 72,332 Aviall Inc.(1) $ 2,727 - -------------------------------------------------------------------------------- 45,094 HEICO Corp. 1,479 - -------------------------------------------------------------------------------- 45,909 HEICO Corp. Cl A 1,272 - -------------------------------------------------------------------------------- 64,205 Moog Inc. Cl A(1) 2,404 - -------------------------------------------------------------------------------- 280,580 Taser International Inc.(1) 3,002 - -------------------------------------------------------------------------------- 10,884 - -------------------------------------------------------------------------------- BEVERAGES -- 1.6% - -------------------------------------------------------------------------------- 36,272 Hansen Natural Corp.(1) 4,696 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 1.1% - -------------------------------------------------------------------------------- 15,745 Nuvelo Inc.(1) 258 - -------------------------------------------------------------------------------- 181,978 QIAGEN N.V.(1) 2,711 - -------------------------------------------------------------------------------- 50,073 Sangamo Biosciences Inc.(1) 267 - -------------------------------------------------------------------------------- 3,236 - -------------------------------------------------------------------------------- BUILDING PRODUCTS -- 0.6% - -------------------------------------------------------------------------------- 63,342 Imperial Industries Inc.(1) 1,589 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 6.4% - -------------------------------------------------------------------------------- 27,808 Affiliated Managers Group Inc.(1) 2,817 - -------------------------------------------------------------------------------- 52,849 Greenhill & Co. Inc. 3,748 - -------------------------------------------------------------------------------- 174,000 Marusan Securities Co. Ltd. ORD 2,668 - -------------------------------------------------------------------------------- 49,378 Nuveen Investments Inc. Cl A 2,376 - -------------------------------------------------------------------------------- 114,177 OptionsXpress Holdings, Inc. 3,597 - -------------------------------------------------------------------------------- 47,345 Piper Jaffray Companies(1) 3,309 - -------------------------------------------------------------------------------- 18,515 - -------------------------------------------------------------------------------- CHEMICALS -- 3.9% - -------------------------------------------------------------------------------- 144,060 Celanese Corp., Series A 3,162 - -------------------------------------------------------------------------------- 395,293 PolyOne Corp.(1) 3,510 - -------------------------------------------------------------------------------- 181,538 Zoltek Companies, Inc.(1) 4,628 - -------------------------------------------------------------------------------- 11,300 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 1.3% - -------------------------------------------------------------------------------- 12,307 Intervest Bancshares Corp.(1) 492 - -------------------------------------------------------------------------------- 37,174 Sterling Bancshares, Inc. 616 - -------------------------------------------------------------------------------- 71,014 Virginia Commerce Bancorp(1) 2,578 - -------------------------------------------------------------------------------- 3,686 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 5.3% - -------------------------------------------------------------------------------- 126,565 51job, Inc. ADR(1) 3,187 - -------------------------------------------------------------------------------- 61,416 American Ecology Corp. 1,643 - -------------------------------------------------------------------------------- 116,014 American Reprographics Co.(1) 4,114 - -------------------------------------------------------------------------------- 129,122 NCO Group, Inc.(1) 2,770 - -------------------------------------------------------------------------------- 102,563 Watson Wyatt Worldwide Inc. 3,382 - -------------------------------------------------------------------------------- 15,096 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 2.9% - -------------------------------------------------------------------------------- 131,407 Ceragon Networks Ltd.(1) 708 - -------------------------------------------------------------------------------- 1,139,302 JDS Uniphase Corp.(1) 3,977 - -------------------------------------------------------------------------------- 531,143 MRV Communications Inc.(1) 2,024 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 93,970 Sierra Wireless(1) $ 1,692 - -------------------------------------------------------------------------------- 8,401 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 0.9% - -------------------------------------------------------------------------------- 154,063 LaserCard Corp.(1) 2,619 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING -- 1.9% - -------------------------------------------------------------------------------- 66,811 Jacobs Engineering Group Inc.(1) 5,525 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 3.5% - -------------------------------------------------------------------------------- 87,403 Baldor Electric Co. 2,902 - -------------------------------------------------------------------------------- 160,598 BTU International, Inc.(1) 3,246 - -------------------------------------------------------------------------------- 77,371 Color Kinetics Inc.(1) 1,639 - -------------------------------------------------------------------------------- 43,277 Energy Conversion Devices Inc.(1) 2,164 - -------------------------------------------------------------------------------- 9,951 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 5.3% - -------------------------------------------------------------------------------- 77,628 Daktronics Inc. 3,045 - -------------------------------------------------------------------------------- 37,761 Itron Inc.(1) 2,532 - -------------------------------------------------------------------------------- 61,990 Littelfuse, Inc.(1) 2,002 - -------------------------------------------------------------------------------- 175,638 Plexus Corp.(1) 7,650 - -------------------------------------------------------------------------------- 15,229 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 9.3% - -------------------------------------------------------------------------------- 304,042 Awilco Offshore ASA ORD(1) 2,846 - -------------------------------------------------------------------------------- 40,813 Helmerich & Payne, Inc. 2,969 - -------------------------------------------------------------------------------- 449,016 Matrix Service Co.(1) 5,124 - -------------------------------------------------------------------------------- 74,220 Oil States International, Inc.(1) 2,996 - -------------------------------------------------------------------------------- 34,760 Schoeller-Bleckmann Oilfield Equipment AG ORD 1,447 - -------------------------------------------------------------------------------- 243,388 Socotherm SpA ORD 4,480 - -------------------------------------------------------------------------------- 58,562 TETRA Technologies, Inc.(1) 2,881 - -------------------------------------------------------------------------------- 70,474 Universal Compression Holdings Inc.(1) 3,939 - -------------------------------------------------------------------------------- 26,682 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 1.3% - -------------------------------------------------------------------------------- 376,817 SunOpta Inc.(1) 3,840 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 2.1% - -------------------------------------------------------------------------------- 162,542 Abaxis, Inc.(1) 4,246 - -------------------------------------------------------------------------------- 162,193 Biolase Technology Inc. 1,727 - -------------------------------------------------------------------------------- 5,973 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 0.3% - -------------------------------------------------------------------------------- 78,688 Five Star Quality Care Inc.(1) 810 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 4.4% - -------------------------------------------------------------------------------- 74,496 Buffalo Wild Wings Inc.(1) 3,217 - -------------------------------------------------------------------------------- 84,105 Penn National Gaming, Inc.(1) 3,424 - -------------------------------------------------------------------------------- 83,893 Pinnacle Entertainment Inc.(1) 2,290 - -------------------------------------------------------------------------------- 9,846,000 Regal Hotels International Holdings Ltd. ORD 940 - -------------------------------------------------------------------------------- 77,471 Shuffle Master Inc.(1) 2,863 - -------------------------------------------------------------------------------- 12,734 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 9 New Opportunities - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 3.6% - -------------------------------------------------------------------------------- 45,491 Alloy Inc.(1) $ 567 - -------------------------------------------------------------------------------- 139,441 dELiA*s Inc.(1) 1,482 - -------------------------------------------------------------------------------- 74,047 NutriSystem, Inc.(1) 5,024 - -------------------------------------------------------------------------------- 104,832 VistaPrint Ltd.(1) 3,353 - -------------------------------------------------------------------------------- 10,426 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 2.3% - -------------------------------------------------------------------------------- 57,414 Digital River Inc.(1) 2,500 - -------------------------------------------------------------------------------- 213,506 Saba Software, Inc.(1) 1,243 - -------------------------------------------------------------------------------- 76,720 Travelzoo Inc.(1) 2,955 - -------------------------------------------------------------------------------- 6,698 - -------------------------------------------------------------------------------- IT SERVICES -- 2.7% - -------------------------------------------------------------------------------- 72,011 Euronet Worldwide Inc.(1) 2,574 - -------------------------------------------------------------------------------- 217,087 Ness Technologies, Inc.(1) 2,637 - -------------------------------------------------------------------------------- 329,593 Sapient Corp.(1) 2,581 - -------------------------------------------------------------------------------- 7,792 - -------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS -- 0.9% - -------------------------------------------------------------------------------- 219,857 K2 Inc.(1) 2,592 - -------------------------------------------------------------------------------- MACHINERY -- 5.0% - -------------------------------------------------------------------------------- 214,000 Aichi Corp. ORD 2,376 - -------------------------------------------------------------------------------- 32,640 American Science and Engineering Inc.(1) 2,798 - -------------------------------------------------------------------------------- 404,047 Deutz AG ORD(1) 3,699 - -------------------------------------------------------------------------------- 47,134 Gardner Denver Inc.(1) 3,513 - -------------------------------------------------------------------------------- 18,964 Komax Holding AG ORD(1) 1,965 - -------------------------------------------------------------------------------- 14,351 - -------------------------------------------------------------------------------- METALS & MINING -- 4.9% - -------------------------------------------------------------------------------- 7,434 Olympic Steel Inc. 234 - -------------------------------------------------------------------------------- 34,177 Oregon Steel Mills, Inc.(1) 1,693 - -------------------------------------------------------------------------------- 167,779 Titanium Metals Corp.(1) 12,021 - -------------------------------------------------------------------------------- 13,948 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 0.8% - -------------------------------------------------------------------------------- 164,793 MC Shipping Inc. 2,175 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 3.2% - -------------------------------------------------------------------------------- 186,977 Aspreva Pharmaceuticals Corp.(1) 6,357 - -------------------------------------------------------------------------------- 124,567 First Horizon Pharmaceutical Corporation(1) 2,774 - -------------------------------------------------------------------------------- 9,131 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS -- 3.9% - -------------------------------------------------------------------------------- 115,673 Eagle Hospitality Properties Trust Inc. 1,040 - -------------------------------------------------------------------------------- 163,351 Education Realty Trust, Inc. 2,437 - -------------------------------------------------------------------------------- 228,547 FelCor Lodging Trust Inc. 4,948 - -------------------------------------------------------------------------------- 224,738 Highland Hospitality Corp. 2,899 - -------------------------------------------------------------------------------- 11,324 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 5.9% - -------------------------------------------------------------------------------- 333,870 Anadigics, Inc.(1) $ 2,988 - -------------------------------------------------------------------------------- 68,952 Nextest Systems Corp.(1) 1,071 - -------------------------------------------------------------------------------- 354,585 ON Semiconductor Corp.(1) 2,542 - -------------------------------------------------------------------------------- 394,847 Skyworks Solutions, Inc.(1) 2,823 - -------------------------------------------------------------------------------- 358,519 STATS ChipPAC Ltd. ADR(1) 3,051 - -------------------------------------------------------------------------------- 831,327 Transwitch Corp.(1) 1,771 - -------------------------------------------------------------------------------- 99,555 Trident Microsystems, Inc.(1) 2,648 - -------------------------------------------------------------------------------- 16,894 - -------------------------------------------------------------------------------- SOFTWARE -- 2.1% - -------------------------------------------------------------------------------- 164,499 Opsware Inc.(1) 1,392 - -------------------------------------------------------------------------------- 363,678 Smith Micro Software Inc.(1) 4,517 - -------------------------------------------------------------------------------- 5,909 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 6.0% - -------------------------------------------------------------------------------- 99,248 Aeropostale Inc.(1) 3,048 - -------------------------------------------------------------------------------- 172,874 Dress Barn Inc.(1) 4,372 - -------------------------------------------------------------------------------- 58,408 GameStop Corp. Cl A(1) 2,757 - -------------------------------------------------------------------------------- 55,368 Pantry Inc. (The)(1) 3,665 - -------------------------------------------------------------------------------- 177,022 United Retail Group Inc.(1) 3,471 - -------------------------------------------------------------------------------- 17,313 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $215,460) 279,319 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.7% - -------------------------------------------------------------------------------- Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 7.125% - 8.125%, 8/15/19 - 2/15/23, valued at $1,934), in a joint trading account at 4.67%, dated 4/28/06, due 5/1/06 (Delivery value $1,901) (Cost $1,900) 1,900 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 97.9% (Cost $217,360) 281,219 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 2.1% 5,914 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $287,133 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt ORD = Foreign Ordinary Share (1) Non-income producing. See Notes to Financial Statements. - ------ 10 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) - -------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------- Investment securities, at value (cost of $217,360) $281,219 - -------------------------------------------------------------------- Cash 3,091 - -------------------------------------------------------------------- Receivable for investments sold 18,361 - -------------------------------------------------------------------- Dividends and interest receivable 110 - -------------------------------------------------------------------------------- 302,781 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------- Payable for investments purchased 15,308 - -------------------------------------------------------------------- Accrued management fees 340 - -------------------------------------------------------------------------------- 15,648 - -------------------------------------------------------------------------------- NET ASSETS $287,133 ================================================================================ CAPITAL SHARES, $0.01 PAR VALUE Authorized 300,000 ================================================================================ Outstanding 41,219 ================================================================================ NET ASSET VALUE PER SHARE $6.97 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------- Capital (par value and paid-in surplus) $357,033 - -------------------------------------------------------------------- Accumulated net investment loss (1,550) - -------------------------------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (132,210) - -------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 63,860 - -------------------------------------------------------------------------------- $287,133 ================================================================================ See Notes to Financial Statements. - ------ 11 Statement of Operations FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - -------------------------------------------------------------------- Dividends $ 324 - -------------------------------------------------------------------- Interest 69 - -------------------------------------------------------------------------------- 393 - -------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------------- Management fees 1,940 - -------------------------------------------------------------------- Directors' fees and expenses 2 - -------------------------------------------------------------------- Other expenses 1 - -------------------------------------------------------------------------------- 1,943 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (1,550) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------- Net realized gain (loss) on investment and foreign currency transactions 24,107 - -------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies 32,926 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 57,033 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $55,483 ================================================================================ See Notes to Financial Statements. - ------ 12 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ (1,550) $ (2,518) - ----------------------------------------------------- Net realized gain (loss) 24,107 29,887 - ----------------------------------------------------- Change in net unrealized appreciation (depreciation) 32,926 120 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 55,483 27,489 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Proceeds from shares sold 15,265 12,549 - ----------------------------------------------------- Payments for shares redeemed(1) (24,079) (73,129) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (8,814) (60,580) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 46,669 (33,091) NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 240,464 273,555 - -------------------------------------------------------------------------------- End of period $287,133 $240,464 ================================================================================ Accumulated net investment loss $(1,550) -- ================================================================================ TRANSACTIONS IN SHARES OF THE FUND - -------------------------------------------------------------------------------- Sold 2,335 2,284 - ----------------------------------------------------- Redeemed (3,834) (13,618) - -------------------------------------------------------------------------------- Net increase (decrease) in shares of the fund (1,499) (11,334) ================================================================================ (1) Net of redemption fees of $10 and $10 for 2006 and 2005, respectively. See Notes to Financial Statements. - ------ 13 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. New Opportunities Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund's investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in common stocks of smaller-sized companies that management believes will increase in value over time. The following is a summary of the fund's significant accounting policies. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the fund to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. (continued) - ------ 14 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. REDEMPTION -- The fund may impose a 2% redemption fee on shares held less than 180 days. The redemption fee is recorded as a reduction in the cost of shares redeemed. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when a fund sells securities to meet investor redemptions. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in the fund's investment strategy (strategy assets) to calculate the appropriate fee rate for the fund. The strategy assets include the fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for the fund is as follows: INVESTOR CLASS - ----------------------------------------------------------------------------- STRATEGY ASSETS - ----------------------------------------------------------------------------- First $250 million 1.50% - ----------------------------------------------------------------------------- Next $250 million 1.30% - ----------------------------------------------------------------------------- Over $500 million 1.10% - ----------------------------------------------------------------------------- The effective annual management fee for the fund for the six months ended April 30, 2006 was 1.49%. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation's transfer agent, American Century Services, LLC. The fund has a bank line of credit agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. (continued) - ------ 15 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2006, were $322,942 and $336,040, respectively. 4. BANK LINE OF CREDIT The fund, along with certain other funds managed by ACIM or ACGIM, has a $500 million unsecured bank line of credit agreement with JPMCB, which was renewed from $575 million effective December 14, 2005. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the six months ended April 30, 2006. 5. RISK FACTORS The fund concentrates its investments in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies. 6. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: Federal tax cost of investments $217,588 ================================================================================ Gross tax appreciation of investments $ 65,898 - ----------------------------------------------------------------- Gross tax depreciation of investments (2,267) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $ 63,631 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and return of capital dividends. As of October 31, 2005, the fund had accumulated capital losses of $155,814, which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Capital loss carryovers of $118,116 and $37,698 expire in 2009 through 2010, respectively. - ------ 16 New Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.63 $5.06 $5.06 $4.01 $4.80 $15.35 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------- Net Investment Income (Loss) (0.04) (0.06) (0.06) (0.04) (0.05) (0.05) - ----------------- Net Realized and Unrealized Gain (Loss) 1.38 0.63 0.06 1.09 (0.74) (6.85) - -------------------------------------------------------------------------------- Total From Investment Operations 1.34 0.57 -- 1.05 (0.79) (6.90) - -------------------------------------------------------------------------------- Distributions - ----------------- From Net Realized Gains -- -- -- -- -- (3.65) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $6.97 $5.63 $5.06 $5.06 $4.01 $4.80 ================================================================================ TOTAL RETURN(2) 23.80% 11.26% 0.00% 26.18% (16.46)% (53.81)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.49%(3) 1.50% 1.49% 1.50% 1.50% 1.50% - ----------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.19)%(3) (0.98)% (1.04)% (0.98)% (1.02)% (0.72)% - ----------------- Portfolio Turnover Rate 124% 260% 269% 217% 175% 189% - ----------------- Net Assets, End of Period (in thousands) $287,133 $240,464 $273,555 $318,226 $297,180 $380,741 - -------------------------------------------------------------------------------- (1) For the six months ended April 30, 2006 (unaudited). (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (3) Annualized. See Notes to Financial Statements. - ------ 17 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 18 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The LIPPER SMALL-CAP GROWTH FUNDS INDEX is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Small Cap Growth fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL 2000(reg.tm) INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000(reg.tm) GROWTH INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth rates. The RUSSELL 2000(reg.tm) VALUE INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth rates. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 19 Notes - ------ 20 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor 0606 SH-SAN-49692S (c)2006 American Century Proprietary Holdings, Inc. All rights reserved.
[front cover] American Century Investments SEMIANNUAL REPORT [photo of man and woman] APRIL 30, 2006 Balanced Fund [american century investments logo and text logo] Table of Contents Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 U.S. Market Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 BALANCED Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Stock Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Top Five Stock Industries . . . . . . . . . . . . . . . . . . . . . . . . . 5 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . . . 6 Key Fixed-Income Portfolio Statistics . . . . . . . . . . . . . . . . . . . 6 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . 19 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . .21 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 22 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 OTHER INFORMATION Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 The opinions expressed in the Market Perspective and the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century Balanced Fund for the six months ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor, and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news--in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company--it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective [photo of John Schniedwind] BY JOHN SCHNIEDWIND, CHIEF INVESTMENT OFFICER, QUANTITATIVE EQUITY U.S. ECONOMY REBOUNDED FROM FOURTH-QUARTER SLUMP Economic growth clearly shifted gears during the six months ended April 30, 2006. The devastating 2005 hurricane season and its impact, especially on energy prices, helped cause a fourth quarter slump that saw the real annualized quarterly rate of gross domestic product (GDP) growth dip to just 1.7%, the lowest rate since the first quarter of 2003. Momentum shifted when real GDP growth rebounded to a 5.3% annualized rate in the first quarter of 2006, according to the government's second set of estimates. This was the highest rate since the third quarter of 2003. Improving labor market conditions helped spur the growth surge--the national unemployment rate dropped to 4.7%, a four-year low, capping the best first quarter for hiring since 2000. U.S. STOCKS REBOUNDED FROM OCTOBER 2005 SELLOFF As shown in the Market Returns table at right, the stock market recovered nicely from a post-hurricane, inflation worry-related downturn that caused the major indices to fall 1-2% in October 2005. The S&P 500 rose for five of the six following months (December was the exception), with all 10 sectors posting gains despite rising interest rates and higher energy prices. Generally stronger-than-expected profits and expectations that the Federal Reserve might stop raising its interest rate target by mid-2006 helped fuel the rally. Leading sectors included energy and industrials, while utilities and health care lagged. U.S. BOND YIELDS ROSE AS ECONOMY STRENGTHENED Similar to the economy, the six-month period spanned a notable shift in conditions for bonds. From October 31, 2005 to January 17, 2006, the 10-year Treasury note yield fell from 4.55% to 4.33% as the economy weakened and inflation fears ebbed. But as the economy reaccelerated and inflation concerns returned, the yield climbed for the next four months, topping 5% for the first time since 2002 before closing at 5.05% on April 28. The result, as shown in the Market Returns table, was a negative return for the Treasury market and modest returns for the broad market and higher-yielding sectors. - -------------------------------------------------------------------------------- U.S. MARKET RETURNS* For the six months ended April 30, 2006 - -------------------------------------------------------------------------------- STOCK INDICES - -------------------------------------------------------------------------------- S&P 500 9.64% - -------------------------------------------------------------------------------- S&P 500/Citigroup Growth 6.39% - -------------------------------------------------------------------------------- S&P 500/Citigroup Value 12.77% - -------------------------------------------------------------------------------- Nasdaq Composite 10.02% - -------------------------------------------------------------------------------- LEHMAN BROTHERS BOND INDICES - -------------------------------------------------------------------------------- Aggregate (multi-sector, combined) 0.56% - -------------------------------------------------------------------------------- Fixed-Rate Mortgage-Backed 1.25% - -------------------------------------------------------------------------------- Treasury -0.14% - -------------------------------------------------------------------------------- Corporate (investment-grade) 0.06% - -------------------------------------------------------------------------------- Agency 0.87% - -------------------------------------------------------------------------------- *Total returns for periods less than one year are not annualized. Sources: Lipper Inc., Lehman Brothers Inc. - ------ 2 Balanced - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ----------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 6.00% 9.43% 4.43% 6.96% 9.05% 10/20/88 - -------------------------------------------------------------------------------- BLENDED INDEX 5.95% 9.37% 3.97% 8.23% 10.23%(2) -- - -------------------------------------------------------------------------------- S&P 500 INDEX(3) 9.64% 15.42% 2.70% 8.94% 11.71%(2) -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(3) 0.56% 0.71% 5.16% 6.33% 7.42%(2) -- - -------------------------------------------------------------------------------- Institutional Class 6.04% 9.65% 4.64% -- 3.00% 5/1/00 - -------------------------------------------------------------------------------- Advisor Class 5.81% 9.17% 4.17% -- 6.06% 1/6/97 - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Since 10/31/88, the date nearest the Investor Class's inception for which data are available. (3) Data provided by Lipper Inc. - A Reuters Company. (c)2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. (continued) - ------ 3 Balanced - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made April 30, 1996
ONE-YEAR RETURNS OVER 10 YEARS Periods ended April 30 - --------------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------------- Investor Class 10.24% 25.61% 10.05% 8.16% -4.25% -5.14% -2.95% 14.98% 7.23% 9.43% - --------------------------------------------------------------------------------------------------------- Blended index 17.78% 28.45% 16.04% 6.80% -3.14% -4.54% -3.82% 14.14% 6.01% 9.37% - --------------------------------------------------------------------------------------------------------- S&P 500 Index 25.13% 41.07% 21.82% 10.13% -12.97% -12.63% -13.31% 22.88% 6.34% 15.42% - --------------------------------------------------------------------------------------------------------- Lehman Brothers U.S. Aggregate Index 7.08% 10.91% 6.27% 1.26% 12.39% 7.84% 10.47% 1.82% 5.26% 0.71% - --------------------------------------------------------------------------------------------------------- Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 4 Balanced - Portfolio Commentary PORTFOLIO TEAM LEADER: JEFF TYLER PERFORMANCE SUMMARY Balanced outperformed its benchmark for the six months ended April 30, 2006, returning 6.00%.* The benchmark (a custom blended index of 60% S&P 500 Index and 40% Lehman Brothers U.S. Aggregate Index) gained 5.95%. Strong stock performance was the primary factor that pushed both the fund and the benchmark higher. Balanced outpaced the blended index primarily because favorable security selection helped the fund's equity portfolio outgain the S&P 500. EQUITY PORTFOLIO STRATEGY The goal of Balanced's equity portfolio is to provide better returns than the S&P 500 without taking on significant additional risk. We use a two-step approach for stock selection and portfolio construction, relying on computer models as key decision-making tools. One model ranks stocks based on their expected return, using both growth and value measures. Another creates a portfolio that balances high-ranking stocks with an overall risk level that compares with that of the S&P 500. The results speak for themselves--over each of the last four 12-month periods ended April 30, the equity portfolio has outperformed the S&P 500. EQUITY DECISIONS THAT MOST AFFECTED PERFORMANCE Net of operating expenses, Balanced's equity portfolio returned 9.96% for the six months, compared with 9.64% for the S&P 500 (index returns are not reduced by expenses). Global economic growth and the resulting run-up in commodities prices were key story lines for the period--crude oil rose 20%, gold gained 40%, and copper jumped 79%. This helped push the energy and materials sectors of the S&P 500 up 17% and 23%, respectively. Guidance from our models positioned the portfolio more favorably, compared with the index, in several stocks that contributed significantly to - -------------------------------------------------------------------------------- BALANCED'S TOP TEN STOCK HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF EQUITY % OF S&P HOLDINGS 500 INDEX - -------------------------------------------------------------------------------- Exxon Mobil Corp. 4.5% 3.2% - -------------------------------------------------------------------------------- International Business Machines Corp. 2.6% 1.1% - -------------------------------------------------------------------------------- Boeing Co. 2.1% 0.6% - -------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The) 2.1% 0.6% - -------------------------------------------------------------------------------- Hewlett-Packard Co. 2.1% 0.8% - -------------------------------------------------------------------------------- TXU Corp. 1.8% 0.2% - -------------------------------------------------------------------------------- Coca-Cola Company (The) 1.8% 0.7% - -------------------------------------------------------------------------------- Wells Fargo & Co. 1.7% 1.0% - -------------------------------------------------------------------------------- Capital One Financial Corp. 1.7% 0.2% - -------------------------------------------------------------------------------- Colgate-Palmolive Co. 1.7% 0.3% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BALANCED'S TOP FIVE STOCK INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF EQUITY % OF S&P HOLDINGS 500 INDEX - -------------------------------------------------------------------------------- Oil, Gas & Consumable Fuels 11.4% 7.9% - -------------------------------------------------------------------------------- Health Care Providers & Services 6.5% 2.7% - -------------------------------------------------------------------------------- Capital Markets 6.5% 3.6% - -------------------------------------------------------------------------------- Computers & Peripherals 4.9% 2.6% - -------------------------------------------------------------------------------- Insurance 4.6% 4.8% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. (continued) - ------ 5 Balanced - Portfolio Commentary portfolio outperformance. They included overweights in steel manufacturer Nucor (up 85% for the six months), and copper producers Phelps Dodge (up 54%) and Freeport-McMoRan Copper & Gold (up 35%). FIXED-INCOME PORTFOLIO STRATEGY Balanced's fixed-income portfolio is also index-oriented, providing a broad, roughly market capitalization-based mix of income-producing, investment-grade debt securities. They may include bonds backed by mortgages or other assets, high- and medium-grade corporate bonds, and U.S. government securities. We use an active, multi-step process that seeks to identify the best relative value among these sectors, then we apply appropriate yield curve/duration positioning, security selection, and portfolio construction. FIXED-INCOME DECISIONS THAT MOST AFFECTED PERFORMANCE Net of operating expenses, Balanced's bond portfolio returned 0.29% for the six months, compared with 0.56% for the Lehman Brothers U.S. Aggregate Index (index returns are not reduced by expenses). In anticipation of higher interest rates, we positioned the portfolio defensively compared with the index, which meant keeping duration relatively short, underweighting Treasury securities, and overweighting agency securities and higher-yielding securitized sectors. It also meant favoring mortgage-backed over corporate securities because of concerns about rising credit risk as interest rates climb. HOW THE FUND FITS IN A DIVERSIFIED INVESTMENT STRATEGY Balanced is designed to serve as a core holding for investors seeking "ready-made" stock/bond diversification. It invests in diversified U.S. stock and bond portfolios, with an approximately 60/40 stock/bond mix. Balanced is also intended for investors who seek long-term growth with less volatility than funds that just hold growth stocks. The fund's bond portfolio is designed to help cushion and offset the stock portfolio's performance swings while providing income; meanwhile the stock portfolio provides long-term growth potential, which is important to investors who wish to guard against inflation. - -------------------------------------------------------------------------------- KEY FIXED-INCOME PORTFOLIO STATISTICS - -------------------------------------------------------------------------------- AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Weighted Average Maturity 6.4 years 5.7 years - -------------------------------------------------------------------------------- Average Duration (Effective) 4.7 years 4.4 years - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO* - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Common Stocks 51.2% 50.6% - -------------------------------------------------------------------------------- Mortgage- & Asset- Backed Securities 19.0% 21.4% - -------------------------------------------------------------------------------- Corporate Bonds 6.7% 8.5% - -------------------------------------------------------------------------------- U.S. Government Agency Securities 6.5% 5.0% - -------------------------------------------------------------------------------- U.S. Treasury Securities 3.6% 4.3% - -------------------------------------------------------------------------------- Other 0.3% 0.9% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.7% 1.6% - -------------------------------------------------------------------------------- Collateral Received for Securities Lending 11.0% 7.7% - -------------------------------------------------------------------------------- *See Schedule of Investments for a presentation of the types of investments in the portfolio based on net assets. - ------ 6 Shareholder Fee Example (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. (continued) - ------ 7 Shareholder Fee Example (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - -------------------------------------------------------------------------------- BALANCED SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,060.00 $4.60 0.90% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,060.40 $3.58 0.70% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,058.10 $5.87 1.15% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,020.33 $4.51 0.90% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,021.32 $3.51 0.70% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,019.09 $5.76 1.15% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 8 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 61.0% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE -- 1.7% - -------------------------------------------------------------------------------- 101,653 Boeing Co. $ 8,483 - -------------------------------------------------------------------------------- 31,739 Lockheed Martin Corp. 2,409 - -------------------------------------------------------------------------------- 10,892 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS -- 0.4% - -------------------------------------------------------------------------------- 4,221 FedEx Corporation 486 - -------------------------------------------------------------------------------- 22,683 United Parcel Service, Inc. Cl B 1,839 - -------------------------------------------------------------------------------- 2,325 - -------------------------------------------------------------------------------- AIRLINES(1) - -------------------------------------------------------------------------------- 19,261 Southwest Airlines Co. 312 - -------------------------------------------------------------------------------- AUTO COMPONENTS -- 0.3% - -------------------------------------------------------------------------------- 131,992 Goodyear Tire & Rubber Co. (The)(2)(3) 1,848 - -------------------------------------------------------------------------------- BEVERAGES -- 2.4% - -------------------------------------------------------------------------------- 22,354 Brown-Forman Corp. Cl B 1,665 - -------------------------------------------------------------------------------- 166,568 Coca-Cola Company (The) 6,990 - -------------------------------------------------------------------------------- 100,312 Pepsi Bottling Group Inc. 3,220 - -------------------------------------------------------------------------------- 83,017 PepsiAmericas, Inc. 1,961 - -------------------------------------------------------------------------------- 27,045 PepsiCo, Inc. 1,575 - -------------------------------------------------------------------------------- 15,411 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 1.5% - -------------------------------------------------------------------------------- 68,899 Alkermes Inc.(2)(3) 1,479 - -------------------------------------------------------------------------------- 93,088 Amgen Inc.(2) 6,303 - -------------------------------------------------------------------------------- 23,123 Applera Corporation-Applied Biosystems Group 667 - -------------------------------------------------------------------------------- 4,819 Biogen Idec Inc.(2) 216 - -------------------------------------------------------------------------------- 1,373 Genentech, Inc.(2) 109 - -------------------------------------------------------------------------------- 19,025 Gilead Sciences, Inc.(2) 1,094 - -------------------------------------------------------------------------------- 9,868 - -------------------------------------------------------------------------------- BUILDING PRODUCTS -- 0.4% - -------------------------------------------------------------------------------- 27,074 USG Corp.(2)(3) 2,896 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 3.9% - -------------------------------------------------------------------------------- 9,872 Federated Investors Inc. Cl B 347 - -------------------------------------------------------------------------------- 51,421 Goldman Sachs Group, Inc. (The) 8,243 - -------------------------------------------------------------------------------- 39,222 Lehman Brothers Holdings Inc. 5,928 - -------------------------------------------------------------------------------- 76,749 Mellon Financial Corp. 2,888 - -------------------------------------------------------------------------------- 31,857 Morgan Stanley 2,048 - -------------------------------------------------------------------------------- 41,314 Northern Trust Corp. 2,433 - -------------------------------------------------------------------------------- 85,586 Raymond James Financial, Inc.(3) 2,598 - -------------------------------------------------------------------------------- 19,694 State Street Corp. 1,286 - -------------------------------------------------------------------------------- 25,771 - -------------------------------------------------------------------------------- CHEMICALS -- 1.0% - -------------------------------------------------------------------------------- 81,115 Celanese Corp., Series A 1,780 - -------------------------------------------------------------------------------- 118,222 Lyondell Chemical Co. 2,849 - -------------------------------------------------------------------------------- 11,903 Monsanto Co. 993 - -------------------------------------------------------------------------------- 30,005 Westlake Chemical Corp. 911 - -------------------------------------------------------------------------------- 6,533 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 2.7% - -------------------------------------------------------------------------------- 131,899 Bank of America Corp. $ 6,584 - -------------------------------------------------------------------------------- 1,560 KeyCorp 60 - -------------------------------------------------------------------------------- 6,910 PNC Financial Services Group 494 - -------------------------------------------------------------------------------- 3,692 U.S. Bancorp 116 - -------------------------------------------------------------------------------- 58,620 Wachovia Corp. 3,508 - -------------------------------------------------------------------------------- 101,163 Wells Fargo & Co. 6,949 - -------------------------------------------------------------------------------- 17,711 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 0.4% - -------------------------------------------------------------------------------- 721 Corporate Executive Board Co. (The) - -------------------------------------------------------------------------------- 40,281 John H. Harland Company(3) 1,670 - -------------------------------------------------------------------------------- 7,041 Republic Services, Inc. Cl A 310 - -------------------------------------------------------------------------------- 3,827 Waste Management, Inc. 143 - -------------------------------------------------------------------------------- 3,719 West Corp.(2)(3) 172 - -------------------------------------------------------------------------------- 2,372 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 0.8% - -------------------------------------------------------------------------------- 211,997 Cisco Systems Inc.(2) 4,441 - -------------------------------------------------------------------------------- 25,650 Motorola, Inc. 548 - -------------------------------------------------------------------------------- 4,989 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 3.0% - -------------------------------------------------------------------------------- 8,709 Apple Computer, Inc.(2) 613 - -------------------------------------------------------------------------------- 13,377 Dell Inc.(2) 350 - -------------------------------------------------------------------------------- 253,324 Hewlett-Packard Co. 8,225 - -------------------------------------------------------------------------------- 124,593 International Business Machines Corp. 10,260 - -------------------------------------------------------------------------------- 19,448 - -------------------------------------------------------------------------------- CONSUMER FINANCE -- 2.4% - -------------------------------------------------------------------------------- 89,462 American Express Co. 4,814 - -------------------------------------------------------------------------------- 127,527 AmeriCredit Corp.(2) 3,862 - -------------------------------------------------------------------------------- 78,903 Capital One Financial Corp. 6,836 - -------------------------------------------------------------------------------- 15,512 - -------------------------------------------------------------------------------- DISTRIBUTORS -- 0.1% - -------------------------------------------------------------------------------- 19,492 Building Materials Holding Corp.(3) 651 - -------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES -- 0.2% - -------------------------------------------------------------------------------- 31,860 Education Management Corp.(2) 1,353 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 0.3% - -------------------------------------------------------------------------------- 4,350 Citigroup Inc. 217 - -------------------------------------------------------------------------------- 5,552 J.P. Morgan Chase & Co. 252 - -------------------------------------------------------------------------------- 25,196 Moody's Corp. 1,563 - -------------------------------------------------------------------------------- 2,032 - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.8% - -------------------------------------------------------------------------------- 64,080 AT&T Inc. 1,680 - -------------------------------------------------------------------------------- 40,231 BellSouth Corp. 1,359 - -------------------------------------------------------------------------------- 2,672 CenturyTel Inc. 101 - -------------------------------------------------------------------------------- 68,119 Verizon Communications 2,249 - -------------------------------------------------------------------------------- 5,389 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 9 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- ELECTRIC UTILITIES -- 1.0% - -------------------------------------------------------------------------------- 77,924 FirstEnergy Corp. $ 3,952 - -------------------------------------------------------------------------------- 122,231 Pepco Holdings, Inc.(3) 2,821 - -------------------------------------------------------------------------------- 6,773 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT(1) - -------------------------------------------------------------------------------- 957 Acuity Brands Inc. 40 - -------------------------------------------------------------------------------- 2,448 Emerson Electric Co. 207 - -------------------------------------------------------------------------------- 247 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 1.1% - -------------------------------------------------------------------------------- 106,161 Arrow Electronics, Inc.(2) 3,844 - -------------------------------------------------------------------------------- 17,601 AVX Corporation(3) 313 - -------------------------------------------------------------------------------- 47,042 Jabil Circuit, Inc.(2) 1,834 - -------------------------------------------------------------------------------- 21,743 Plexus Corp.(2)(3) 947 - -------------------------------------------------------------------------------- 6,938 - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING -- 0.8% - -------------------------------------------------------------------------------- 144,888 Kroger Co. (The)(2) 2,936 - -------------------------------------------------------------------------------- 45,504 Longs Drug Stores Corp.(3) 2,157 - -------------------------------------------------------------------------------- 9,270 Supervalu Inc. 269 - -------------------------------------------------------------------------------- 5,362 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 1.2% - -------------------------------------------------------------------------------- 88,394 Campbell Soup Company 2,841 - -------------------------------------------------------------------------------- 73,562 General Mills, Inc. 3,629 - -------------------------------------------------------------------------------- 846 Seaboard Corp.(3) 1,305 - -------------------------------------------------------------------------------- 7,775 - -------------------------------------------------------------------------------- GAS UTILITIES -- 0.1% - -------------------------------------------------------------------------------- 17,157 UGI Corp. 384 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 0.9% - -------------------------------------------------------------------------------- 1,937 Alcon Inc.(2) 197 - -------------------------------------------------------------------------------- 71,735 Becton Dickinson & Co. 4,522 - -------------------------------------------------------------------------------- 17,828 Kinetic Concepts Inc.(2) 778 - -------------------------------------------------------------------------------- 3,729 Medtronic, Inc. 187 - -------------------------------------------------------------------------------- 5,684 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 4.0% - -------------------------------------------------------------------------------- 3,074 Aetna Inc. 118 - -------------------------------------------------------------------------------- 145,870 AmerisourceBergen Corp. 6,295 - -------------------------------------------------------------------------------- 74,216 Cardinal Health, Inc. 4,998 - -------------------------------------------------------------------------------- 43,005 Express Scripts, Inc.(2) 3,360 - -------------------------------------------------------------------------------- 2,297 Humana Inc.(2) 104 - -------------------------------------------------------------------------------- 116,945 McKesson Corp. 5,683 - -------------------------------------------------------------------------------- 20,199 Sierra Health Services, Inc.(2)(3) 792 - -------------------------------------------------------------------------------- 94,721 UnitedHealth Group Incorporated 4,711 - -------------------------------------------------------------------------------- 26,061 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 1.6% - -------------------------------------------------------------------------------- 57,337 Choice Hotels International Inc.(3) 3,069 - -------------------------------------------------------------------------------- 111,428 Darden Restaurants, Inc. 4,413 - -------------------------------------------------------------------------------- 14,531 Domino's Pizza Inc.(3) 383 - -------------------------------------------------------------------------------- 12,935 Papa John's International Inc.(2) 432 - -------------------------------------------------------------------------------- 5,417 Royal Caribbean Cruises Ltd.(3) 226 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 37,207 Yum! Brands, Inc. $ 1,923 - -------------------------------------------------------------------------------- 10,446 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES(1) - -------------------------------------------------------------------------------- 1,518 Fortune Brands, Inc. 122 - -------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS -- 1.1% - -------------------------------------------------------------------------------- 113,161 Colgate-Palmolive Co. 6,690 - -------------------------------------------------------------------------------- 4,953 Procter & Gamble Co. (The) 288 - -------------------------------------------------------------------------------- 6,978 - -------------------------------------------------------------------------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS -- 1.7% - -------------------------------------------------------------------------------- 252,728 AES Corporation (The)(2) 4,289 - -------------------------------------------------------------------------------- 143,311 TXU Corp. 7,112 - -------------------------------------------------------------------------------- 11,401 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES -- 0.1% - -------------------------------------------------------------------------------- 12,139 Teleflex Inc.(3) 792 - -------------------------------------------------------------------------------- INSURANCE -- 2.8% - -------------------------------------------------------------------------------- 29,503 Ace, Ltd. 1,639 - -------------------------------------------------------------------------------- 21,405 Arch Capital Group Ltd.(2)(3) 1,300 - -------------------------------------------------------------------------------- 152,107 Berkley (W.R.) Corp. 5,692 - -------------------------------------------------------------------------------- 55,992 Chubb Corp. 2,886 - -------------------------------------------------------------------------------- 108,529 First American Financial Corp. (The) 4,623 - -------------------------------------------------------------------------------- 12,756 LandAmerica Financial Group Inc.(3) 885 - -------------------------------------------------------------------------------- 2,390 Protective Life Corporation 120 - -------------------------------------------------------------------------------- 24,675 Zenith National Insurance Corp. 1,089 - -------------------------------------------------------------------------------- 18,234 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 0.2% - -------------------------------------------------------------------------------- 448 Google Inc. Cl A(2) 187 - -------------------------------------------------------------------------------- 101,174 RealNetworks Inc.(2)(3) 1,014 - -------------------------------------------------------------------------------- 1,201 - -------------------------------------------------------------------------------- IT SERVICES -- 1.6% - -------------------------------------------------------------------------------- 139,055 Accenture Ltd. Cl A 4,042 - -------------------------------------------------------------------------------- 125,011 Acxiom Corp.(3) 3,241 - -------------------------------------------------------------------------------- 3,894 Computer Sciences Corp.(2) 228 - -------------------------------------------------------------------------------- 65,341 Global Payments Inc.(3) 3,099 - -------------------------------------------------------------------------------- 10,610 - -------------------------------------------------------------------------------- MACHINERY -- 1.1% - -------------------------------------------------------------------------------- 57,553 Cummins Inc.(3) 6,014 - -------------------------------------------------------------------------------- 2,575 Danaher Corp. 165 - -------------------------------------------------------------------------------- 38,516 Navistar International Corp.(2)(3) 1,016 - -------------------------------------------------------------------------------- 7,195 - -------------------------------------------------------------------------------- MEDIA -- 1.6% - -------------------------------------------------------------------------------- 24,220 CBS Corp. Cl B 617 - -------------------------------------------------------------------------------- 122,478 Disney (Walt) Co. 3,424 - -------------------------------------------------------------------------------- 56,994 DreamWorks Animation SKG Inc.(2)(3) 1,545 - -------------------------------------------------------------------------------- 14,107 John Wiley & Sons Inc. Cl A 517 - -------------------------------------------------------------------------------- 195,501 Time Warner Inc. 3,402 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 10 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 23,126 Viacom Inc. Cl B $ 921 - -------------------------------------------------------------------------------- 10,426 - -------------------------------------------------------------------------------- METALS & MINING -- 1.5% - -------------------------------------------------------------------------------- 2,003 Cleveland-Cliffs Inc.(3) 171 - -------------------------------------------------------------------------------- 51,630 Freeport-McMoRan Copper & Gold, Inc. Cl B 3,334 - -------------------------------------------------------------------------------- 46,231 Nucor Corp. 5,032 - -------------------------------------------------------------------------------- 12,529 Quanex Corporation(3) 536 - -------------------------------------------------------------------------------- 6,928 Reliance Steel & Aluminum Company 616 - -------------------------------------------------------------------------------- 9,689 - -------------------------------------------------------------------------------- MULTI-UTILITIES -- 0.1% - -------------------------------------------------------------------------------- 4,564 OGE Energy Corp.(3) 138 - -------------------------------------------------------------------------------- 19,820 Vectren Corp.(3) 529 - -------------------------------------------------------------------------------- 667 - -------------------------------------------------------------------------------- MULTILINE RETAIL -- 1.1% - -------------------------------------------------------------------------------- 47,448 Dollar Tree Stores Inc.(2)(3) 1,237 - -------------------------------------------------------------------------------- 90,074 J.C. Penney Co. Inc. 5,896 - -------------------------------------------------------------------------------- 2,205 Target Corp. 117 - -------------------------------------------------------------------------------- 7,250 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 6.8% - -------------------------------------------------------------------------------- 52,100 Chevron Corp. 3,179 - -------------------------------------------------------------------------------- 55,668 ConocoPhillips 3,724 - -------------------------------------------------------------------------------- 287,579 Exxon Mobil Corp. 18,141 - -------------------------------------------------------------------------------- 1,783 Frontier Oil Corp. 108 - -------------------------------------------------------------------------------- 64,029 Kerr-McGee Corp. 6,394 - -------------------------------------------------------------------------------- 36,597 Marathon Oil Corp. 2,904 - -------------------------------------------------------------------------------- 11,725 Occidental Petroleum Corp. 1,205 - -------------------------------------------------------------------------------- 61,264 Sunoco, Inc. 4,965 - -------------------------------------------------------------------------------- 6,660 Tesoro Corporation 466 - -------------------------------------------------------------------------------- 67,058 Valero Energy Corp. 4,341 - -------------------------------------------------------------------------------- 45,427 - -------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS -- 0.3% - -------------------------------------------------------------------------------- 82,391 Louisiana-Pacific Corp.(3) 2,272 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 0.8% - -------------------------------------------------------------------------------- 4,731 Abbott Laboratories 202 - -------------------------------------------------------------------------------- 32,099 Alpharma Inc. Cl A(3) 843 - -------------------------------------------------------------------------------- 9,836 Johnson & Johnson 576 - -------------------------------------------------------------------------------- 143,869 King Pharmaceuticals, Inc.(2) 2,502 - -------------------------------------------------------------------------------- 22,745 Merck & Co., Inc. 783 - -------------------------------------------------------------------------------- 5,557 Pfizer Inc. 141 - -------------------------------------------------------------------------------- 5,047 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS -- 0.7% - -------------------------------------------------------------------------------- 96,514 CBL & Associates Properties, Inc.(3) 3,859 - -------------------------------------------------------------------------------- 10,179 Taubman Centers Inc.(3) 419 - -------------------------------------------------------------------------------- 4,278 - -------------------------------------------------------------------------------- ROAD & RAIL -- 0.1% - -------------------------------------------------------------------------------- 1,200 Burlington Northern Santa Fe Corp. 95 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 3,836 Norfolk Southern Corp. $ 207 - -------------------------------------------------------------------------------- 5,180 Union Pacific Corp. 473 - -------------------------------------------------------------------------------- 775 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.3% - -------------------------------------------------------------------------------- 40,403 Lam Research Corp.(2) 1,975 - -------------------------------------------------------------------------------- 171,381 National Semiconductor Corp. 5,137 - -------------------------------------------------------------------------------- 39,734 ON Semiconductor Corp.(2)(3) 285 - -------------------------------------------------------------------------------- 37,528 Texas Instruments Inc. 1,303 - -------------------------------------------------------------------------------- 8,700 - -------------------------------------------------------------------------------- SOFTWARE -- 0.7% - -------------------------------------------------------------------------------- 19,285 Autodesk, Inc.(2) 811 - -------------------------------------------------------------------------------- 11,108 BMC Software Inc.(2) 239 - -------------------------------------------------------------------------------- 15,925 Cadence Design Systems Inc.(2) 301 - -------------------------------------------------------------------------------- 17,533 Intuit Inc.(2) 950 - -------------------------------------------------------------------------------- 67,785 Microsoft Corporation 1,638 - -------------------------------------------------------------------------------- 28,610 Oracle Corp.(2) 417 - -------------------------------------------------------------------------------- 4,356 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 2.0% - -------------------------------------------------------------------------------- 118,495 Barnes & Noble Inc.(3) 5,343 - -------------------------------------------------------------------------------- 28,220 Group 1 Automotive, Inc.(3) 1,540 - -------------------------------------------------------------------------------- 68,281 Home Depot, Inc. (The) 2,726 - -------------------------------------------------------------------------------- 36,945 Lowe's Companies, Inc. 2,329 - -------------------------------------------------------------------------------- 6,691 Pantry Inc. (The)(2)(3) 443 - -------------------------------------------------------------------------------- 39,486 Payless ShoeSource, Inc.(2)(3) 907 - -------------------------------------------------------------------------------- 13,288 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS -- 0.1% - -------------------------------------------------------------------------------- 13,637 Brown Shoe Company, Inc.(3) 519 - -------------------------------------------------------------------------------- 1,166 NIKE, Inc. Cl B 95 - -------------------------------------------------------------------------------- 614 - -------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE -- 1.4% - -------------------------------------------------------------------------------- 35,755 Corus Bankshares Inc.(3) 2,393 - -------------------------------------------------------------------------------- 26,605 Downey Financial Corp.(3) 1,910 - -------------------------------------------------------------------------------- 33,849 Golden West Financial Corp. 2,433 - -------------------------------------------------------------------------------- 47,332 Washington Mutual, Inc. 2,133 - -------------------------------------------------------------------------------- 8,869 - -------------------------------------------------------------------------------- TOBACCO -- 0.1% - -------------------------------------------------------------------------------- 12,204 Loews Corp. - Carolina Group 625 - -------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS -- 0.3% - -------------------------------------------------------------------------------- 41,725 UAP Holding Corp.(3) 862 - -------------------------------------------------------------------------------- 17,900 WESCO International Inc.(2)(3) 1,343 - -------------------------------------------------------------------------------- 2,205 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 0.5% - -------------------------------------------------------------------------------- 135,974 Sprint Nextel Corp. 3,372 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $340,234) 399,376 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 11 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES(4) -- 12.2% - -------------------------------------------------------------------------------- $ 4,750 FHLMC, 5.00%, settlement date 5/16/06(5) $ 4,618 - -------------------------------------------------------------------------------- 208 FHLMC, 7.00%, 10/1/12 214 - -------------------------------------------------------------------------------- 2,887 FHLMC, 4.50%, 1/1/19(6) 2,754 - -------------------------------------------------------------------------------- 192 FHLMC, 6.50%, 1/1/28 196 - -------------------------------------------------------------------------------- 1,416 FHLMC, 5.50%, 12/1/33(6) 1,380 - -------------------------------------------------------------------------------- 6,327 FNMA, 5.00%, settlement date 5/11/06(5) 5,985 - -------------------------------------------------------------------------------- 5,775 FNMA, 5.50%, settlement date 5/11/06(5) 5,609 - -------------------------------------------------------------------------------- 10,936 FNMA, 6.00%, settlement date 5/11/06(5) 10,888 - -------------------------------------------------------------------------------- 4,438 FNMA, 5.00%, settlement date 5/16/06(5) 4,321 - -------------------------------------------------------------------------------- 8,230 FNMA, 5.50%, settlement date 5/16/06(5) 8,168 - -------------------------------------------------------------------------------- 1,582 FNMA, 6.50%, settlement date 6/13/06(5) 1,607 - -------------------------------------------------------------------------------- 375 FNMA, 6.00%, 2/1/09 377 - -------------------------------------------------------------------------------- 24 FNMA, 6.50%, 5/1/11 24 - -------------------------------------------------------------------------------- 347 FNMA, 7.50%, 11/1/11 359 - -------------------------------------------------------------------------------- 2 FNMA, 6.50%, 10/1/12 3 - -------------------------------------------------------------------------------- 36 FNMA, 6.50%, 5/1/13 37 - -------------------------------------------------------------------------------- 199 FNMA, 6.50%, 6/1/13 204 - -------------------------------------------------------------------------------- 187 FNMA, 6.00%, 1/1/14 189 - -------------------------------------------------------------------------------- 643 FNMA, 6.00%, 4/1/14 651 - -------------------------------------------------------------------------------- 3,413 FNMA, 4.50%, 5/1/19 3,256 - -------------------------------------------------------------------------------- 30 FNMA, 6.50%, 1/1/28 30 - -------------------------------------------------------------------------------- 210 FNMA, 7.00%, 1/1/28 217 - -------------------------------------------------------------------------------- 235 FNMA, 6.50%, 1/1/29 240 - -------------------------------------------------------------------------------- 250 FNMA, 7.50%, 7/1/29 260 - -------------------------------------------------------------------------------- 98 FNMA, 7.00%, 5/1/30 101 - -------------------------------------------------------------------------------- 133 FNMA, 7.50%, 9/1/30 138 - -------------------------------------------------------------------------------- 198 FNMA, 6.50%, 9/1/31 202 - -------------------------------------------------------------------------------- 67 FNMA, 7.00%, 9/1/31 69 - -------------------------------------------------------------------------------- 372 FNMA, 6.50%, 1/1/32 380 - -------------------------------------------------------------------------------- 768 FNMA, 7.00%, 6/1/32 791 - -------------------------------------------------------------------------------- 352 FNMA, 6.50%, 8/1/32 359 - -------------------------------------------------------------------------------- 1,906 FNMA, 5.50%, 6/1/33(6) 1,857 - -------------------------------------------------------------------------------- 5,525 FNMA, 5.50%, 7/1/33 5,382 - -------------------------------------------------------------------------------- 2,073 FNMA, 5.50%, 8/1/33(6) 2,019 - -------------------------------------------------------------------------------- 1,283 FNMA, 5.50%, 9/1/33(6) 1,250 - -------------------------------------------------------------------------------- 3,952 FNMA, 5.00%, 11/1/33 3,753 - -------------------------------------------------------------------------------- 8,730 FNMA, 5.50%, 1/1/34(6) 8,505 - -------------------------------------------------------------------------------- 317 GNMA, 7.00%, 4/20/26 327 - -------------------------------------------------------------------------------- 176 GNMA, 7.50%, 8/15/26 186 - -------------------------------------------------------------------------------- 63 GNMA, 7.00%, 2/15/28 65 - -------------------------------------------------------------------------------- 133 GNMA, 7.50%, 2/15/28 140 - -------------------------------------------------------------------------------- Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- $ 84 GNMA, 7.00%, 12/15/28 $ 87 - -------------------------------------------------------------------------------- 57 GNMA, 8.00%, 12/15/29 61 - -------------------------------------------------------------------------------- 391 GNMA, 7.00%, 5/15/31 406 - -------------------------------------------------------------------------------- 2,272 GNMA, 5.50%, 11/15/32(6) 2,233 - -------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Cost $81,175) 79,898 - -------------------------------------------------------------------------------- CORPORATE BONDS -- 8.0% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE -- 0.3% - -------------------------------------------------------------------------------- 630 Honeywell International Inc., 5.70%, 3/15/36 595 - -------------------------------------------------------------------------------- 145 Lockheed Martin Corp., 8.50%, 12/1/29 184 - -------------------------------------------------------------------------------- 900 United Technologies Corp., 4.375%, 5/1/10 867 - -------------------------------------------------------------------------------- 450 United Technologies Corp., 5.40%, 5/1/35(3) 414 - -------------------------------------------------------------------------------- 2,060 - -------------------------------------------------------------------------------- AUTOMOBILES(1) - -------------------------------------------------------------------------------- 145 DaimlerChrysler N.A. Holding Corp., 8.50%, 1/18/31 169 - -------------------------------------------------------------------------------- BEVERAGES -- 0.2% - -------------------------------------------------------------------------------- 640 Fortune Brands Inc., 5.375%, 1/15/16 607 - -------------------------------------------------------------------------------- 750 Miller Brewing Co., 4.25%, 8/15/08 (Acquired 1/6/04, Cost $762)(7) 731 - -------------------------------------------------------------------------------- 1,338 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 0.1% - -------------------------------------------------------------------------------- 710 Genentech, Inc., 4.75%, 7/15/15 658 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 0.5% - -------------------------------------------------------------------------------- 750 Goldman Sachs Group, Inc. (The), 5.70%, 9/1/12(3) 750 - -------------------------------------------------------------------------------- 750 Goldman Sachs Group, Inc. (The), 5.25%, 10/15/13 725 - -------------------------------------------------------------------------------- 560 Merrill Lynch & Co., Inc., 4.25%, 2/8/10(3) 537 - -------------------------------------------------------------------------------- 420 Morgan Stanley, 4.00%, 1/15/10 399 - -------------------------------------------------------------------------------- 350 Morgan Stanley, 4.25%, 5/15/10 334 - -------------------------------------------------------------------------------- 430 Morgan Stanley, 5.05%, 1/21/11(3) 420 - -------------------------------------------------------------------------------- 3,165 - -------------------------------------------------------------------------------- CHEMICALS(1) - -------------------------------------------------------------------------------- 145 Dow Chemical Co. (The), 7.375%, 11/1/29 164 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 0.8% - -------------------------------------------------------------------------------- 145 Abbey National plc, 7.95%, 10/26/29 173 - -------------------------------------------------------------------------------- 1,600 Bank of America Corp., 4.375%, 12/1/10 1,530 - -------------------------------------------------------------------------------- 670 PNC Bank N.A., 4.875%, 9/21/17 614 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 12 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- $ 500 SouthTrust Corp., 5.80%, 6/15/14 $ 495 - -------------------------------------------------------------------------------- 660 Wachovia Bank N.A., 4.80%, 11/1/14 613 - -------------------------------------------------------------------------------- 1,020 Wachovia Bank N.A., 4.875%, 2/1/15 951 - -------------------------------------------------------------------------------- 830 Wells Fargo & Co., 4.625%, 8/9/10 804 - -------------------------------------------------------------------------------- 5,180 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 0.1% - -------------------------------------------------------------------------------- 540 Waste Management, Inc., 7.00%, 7/15/28 562 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 1.2% - -------------------------------------------------------------------------------- 1,500 American General Finance Corp., Series 2002 H, 4.50%, 11/15/07 1,484 - -------------------------------------------------------------------------------- 1,000 Citigroup Inc., 5.00%, 9/15/14 949 - -------------------------------------------------------------------------------- 1,020 Ford Motor Credit Co., 6.50%, 1/25/07(3) 1,014 - -------------------------------------------------------------------------------- 560 General Electric Capital Corp. 6.125%, 2/22/11 575 - -------------------------------------------------------------------------------- 1,025 HSBC Finance Corp., 4.75%, 4/15/10(3) 997 - -------------------------------------------------------------------------------- 540 HSBC Finance Corp., 4.625%, 9/15/10 521 - -------------------------------------------------------------------------------- 830 John Deere Capital Corp., 4.50%, 8/25/08 815 - -------------------------------------------------------------------------------- 800 J.P. Morgan Chase & Co., 6.75%, 2/1/11 838 - -------------------------------------------------------------------------------- 145 National Rural Utilities Cooperative Finance Corp., 8.00%, 3/1/32 178 - -------------------------------------------------------------------------------- 540 Residential Capital Corp., 6.50%, 4/17/13 (Acquired 4/11/06- 4/26/06, Cost $537)(7) 539 - -------------------------------------------------------------------------------- 7,910 - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.4% - -------------------------------------------------------------------------------- 732 AT&T Corp., 9.05%, 11/15/11 790 - -------------------------------------------------------------------------------- 145 BellSouth Corp., 6.875%, 10/15/31 148 - -------------------------------------------------------------------------------- 145 British Telecommunications plc, 8.875%, 12/15/30 184 - -------------------------------------------------------------------------------- 690 Sprint Capital Corp., 8.375%, 3/15/12 777 - -------------------------------------------------------------------------------- 420 Telecom Italia Capital SA, 4.00%, 1/15/10 396 - -------------------------------------------------------------------------------- 145 Verizon Global Funding Corp., 7.75%, 12/1/30 160 - -------------------------------------------------------------------------------- 2,455 - -------------------------------------------------------------------------------- ELECTRIC UTILITIES -- 0.4% - -------------------------------------------------------------------------------- 420 Carolina Power & Light Co., 5.15%, 4/1/15 399 - -------------------------------------------------------------------------------- 469 CenterPoint Energy Resources Corp., 6.50%, 2/1/08 475 - -------------------------------------------------------------------------------- 145 FirstEnergy Corp., 7.375%, 11/15/31 158 - -------------------------------------------------------------------------------- 450 Florida Power & Light Co., 5.65%, 2/1/37 418 - -------------------------------------------------------------------------------- Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- $ 450 Florida Power Corp., 4.50%, 6/1/10 $ 433 - -------------------------------------------------------------------------------- 145 Hydro Quebec, 8.40%, 1/15/22 183 - -------------------------------------------------------------------------------- 480 Southern California Edison Co., 5.625%, 2/1/36 439 - -------------------------------------------------------------------------------- 2,505 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 0.1% - -------------------------------------------------------------------------------- 380 XTO Energy Inc., 6.10%, 4/1/36 359 - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING -- 0.2% - -------------------------------------------------------------------------------- 750 Wal-Mart Stores, Inc., 4.125%, 7/1/10 715 - -------------------------------------------------------------------------------- 300 Wal-Mart Stores, Inc., 5.25%, 9/1/35 264 - -------------------------------------------------------------------------------- 145 Wal-Mart Stores, Inc., 7.55%, 2/15/30 170 - -------------------------------------------------------------------------------- 1,149 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 0.2% - -------------------------------------------------------------------------------- 490 Archer-Daniels-Midland Co., 5.375%, 9/15/35(3) 432 - -------------------------------------------------------------------------------- 700 Cadbury Schweppes U.S. Finance LLC, 3.875%, 10/1/08 (Acquired 6/14/05-8/18/05, Cost $687)(3)(7) 675 - -------------------------------------------------------------------------------- 145 Kellogg Co., 7.45%, 4/1/31 166 - -------------------------------------------------------------------------------- 145 Kraft Foods Inc., 6.50%, 11/1/31 148 - -------------------------------------------------------------------------------- 1,421 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 0.1% - -------------------------------------------------------------------------------- 710 Baxter Financial Corp., 4.75%, 10/15/10 (Acquired 9/28/05, Cost $708)(7) 686 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 0.1% - -------------------------------------------------------------------------------- 730 Yum! Brands Inc., 8.875%, 4/15/11 821 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES -- 0.1% - -------------------------------------------------------------------------------- 550 D.R. Horton Inc., 7.875%, 8/15/11 590 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES -- 0.2% - -------------------------------------------------------------------------------- 1,590 General Electric Co., 5.00%, 2/1/13 1,539 - -------------------------------------------------------------------------------- INSURANCE -- 0.5% - -------------------------------------------------------------------------------- 750 Allstate Financial Global Funding, 4.25%, 9/10/08 (Acquired 9/3/03, Cost $749)(7) 733 - -------------------------------------------------------------------------------- 145 AXA SA, 8.60%, 12/15/30 180 - -------------------------------------------------------------------------------- 750 Genworth Financial Inc., 5.75%, 6/15/14 743 - -------------------------------------------------------------------------------- 400 Genworth Financial Inc., 4.95%, 10/1/15 373 - -------------------------------------------------------------------------------- 750 Monumental Global Funding II, 3.85%, 3/3/08 (Acquired 2/5/03, Cost $750)(7) 730 - -------------------------------------------------------------------------------- 450 Prudential Financial, Inc., 5.40%, 6/13/35 393 - -------------------------------------------------------------------------------- 3,152 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 13 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- MACHINERY -- 0.1% - -------------------------------------------------------------------------------- $ 440 Dover Corp., 5.375%, 10/15/35 $ 390 - -------------------------------------------------------------------------------- MEDIA -- 0.5% - -------------------------------------------------------------------------------- 131 Comcast Cable Communications Holdings Inc., 8.375%, 3/15/13 147 - -------------------------------------------------------------------------------- 1,020 Comcast Corp., 5.90%, 3/15/16(3) 997 - -------------------------------------------------------------------------------- 970 Cox Communications, Inc., 7.125%, 10/1/12 1,019 - -------------------------------------------------------------------------------- 550 News America Holdings, 7.75%, 1/20/24 590 - -------------------------------------------------------------------------------- 145 Time Warner Inc., 7.625%, 4/15/31 157 - -------------------------------------------------------------------------------- 370 Viacom Inc., 5.75%, 4/30/11 (Acquired 4/5/06, Cost $368)(3)(7) 368 - -------------------------------------------------------------------------------- 180 Viacom Inc., 6.25%, 4/30/16 (Acquired 4/5/06, Cost $179)(7) 179 - -------------------------------------------------------------------------------- 3,457 - -------------------------------------------------------------------------------- METALS & MINING -- 0.1% - -------------------------------------------------------------------------------- 560 Alcan Inc., 4.50%, 5/15/13 519 - -------------------------------------------------------------------------------- MULTI-UTILITIES -- 0.3% - -------------------------------------------------------------------------------- 750 Dominion Resources Inc., 4.125%, 2/15/08 733 - -------------------------------------------------------------------------------- 420 Dominion Resources Inc., 4.75%, 12/15/10(3) 403 - -------------------------------------------------------------------------------- 690 Nisource Finance Corp., 5.25%, 9/15/17 638 - -------------------------------------------------------------------------------- 430 Pacific Gas & Electric Co., 6.05%, 3/1/34 413 - -------------------------------------------------------------------------------- 2,187 - -------------------------------------------------------------------------------- MULTILINE RETAIL -- 0.2% - -------------------------------------------------------------------------------- 350 May Department Stores Co. (The), 3.95%, 7/15/07 343 - -------------------------------------------------------------------------------- 850 May Department Stores Co. (The), 4.80%, 7/15/09 832 - -------------------------------------------------------------------------------- 145 Target Corp., 7.00%, 7/15/31 162 - -------------------------------------------------------------------------------- 1,337 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 0.5% - -------------------------------------------------------------------------------- 145 Anadarko Finance Co., 7.50%, 5/1/31 164 - -------------------------------------------------------------------------------- 145 ConocoPhillips Holding Co., 6.95%, 4/15/29 160 - -------------------------------------------------------------------------------- 145 Devon Financing Corp ULC, 7.875%, 9/30/31 172 - -------------------------------------------------------------------------------- 1,100 Enterprise Products Operating L.P., 4.95%, 6/1/10 1,066 - -------------------------------------------------------------------------------- 360 Enterprise Products Operating L.P., 6.65%, 10/15/34(3) 351 - -------------------------------------------------------------------------------- 300 Pemex Project Funding Master Trust, 5.75%, 12/15/15 (Acquired 1/26/06, Cost $297)(3)(7) 285 - -------------------------------------------------------------------------------- 860 Premcor Refining Group Inc. (The), 6.125%, 5/1/11 873 - -------------------------------------------------------------------------------- 580 XTO Energy Inc., 5.30%, 6/30/15 553 - -------------------------------------------------------------------------------- 3,624 - -------------------------------------------------------------------------------- Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 0.1% - -------------------------------------------------------------------------------- $ 400 Schering-Plough Corp., 5.55%, 12/1/13 $ 392 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS -- 0.1% - -------------------------------------------------------------------------------- 380 ERP Operating L.P., 5.125%, 3/15/16 356 - -------------------------------------------------------------------------------- ROAD & RAIL -- 0.2% - -------------------------------------------------------------------------------- 800 Canadian National Railway Co., 6.25%, 8/1/34 819 - -------------------------------------------------------------------------------- 23 Norfolk Southern Corp., 7.80%, 5/15/27 27 - -------------------------------------------------------------------------------- 577 Norfolk Southern Corp., 5.64%, 5/17/29 534 - -------------------------------------------------------------------------------- 1,380 - -------------------------------------------------------------------------------- SOFTWARE -- 0.1% - -------------------------------------------------------------------------------- 770 Oracle Corp./Ozark Holding Inc., 5.00%, 1/15/11 (Acquired 1/10/06, Cost $767)(7) 751 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 0.1% - -------------------------------------------------------------------------------- 760 Home Depot, Inc. (The), 5.40%, 3/1/16 742 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 0.2% - -------------------------------------------------------------------------------- 1,190 Nextel Communications Inc., 5.95%, 3/15/14 1,172 - -------------------------------------------------------------------------------- TOTAL CORPORATE BONDS (Cost $53,703) 52,190 - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY SECURITIES -- 7.8% - -------------------------------------------------------------------------------- 1,800 FHLB, 4.625%, 9/11/20(6) 1,623 - -------------------------------------------------------------------------------- 2,475 FHLMC, 5.00%, 9/17/07(6) 2,470 - -------------------------------------------------------------------------------- 10,000 FHLMC, 7.00%, 3/15/10 10,627 - -------------------------------------------------------------------------------- 2,300 FHLMC, 5.50%, 3/28/16(6) 2,275 - -------------------------------------------------------------------------------- 3,000 FHLMC, 5.30%, 5/12/20(6) 2,815 - -------------------------------------------------------------------------------- 8,840 FNMA, 5.25%, 4/15/07(6) 8,846 - -------------------------------------------------------------------------------- 4,970 FNMA, 4.75%, 8/3/07(6) 4,946 - -------------------------------------------------------------------------------- 2,700 FNMA, 4.50%, 10/15/08(3) 2,662 - -------------------------------------------------------------------------------- 3,800 FNMA, 6.625%, 9/15/09(6) 3,971 - -------------------------------------------------------------------------------- 3,380 FNMA, 6.00%, 5/15/11(6) 3,488 - -------------------------------------------------------------------------------- 7,200 FNMA, 5.80%, 2/9/26(6) 6,968 - -------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $51,611) 50,691 - -------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS(4) -- 7.0% - -------------------------------------------------------------------------------- 15,306 Bank of America Commercial Mortgage Inc. STRIPS - COUPON, Series 2004-1, Class XP, VRN, 0.69%, 5/1/06 353 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 14 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- $ 3,950 Bank of America Mortgage Securities, Series 2004 F, Class 2A5, VRN, 4.15%, 5/1/06(6) $ 3,796 - -------------------------------------------------------------------------------- 19,000 Bear Stearns Commercial Mortgage Securities STRIPS - COUPON, Series 2004 T16, Class X2, VRN, 0.81%, 5/1/06 634 - -------------------------------------------------------------------------------- 905 Commercial Mortgage Pass-Through Certificates, Series 2005 F10A, Class A1, VRN, 5.00%, 5/15/06, resets monthly off the 1-month LIBOR plus 0.10% with no caps (Acquired 3/18/05, Cost $905)(7) 906 - -------------------------------------------------------------------------------- 1,499 Commercial Mortgage Pass-Through Certificates, Series 2005 FL11, Class A1, VRN, 5.05%, 5/15/06, resets monthly off the 1-month LIBOR plus 0.15% with no caps (Acquired 11/18/05, Cost $1,499)(7) 1,500 - -------------------------------------------------------------------------------- 397 FHLMC REMIC, Series 77, Class H, 8.50%, 9/15/20 396 - -------------------------------------------------------------------------------- 6,318 FHLMC, Series 2541, Class EA, 5.00%, 3/1/16 6,272 - -------------------------------------------------------------------------------- 2,069 FHLMC, Series 2937, Class KA, 4.50%, 12/15/14 2,043 - -------------------------------------------------------------------------------- 395 GMAC Commercial Mortgage Securities, Inc., Series 2002 C2, Class A1 SEQ, 4.32%, 10/15/38 393 - -------------------------------------------------------------------------------- 3,500 GMAC Commercial Mortgage Securities, Inc., Series 2005 C1, Class A2 SEQ, 4.47%, 5/10/43(6) 3,386 - -------------------------------------------------------------------------------- 2,980 Greenwich Capital Commercial Funding Corp., Series 2005 GG5, Class A5, 5.22%, 4/10/37(3) 2,874 - -------------------------------------------------------------------------------- 1,000 LB-UBS Commercial Mortgage Trust, Series 2004 C4, Class A2, VRN, 4.57%, 5/11/06 980 - -------------------------------------------------------------------------------- 3,000 LB-UBS Commercial Mortgage Trust, Series 2005 C3, Class A3 SEQ, 4.65%, 7/30/30(6) 2,879 - -------------------------------------------------------------------------------- 2,960 LB-UBS Commercial Mortgage Trust, Series 2005 C3, Class A5 SEQ, 4.74%, 7/15/30(3) 2,762 - -------------------------------------------------------------------------------- 2,550 LB-UBS Commercial Mortgage Trust, Series 2006 C1, Class A4 SEQ, 5.16%, 2/15/31(6) 2,446 - -------------------------------------------------------------------------------- 1,499 Lehman Brothers Floating Rate Commercial Mortgage Trust, Series 2005 LLFA, Class A1, VRN, 5.00%, 5/15/06, resets monthly off the 1-month LIBOR plus 0.10% with no caps (Acquired 7/25/05, Cost $1,499)(7) 1,500 - -------------------------------------------------------------------------------- 211 MASTR Alternative Loans Trust, Series 2003-8, Class 4A1, 7.00%, 12/25/33 211 - -------------------------------------------------------------------------------- Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- $ 1,989 Wachovia Bank Commercial Mortgage Trust, Series 2005 WL5A, Class A1, VRN, 5.01%, 5/15/06, resets monthly off the 1-month LIBOR plus 0.10% with no caps (Acquired 3/24/05, Cost $1,989)(7) $ 1,990 - -------------------------------------------------------------------------------- 5,060 Wachovia Bank Commercial Mortgage Trust, Series 2006 C23, Class A4, 5.42%, 1/15/45(6) 4,939 - -------------------------------------------------------------------------------- 2,150 Washington Mutual, Inc., Series 2004 AR4, Class A6, 3.81%, 6/25/34(6) 2,047 - -------------------------------------------------------------------------------- 2,600 Washington Mutual, Inc., Series 2004 AR9, Class A7, VRN, 4.17%, 5/1/06(6) 2,502 - -------------------------------------------------------------------------------- 1,167 Washington Mutual, Inc., Series 2005 AR11, Class A1C1, VRN, 5.16%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.20% with a cap of 10.50% 1,167 - -------------------------------------------------------------------------------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $46,985) 45,976 - -------------------------------------------------------------------------------- U.S. TREASURY SECURITIES -- 4.3% - -------------------------------------------------------------------------------- 6,665 U.S. Treasury Bonds, 8.125%, 8/15/21(3) 8,629 - -------------------------------------------------------------------------------- 6,700 U.S. Treasury Bonds, 7.125%, 2/15/23(3) 8,041 - -------------------------------------------------------------------------------- 800 U.S. Treasury Bonds, 6.125%, 11/15/27(3) 883 - -------------------------------------------------------------------------------- 1,248 U.S. Treasury Bonds, 6.25%, 5/15/30(3) 1,411 - -------------------------------------------------------------------------------- 2,600 U.S. Treasury Bonds, 4.50%, 2/15/36(3) 2,337 - -------------------------------------------------------------------------------- 2,502 U.S. Treasury Inflation Indexed Notes, 2.00%, 1/15/16(6) 2,420 - -------------------------------------------------------------------------------- 4,280 U.S. Treasury Notes, 4.50%, 2/28/11(3) 4,203 - -------------------------------------------------------------------------------- TOTAL U.S. TREASURY SECURITIES (Cost $29,084) 27,924 - -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES(4) -- 3.3% - -------------------------------------------------------------------------------- 15 ABSC Net Interest Margin, Series 2004 HE5, Class A1, 5.00%, 8/27/34 (Acquired 6/22/04, Cost $15)(7) 15 - -------------------------------------------------------------------------------- 1,554 Accredited Mortgage Loan Trust, Series 2006-1, Class A1, VRN, 5.02%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.06% with no caps(6) 1,554 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 15 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- $ 1,118 Ameriquest Mortgage Securities Inc., Series 2006 R1, Class A2A, VRN, 5.04%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.08% with no caps $ 1,119 - -------------------------------------------------------------------------------- 11 AQ Finance Net Interest Margin, Series 2004 RN5, Class A, 5.19%, 6/29/34 (Acquired 6/24/04, Cost $11)(7) 11 - -------------------------------------------------------------------------------- 7 Argent Net Interest Margin, Series 2004 WN9, Class A, 5.19%, 10/25/34 (Acquired 9/9/04, Cost $7)(7) 7 - -------------------------------------------------------------------------------- 1 Asset Backed Funding Corp. Net Interest Margin, Series 2004 OPT4, Class N1, 4.45%, 5/26/34 1 - -------------------------------------------------------------------------------- 2,000 Capital One Prime Auto Receivables Trust, Series 2004-2, Class A4, VRN, 4.96%, 5/15/06, resets monthly off the 1-month LIBOR plus 0.06% with no caps(6) 2,003 - -------------------------------------------------------------------------------- 1,659 CNH Equipment Trust, Series 2004 A, Class A3A, VRN, 4.97%, 5/15/06, resets monthly off the 1-month LIBOR plus 0.07% with no caps 1,661 - -------------------------------------------------------------------------------- 5 Countrywide Asset-Backed Certificates, Series 2004-5N, Class N1, 5.50%, 10/25/35 5 - -------------------------------------------------------------------------------- 14 Countrywide Asset-Backed Certificates, Series 2004-11N, Class N, 5.25%, 4/25/36 (Acquired 10/27/04, Cost $14)(7) 14 - -------------------------------------------------------------------------------- 1,043 Countrywide Asset-Backed Certificates, Series 2005-7, Class 3AV1, VRN, 5.08%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.12% with no caps 1,043 - -------------------------------------------------------------------------------- 1,606 Countrywide Asset-Backed Certificates, Series 2005-8, Class 2A1, VRN, 5.09%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.13% with no caps 1,608 - -------------------------------------------------------------------------------- 1,927 Countrywide Asset-Backed Certificates, Series 2006-6, Class 2A1, VRN, 5.03%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.07% with no caps 1,927 - -------------------------------------------------------------------------------- 2,063 Credit-Based Asset Servicing and Securitization, Series 2006 CB3, Class AV1, VRN, 5.02%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.06% with no caps(6) 2,062 - -------------------------------------------------------------------------------- 404 First Franklin Mortgage Loan Asset Backed Certificates, Series 2005 FF4, Class 2A1, VRN, 5.04%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.08% with no caps 404 - -------------------------------------------------------------------------------- Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- $ 7 GSAMP Net Interest Margin, Series 2004, Class N1, 5.50%, 9/25/34 (Acquired 9/20/04, Cost $7)(7) $ 7 - -------------------------------------------------------------------------------- 1,050 IndyMac Residential Asset Backed Trust, Series 2006 B, Class 2A1, VRN, 5.02%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.06% with no caps 1,051 - -------------------------------------------------------------------------------- 3 Long Beach Asset Holdings Corp., Series 2004-5, Class C and P, 5.00%, 9/25/34 (Acquired 9/15/04, Cost $3)(7) 3 - -------------------------------------------------------------------------------- 73 Long Beach Asset Holdings Corp., Series 2005-1, Class N1, 4.12%, 2/25/35 (Acquired 1/19/05, Cost $73)(7) 73 - -------------------------------------------------------------------------------- 836 Long Beach Mortgage Loan Trust, Series 2006-2, Class 2A1, VRN, 5.03%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.07% with no caps 836 - -------------------------------------------------------------------------------- 773 NovaStar Home Equity Loan, Series 2005-1, Class A2A, VRN, 5.08%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.12% with a cap of 11.00% 774 - -------------------------------------------------------------------------------- 1,304 NovaStar Home Equity Loan, Series 2005-4, Class A2A, VRN, 5.05%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.09% with a cap of 11.00% 1,305 - -------------------------------------------------------------------------------- 280 Residential Asset Mortgage Products, Inc., Series 2004 RS10, Class AII1, VRN, 5.13%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.17% with a cap of 14.00% 281 - -------------------------------------------------------------------------------- 1,745 Residential Asset Mortgage Products, Inc., Series 2005 RS1, Class AII1, VRN, 5.07%, 5/25/06, resets monthly off the 1-month LIBOR plus 0.11% with a cap of 14.00% 1,746 - -------------------------------------------------------------------------------- 300 Residential Asset Securities Corp., Series 2004 KS2, Class MI1, 4.71%, 3/25/34 288 - -------------------------------------------------------------------------------- 13 Sail Net Interest Margin Notes, Series 2004-8A, Class A, 5.00%, 9/27/34 (Acquired 9/13/04, Cost $13)(7) 13 - -------------------------------------------------------------------------------- 1 Sail Net Interest Margin Notes, Series 2004 BNCA, Class A, 5.00%, 9/27/34 (Acquired 8/5/04, Cost $1)(7) 1 - -------------------------------------------------------------------------------- 1,192 SLM Student Loan Trust, Series 2006-2, Class A1, VRN, 4.85%, 6/26/06, resets quarterly off the 3-month LIBOR minus 0.03% with no caps 1,193 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 16 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- $ 850 SLM Student Loan Trust, Series 2006-4, Class A1, VRN, 5.04%, 7/25/06, resets quarterly off the 3-month LIBOR minus 0.03% with no caps $ 850 - -------------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (Cost $21,855) 21,855 - -------------------------------------------------------------------------------- SOVEREIGN GOVERNMENTS & AGENCIES -- 0.3% - -------------------------------------------------------------------------------- 810 Province of Quebec, 5.00%, 7/17/09 804 - -------------------------------------------------------------------------------- 910 Republic of Italy, 4.00%, 6/16/08 889 - -------------------------------------------------------------------------------- TOTAL SOVEREIGN GOVERNMENTS & AGENCIES (Cost $1,735) 1,693 - -------------------------------------------------------------------------------- MUNICIPAL SECURITIES -- 0.1% - -------------------------------------------------------------------------------- 800 Illinois GO, (Taxable Pension), 5.10%, 6/1/33 (Cost $804) 722 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 2.0% - -------------------------------------------------------------------------------- 13,200 FNMA Discount Notes, 4.71%, 5/1/06(6)(8) (Cost $13,200) 13,200 - -------------------------------------------------------------------------------- Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(9) -- 13.2% - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.77%, dated 4/28/06, due 5/1/06 (Delivery value $25,010) $ 25,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.875%, dated 4/28/06, due 5/1/06 (Delivery value $61,047) 61,022 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $86,022) 86,022 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 119.2% (Cost $726,408) 779,547 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (19.2)% (125,574) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $ 653,973 ================================================================================ FUTURES CONTRACTS* - -------------------------------------------------------------------------------- ($ IN THOUSANDS) Expiration Underlying Face Unrealized Contracts Purchased Date Amount at Value Gain (Loss) - -------------------------------------------------------------------------------- 39 U.S. Treasury 2-Year Notes June 2006 $7,945 $2 =================================== Expiration Underlying Face Unrealized Contracts Sold Date Amount at Value Gain (Loss) - -------------------------------------------------------------------------------- 100 U.S. Treasury 5-Year Notes June 2006 $10,416 $ 82 - -------------------------------------------------------------------------------- 91 U.S. Treasury 10-Year Notes June 2006 9,608 141 - -------------------------------------------------------------------------------- $20,024 $223 =================================== *FUTURES CONTRACTS typically are based on an index or specific securities and tend to track the performance of the index or specific securities while remaining very liquid (easy to buy and sell). By investing its cash assets in futures, the fund has increased exposure to certain markets while maintaining easy access to cash. By selling futures, the fund hedges its investments against price fluctuations. See Notes to Financial Statements. (continued) - ------ 17 Balanced - Schedule of Investments APRIL 30, 2006 (UNAUDITED) SWAP AGREEMENTS** ($ IN THOUSANDS) - --------------------------------------------------------------------------------------------------------- Unrealized Notional Amount Description of Agreement Expiration Date Gain (Loss) - --------------------------------------------------------------------------------------------------------- $7,580 Pay quarterly a fixed rate equal to 0.45% multiplied December 2010 $(39) by the notional amount and receive from Deutsche Bank AG upon each default event of one of the issues of Dow Jones CDX N.A. Investment Grade 5, par value of the proportional notional amount. - --------------------------------------------------------------------------------------------------------- 5,150 Pay quarterly a fixed rate equal to 0.85% multiplied December 2010 (25) by the notional amount and receive from Barclays Capital, Inc. upon each default event of one of the issues of Dow Jones CDX N.A. Investment Grade 5, par value of the proportional notional amount. - --------------------------------------------------------------------------------------------------------- 8,000 Pay quarterly a fixed rate equal to 0.40% multiplied June 2011 (22) by the notional amount and receive from Barclays Capital, Inc. upon each default event of one of the issues of Dow Jones CDX N.A. Investment Grade 6, par value of the proportional notional amount. - --------------------------------------------------------------------------------------------------------- 4,000 Pay quarterly a fixed rate equal to 0.75% multiplied June 2011 (12) by the notional amount and receive from Deutsche Bank AG upon each default event of one of the issuesof Dow Jones CDX N.A. Investment Grade 6, par value of the proportional notional amount. - --------------------------------------------------------------------------------------------------------- $(98) =========== **SWAP AGREEMENTS are contracts in which two parties agree to exchange the returns earned or realized on predetermined investments or instruments. The fund may enter into swap agreements in order to manage interest, credit, or market risk or to gain exposure to certain markets. - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ABSC = Asset-Backed Securities Corp. FHLB = Federal Home Loan Bank FHLMC = Federal Home Loan Mortgage Corporation FNMA = Federal National Mortgage Association GMAC = General Motors Acceptance Corporation GNMA = Government National Mortgage Association GO = General Obligation GSAMP = Goldman Sachs Mortgage Pass-through LB-UBS = Lehman Brothers Inc. -- UBS AG LIBOR = London Interbank Offered Rate MASTR = Mortgage Asset Securitization Transactions, Inc. REMIC = Real Estate Mortgage Investment Conduit resets = The frequency with which a security's coupon changes, based on current market conditions or an underlying index. The more frequently a security resets, the less risk the investor is taking that the coupon will vary significantly from current market rates. SEQ = Sequential Payer STRIPS = Separate Trading of Registered Interest and Principal of Securities VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is effective April 30, 2006. (1) Industry is less than 0.05% of total net assets. (2) Non-income producing. (3) Security, or a portion thereof, was on loan as of April 30, 2006. (4) Final maturity indicated, unless otherwise noted. (5) Forward commitment. (6) Security, or a portion thereof, has been segregated for a forward commitment, futures contract and/or swap agreement. (7) Security was purchased under Rule 144A of the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be sold to qualified institutional investors. The aggregate value of restricted securities at April 30, 2006, was $11,717 (in thousands), which represented 1.8% of total net assets. (8) The rate indicated is the yield to maturity at purchase. (9) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 18 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $640,386) -- including $83,310 of securities on loan $693,525 - ----------------------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $86,022) 86,022 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $726,408) 779,547 - ----------------------------------------------------------- Receivable for investments sold 12,645 - ----------------------------------------------------------- Receivable for capital shares sold 6 - ----------------------------------------------------------- Dividends and interest receivable 2,399 - -------------------------------------------------------------------------------- 794,597 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received for securities on loan 86,022 - ----------------------------------------------------------- Disbursements in excess of demand deposit cash 1,796 - ----------------------------------------------------------- Payable for investments purchased 52,189 - ----------------------------------------------------------- Payable for variation margin on futures contracts 32 - ----------------------------------------------------------- Unrealized depreciation on swap agreements 98 - ----------------------------------------------------------- Accrued management fees 481 - ----------------------------------------------------------- Distribution fees payable 3 - ----------------------------------------------------------- Service fees payable 3 - -------------------------------------------------------------------------------- 140,624 - -------------------------------------------------------------------------------- NET ASSETS $653,973 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $586,239 - ----------------------------------------------------------- Undistributed net investment income 1,450 - ----------------------------------------------------------- Undistributed net realized gain on investment transactions 13,022 - ----------------------------------------------------------- Net unrealized appreciation on investments 53,262 - -------------------------------------------------------------------------------- $653,973 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $638,321,539 - ----------------------------------------------------------- Shares outstanding 38,842,269 - ----------------------------------------------------------- Net asset value per share $16.43 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $1,042,779 - ----------------------------------------------------------- Shares outstanding 63,451 - ----------------------------------------------------------- Net asset value per share $16.43 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $14,608,905 - ----------------------------------------------------------- Shares outstanding 889,506 - ----------------------------------------------------------- Net asset value per share $16.42 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 19 Statement of Operations FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- INCOME: - ----------------------------------------------------------- Interest $ 6,313 - ----------------------------------------------------------- Dividends 3,459 - ----------------------------------------------------------- Securities lending 67 - -------------------------------------------------------------------------------- 9,839 - -------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------- Management fees 2,908 - ----------------------------------------------------------- Distribution fees -- Advisor Class 20 - ----------------------------------------------------------- Service fees -- Advisor Class 20 - ----------------------------------------------------------- Directors' fees and expenses 5 - ----------------------------------------------------------- Other expenses 2 - -------------------------------------------------------------------------------- 2,955 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 6,884 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- Net realized gain (loss) on investment transactions 15,490 - ----------------------------------------------------------- Change in net unrealized appreciation (depreciation) on investments 15,318 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 30,808 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $37,692 ================================================================================ See Notes to Financial Statements. - ------ 20 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income $ 6,884 $ 12,056 - ----------------------------------------------------- Net realized gain (loss) 15,490 44,163 - ----------------------------------------------------- Change in net unrealized appreciation (depreciation) 15,318 (14,041) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 37,692 42,178 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income: - ----------------------------------------------------- Investor Class (6,904) (11,086) - ----------------------------------------------------- Institutional Class (15) (14) - ----------------------------------------------------- Advisor Class (156) (254) - ----------------------------------------------------- From net realized gains: - ----------------------------------------------------- Investor Class (32,826) -- - ----------------------------------------------------- Institutional Class (66) -- - ----------------------------------------------------- Advisor Class (860) -- - -------------------------------------------------------------------------------- Decrease in net assets from distributions (40,827) (11,354) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 25,124 (10,683) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 21,989 20,141 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 631,984 611,843 - -------------------------------------------------------------------------------- End of period $653,973 $631,984 ================================================================================ Undistributed net investment income $1,450 $1,609 ================================================================================ See Notes to Financial Statements. - ------ 21 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------------------- ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Balanced Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund's investment objective is to seek long-term capital growth and current income. The fund pursues its objective by investing approximately 60% of its assets in equity securities and the remainder in bonds and other fixed-income securities. The following is a summary of the fund's significant accounting policies. MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the Institutional Class and the Advisor Class. The share classes differ principally in their respective shareholder servicing and distribution expenses and arrangements. All shares of the fund represent an equal pro rata interest in the assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the fund to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending agent to certain approved borrowers in order to earn additional income. The fund continues to recognize any gain or loss in the market price of the securities loaned and records any interest earned or dividends declared. FUTURES CONTRACTS -- The fund may enter into futures contracts in order to manage the fund's exposure to changes in market conditions. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Upon entering into a futures contract, the fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. WHEN-ISSUED AND FORWARD COMMITMENTS -- The fund may engage in securities transactions on a when-issued or forward commitment basis. Under these arrangements, the securities' prices and yields are fixed on the date of the commitment, but payment and delivery are scheduled for a future date. During this period, securities are subject to market fluctuations. The fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet the purchase price. (continued) - ------ 22 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) - -------------------------------------------------------------------------------- SWAP AGREEMENTS -- The fund may enter into a swap agreement in order to attempt to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets; protect against currency fluctuations; attempt to manage duration to protect against any increase in the price of securities the fund anticipates purchasing at a later date; or gain exposure to certain markets in the most economical way possible. A basic swap agreement is a contract in which two parties agree to exchange the returns earned or realized on predetermined investments or instruments. Credit default swaps enable an investor to buy/sell protection against a credit event of a specific issuer. The seller of credit protection against a security or basket of securities receives an up-front or periodic payment to compensate against potential default events. The fund may enhance returns by selling protection or attempt to mitigate credit risk by buying protection. The fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. Unrealized gains are reported as an asset and unrealized losses are reported as a liability on the Statement of Assets and Liabilities. Swap agreements are valued daily and changes in value, including the periodic amounts of interest to be paid or received on swaps, are recorded as unrealized appreciation (depreciation) on investments. Realized gain or loss is recorded upon receipt or payment of a periodic settlement or termination of swap agreements. The risks of entering into swap agreements include the possible lack of liquidity, failure of the counterparty to meet its obligations, and that there may be unfavorable changes in the underlying investments and instruments. REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. (continued) - ------ 23 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- 2. FEES AND TRANSACTIONS WITH RELATED PARTIES - -------------------------------------------------------------------------------- MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in the fund's investment strategy (strategy assets) to calculate the appropriate fee rate for the fund. The strategy assets include the fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for each class of the fund is as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $1 billion 0.90% 0.70% 0.65% - -------------------------------------------------------------------------------- Over $1 billion 0.80% 0.60% 0.55% - -------------------------------------------------------------------------------- The effective annual management fee for the fund for the six months ended April 30, 2006 was 0.90%, 0.70%, and 0.65%, for the Investor Class, Institutional Class and Advisor Class, respectively. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan (the plan) for the Advisor Class, pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the Advisor Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution fee equal to 0.25% and an annual service fee equal to 0.25%. The fees are computed and accrued daily based on the Advisor Class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred by financial intermediaries in connection with distributing shares of the Advisor Class including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the fund. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers. Fees incurred under the plan during the six months ended April 30, 2006, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. The fund has a bank line of credit agreement and securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. - -------------------------------------------------------------------------------- 3. INVESTMENT TRANSACTIONS - -------------------------------------------------------------------------------- Purchases of investment securities, excluding short-term investments, for the six months ended April 30, 2006, totaled $601,515, of which $342,073 represented U.S. Treasury and Agency obligations. Sales of investment securities excluding short-term investments, for the six months ended April 30, 2006, totaled $617,990, of which $338,989 represented U.S. Treasury and Agency obligations. (continued) - ------ 24 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Transactions in shares of the fund were as follows: - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 200,000 ================================================================================ Sold 2,568 $ 42,273 - ------------------------------------------------- Issued in reinvestment of distributions 2,370 38,582 - ------------------------------------------------- Redeemed (3,286) (54,034) - -------------------------------------------------------------------------------- Net increase (decrease) 1,652 $ 26,821 ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 200,000 ================================================================================ Sold 4,551 $ 75,084 - ------------------------------------------------- Issued in reinvestment of distributions 647 10,748 - ------------------------------------------------- Redeemed (5,845) (96,478) - -------------------------------------------------------------------------------- Net increase (decrease) (647) $(10,646) ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 15,000 ================================================================================ Sold 5 $ 86 - ------------------------------------------------- Issued in reinvestment of distributions 5 81 - ------------------------------------------------- Redeemed (22) (357) - -------------------------------------------------------------------------------- Net increase (decrease) (12) $(190) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 15,000 ================================================================================ Sold 64 $1,052 - ------------------------------------------------- Issued in reinvestment of distributions 1 14 - ------------------------------------------------- Redeemed (4) (68) - -------------------------------------------------------------------------------- Net increase (decrease) 61 $ 998 ================================================================================ ADVISOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000 ================================================================================ Sold 144 $ 2,336 - ------------------------------------------------- Issued in reinvestment of distributions 54 884 - ------------------------------------------------- Redeemed (288) (4,727) - -------------------------------------------------------------------------------- Net increase (decrease) (90) $(1,507) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 50,000 ================================================================================ Sold 316 $ 5,224 - ------------------------------------------------- Issued in reinvestment of distributions 13 224 - ------------------------------------------------- Redeemed (395) (6,483) - -------------------------------------------------------------------------------- Net increase (decrease) (66) $(1,035) ================================================================================ (continued) - ------ 25 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- 5. SECURITIES LENDING - -------------------------------------------------------------------------------- As of April 30, 2006, securities in the fund valued at $83,310, were on loan through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives and maintains collateral in the form of cash, and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total value of all collateral received, at this date, was $86,795. The fund's risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the fund may be delayed or limited. - -------------------------------------------------------------------------------- 6. BANK LINE OF CREDIT - -------------------------------------------------------------------------------- The fund, along with certain other funds managed by ACIM or ACGIM, has a $500 million unsecured bank line of credit agreement with JPMCB, which was renewed from $575 million effective December 14, 2005. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the six months ended April 30, 2006. - -------------------------------------------------------------------------------- 7. FEDERAL TAX INFORMATION - -------------------------------------------------------------------------------- The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of paydown losses, certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- Federal tax cost of investments $727,540 ================================================================================ Gross tax appreciation of investments $60,563 - ----------------------------------------------------------------- Gross tax depreciation of investments (8,556) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $52,007 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. (continued) - ------ 26 Balanced - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.52 $15.73 $14.77 $12.98 $14.28 $17.01 - ----------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income(2) 0.17 0.31 0.26 0.27 0.35 0.38 - -------------------------- Net Realized and Unrealized Gain (Loss) 0.81 0.77 0.98 1.77 (1.30) (2.10) - ----------------------------------------------------------------------------------------------- Total From Investment Operations 0.98 1.08 1.24 2.04 (0.95) (1.72) - ----------------------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.18) (0.29) (0.28) (0.25) (0.35) (0.40) - -------------------------- From Net Realized Gains (0.89) -- -- -- -- (0.61) - ----------------------------------------------------------------------------------------------- Total Distributions (1.07) (0.29) (0.28) (0.25) (0.35) (1.01) - ----------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.43 $16.52 $15.73 $14.77 $12.98 $14.28 =============================================================================================== TOTAL RETURN(3) 6.00% 6.89% 8.46% 15.92% (6.80)% (10.46)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.90%(4) 0.90% 0.90% 0.90% 0.90% 0.90% - -------------------------- Ratio of Net Investment Income to Average Net Assets 2.12%(4) 1.89% 1.65% 1.96% 2.46% 2.46% - -------------------------- Portfolio Turnover Rate 95% 206% 204% 133% 108% 107% - -------------------------- Net Assets, End of Period (in millions) $638 $615 $595 $583 $541 $663 - ----------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 27 Balanced - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.53 $15.73 $14.78 $12.99 $14.28 $17.01 - ----------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income(2) 0.19 0.33 0.28 0.41 0.37 0.41 - -------------------------- Net Realized and Unrealized Gain (Loss) 0.79 0.80 0.98 1.66 (1.29) (2.10) - ----------------------------------------------------------------------------------------------- Total From Investment Operations 0.98 1.13 1.26 2.07 (0.92) (1.69) - ----------------------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.19) (0.33) (0.31) (0.28) (0.37) (0.43) - -------------------------- From Net Realized Gains (0.89) -- -- -- -- (0.61) - ----------------------------------------------------------------------------------------------- Total Distributions (1.08) (0.33) (0.31) (0.28) (0.37) (1.04) - ----------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.43 $16.53 $15.73 $14.78 $12.99 $14.28 =============================================================================================== TOTAL RETURN(3) 6.04% 7.17% 8.61% 16.13% (6.54)% (10.27)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.70%(4) 0.70% 0.70% 0.70% 0.70% 0.70% - -------------------------- Ratio of Net Investment Income to Average Net Assets 2.32%(4) 2.09% 1.85% 2.16% 2.66% 2.66% - -------------------------- Portfolio Turnover Rate 95% 206% 204% 133% 108% 107% - -------------------------- Net Assets, End of Period (in thousands) $1,043 $1,237 $225 $155 $16,245 $20,474 - ----------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 28 Balanced - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------- ADVISOR CLASS - ----------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.52 $15.72 $14.77 $12.97 $14.27 $17.00 - ----------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income(2) 0.15 0.27 0.22 0.22 0.31 0.34 - -------------------------- Net Realized and Unrealized Gain (Loss) 0.80 0.78 0.97 1.80 (1.30) (2.10) - ----------------------------------------------------------------------------------------------- Total From Investment Operations 0.95 1.05 1.19 2.02 (0.99) (1.76) - ----------------------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.16) (0.25) (0.24) (0.22) (0.31) (0.36) - -------------------------- From Net Realized Gains (0.89) -- -- -- -- (0.61) - ----------------------------------------------------------------------------------------------- Total Distributions (1.05) (0.25) (0.24) (0.22) (0.31) (0.97) - ----------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.42 $16.52 $15.72 $14.77 $12.97 $14.27 =============================================================================================== TOTAL RETURN(3) 5.81% 6.70% 8.11% 15.74% (7.04)% (10.69)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.15%(4) 1.15% 1.15% 1.15% 1.15% 1.15% - -------------------------- Ratio of Net Investment Income to Average Net Assets 1.87%(4) 1.64% 1.40% 1.71% 2.21% 2.21% - -------------------------- Portfolio Turnover Rate 95% 206% 204% 133% 108% 107% - -------------------------- Net Assets, End of Period (in thousands) $14,609 $16,189 $16,439 $17,482 $13,985 $16,990 - ----------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 29 Share Class Information Three classes of shares are authorized for sale by the fund: Investor Class, Institutional Class, and Advisor Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratio of Advisor Class shares is higher than that of Investor Class shares. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the unified management fee of Institutional Class shares is 0.20% less than the unified management fee of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. All classes of shares represent a pro rata interest in the fund and generally have the same rights and preferences. - ------ 30 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 31 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The BLENDED INDEX is considered the benchmark for Balanced. It combines two widely known indices in proportion to the asset mix of the fund. Accordingly, 60% of the index is represented by the S&P 500 Index, which reflects the approximately 60% of the fund's assets invested in stocks. The remaining 40% of the index is represented by the Lehman Brothers U.S. Aggregate Index, which reflects the roughly 40% of the fund's assets invested in fixed-income securities. The LEHMAN BROTHERS U.S. AGENCY INDEX is composed of those securities included in the Lehman Brothers U.S. Aggregate Index that are public obligations of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government. The LEHMAN BROTHERS U.S. AGGREGATE INDEX represents securities that are taxable, registered with the Securities and Exchange Commission, and U.S. dollar-denominated. The index covers the U.S. investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. The LEHMAN BROTHERS U.S. CORPORATE INDEX is composed of those securities included in the Lehman Brothers U.S. Aggregate Index that are U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities sold by industrial, utility and financial issuers. The LEHMAN BROTHERS U.S. FIXED-RATE MORTGAGE-BACKED SECURITIES (MBS) INDEX is the MBS Fixed-Rate component of the Lehman Brothers U.S. Aggregate Index. It covers the mortgage-backed pass-through securities of the Government National Mortgage Association (GNMA), the Federal National Mortgage Association (FNMA), and the Federal Home Loan Mortgage Corporation (FHLMC). The LEHMAN BROTHERS U.S. TREASURY INDEX is composed of those securities included in the Lehman Brothers U.S. Aggregate Index that are public obligations of the U.S. Treasury with a remaining maturity of one year or more. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. The S&P 500/CITIGROUP VALUE AND GROWTH INDICES are market value-weighted indices consisting of stocks in the S&P 500 Index. S&P 500/CITIGROUP VALUE consists of those stocks with lower price-to-book ratios that are slower growing or undervalued, and S&P 500/CITIGROUP GROWTH consists of those stocks with higher price-to-book ratios that are faster growing. - ------ 32 [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor 0606 (c)2006 American Century Proprietary Holdings, Inc. SH-SAN-49688S All rights reserved.
[front cover] American Century Investments SEMIANNUAL REPORT [photo of boy and airplane] APRIL 30, 2006 Veedot(reg.tm) Fund [american century investments logo and text logo] Table of Contents Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Six-Month Total Returns . . . . . . . . . . . . . . . . . . . . . . . . .2 VEEDOT Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . .6 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 9 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .11 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .12 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . 13 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .14 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 OTHER INFORMATION Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .21 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 The opinions expressed in the Market Perspective and the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century Veedot(reg.tm) Fund for the six months ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor, and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective [photo of Chief Investment Officer] BY MARK MALLON, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS WHAT HAPPENED IN THE ECONOMY A short-lived economic slowdown on the heels of last summer's devastating Gulf Coast hurricanes gave way to a strong rebound after the first of the year, providing fuel for a dose of investor enthusiasm that pushed U.S. broad market indices to solid gains in the six-month period ended April 30, 2006. As measured in gross domestic product (GDP), U.S. economic growth slowed to 1.7% in the fourth quarter of 2005 as energy supply interruptions caused by hurricanes Rita and Katrina - and a corresponding spike in oil and natural gas prices - filtered through the economy. Other temporary business and employment disruptions caused by those two storms further muted economic vitality in the final months of 2005. By January 2006, however, economic growth reaccelerated, with retailers reporting strong post-holiday sales and overall corporate profits remaining robust. Not even rising commodity prices and rising interest rates halted the momentum, with GDP growth of 5.3% in the first quarter of 2006 more than tripling the rate of the previous quarter. The surge in many commodity values gave the Federal Reserve one reason to keep its string of interest rate hikes intact, even though broader inflation remained modest. The Fed boosted its short-term rate target to 4.75% in the period with four consecutive quarter-point increases. WHAT HAPPENED IN THE MARKET The notion that the Fed might soon stop raising rates helped feed investors' appetites throughout the period, even after short-term interest rates briefly surpassed long-term yields in the final week of 2005. Such yield-curve inversions historically presage a recession. But long-term yields finally inched upward in early 2006, with the benchmark 10-year Treasury note topping the 5% level for the first time in four years. Investors normally disdain rising 10-year yields. Nevertheless, equity markets surged, and as they have since 1999, stocks with smaller capitalizations once more set the pace. But large-cap returns outperformed in the period's final month, when gasoline prices again crept to near $3 per gallon. Growth stocks also found more favor. Among small- and mid-cap stocks, returns on growth issues surpassed returns for value stocks in the 6-month period. Large-cap growth continued languishing behind large-cap value, though, with the latter garnering substantial support from energy conglomerates riding record profits and surging share prices. SIX-MONTH TOTAL RETURNS AS OF APRIL 30, 2006(1) - -------------------------------------------------------------------------------- S&P 500 Index 9.64% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 10.24% - -------------------------------------------------------------------------------- Nasdaq Composite Index 10.02% - -------------------------------------------------------------------------------- (1) Total returns less than one year are not annualized. - ------ 2 Veedot - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ---------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS INCEPTION DATE - ------------------------------------------------------------------------------------- INVESTOR CLASS 11/30/99 Before redemption fee 15.98% 28.94% 5.30% 4.07% Net of redemption fee(2) 13.66% 26.36% 5.30% 4.07% - ------------------------------------------------------------------------------------- RUSSELL 3000 INDEX(3)(4) 10.70% 18.08% 3.94% 1.97% -- - ------------------------------------------------------------------------------------- DOW JONES WILSHIRE 5000 TOTAL MARKET INDEX 11.05% 18.85% 4.54% 2.00% -- - ------------------------------------------------------------------------------------- INSTITUTIONAL CLASS 8/1/00 Before redemption fee 15.99% 29.05% 5.48% 1.13% Net of redemption fee(2) 13.67% 26.47% 5.48% 1.13% - ------------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Returns reflect the deduction of a 2.00% redemption fee, incurred if shares were redeemed within the first five years after purchase. (3) In August of 2005, the fund's benchmark changed from the Dow Jones Wilshire 5000 Total Market Index to the Russell 3000 Index. The fund's investment advisor believes this index better represents the fund's portfolio composition. (4) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The Veedot Fund's investment process may involve high portfolio turnover and high capital gains distributions. In addition, its investment approach may involve higher volatility and risk. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. (continued) - ------ 3 Veedot - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made November 30, 1999
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended April 30 - ----------------------------------------------------------------------------------------- 2000* 2001 2002 2003 2004 2005 2006 - ----------------------------------------------------------------------------------------- ========================================================================================= Investor Class (before redemption fee) 35.20% -26.18% -4.21% -20.92% 32.28% 0.20% 28.94% - ----------------------------------------------------------------------------------------- Russell 3000 7.32% -12.96% -10.73% -13.99% 25.11% 6.97% 18.08% - ----------------------------------------------------------------------------------------- Dow Jones Wilshire 5000 Total Market Index 5.88% -14.10% -9.88% -13.58% 26.08% 6.99% 18.85% - ----------------------------------------------------------------------------------------- * From 11/30/99, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The Veedot Fund's investment process may involve high portfolio turnover and high capital gains distributions. In addition, its investment approach may involve higher volatility and risk. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 4 Veedot - Portfolio Commentary PORTFOLIO MANAGERS: JOHN SMALL, JR. AND STEPHEN POOL. American Century Veedot gained 15.98%* in the six months ended April 30, 2006, surpassing the 10.70% return of its benchmark, the Russell 3000 Index, and the 12.32%** return of the Lipper Multi-Cap Core Funds Index measuring its peers. Veedot's average annual return also exceeds both the benchmark and the peer index for each of the past 1- and 5-year periods. RIGHT PLACES, RIGHT TIME Veedot's systematic investment process guides it to stocks that show acceleration in earnings and revenue. As a result, that process led the portfolio to overweights in numerous sectors enjoying sound overall financial growth in the latest six-month period, growth reflected in stock market returns. In particular, Veedot garnered relative outperformance from overweight stakes and solid security selection in industrials and materials. The first of those sectors benefited from rising corporate capital expenditures, which partly fed soaring commodity prices that boosted profits for raw materials providers. Those sectors ranked as the top two in terms of total return within the benchmark. The portfolio's biggest relative and absolute contributions, though, came from information technology. Veedot deftly avoided some struggling software and Internet-related stocks while choosing others in those same industries whose shares appreciated in value. Stakes in several semiconductor companies, another industry benefiting from the surge in capital spending, further boosted returns. Overall, Veedot's stake in IT accounted for a quarter of its total portfolio holdings, and its total return in the sector equaled two-and-a-half times the benchmark's IT performance. HEAVY WEIGHTINGS SET PACE One individual stake in the semiconductor industry, New Jersey-based Anadigics, Inc., led all individual contributors to Veedot on both a relative and total-return basis. The maker of integrated circuits and radio frequency solutions for wireless handset and broadband applications enjoyed booming demand for its products, and its shares rallied 168%. The portfolio's second-leading contributor in terms of total return and third-best performer on a relative basis, Investment Technology Group Inc. (ITG), reaped the windfalls of a rising TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Investment Technology Group Inc. 1.8% 1.1% - -------------------------------------------------------------------------------- Anadigics, Inc. 1.5% 0.6% - -------------------------------------------------------------------------------- JLG Industries Inc. 1.5% 1.0% - -------------------------------------------------------------------------------- The9 Ltd. ADR 1.4% -- - -------------------------------------------------------------------------------- Technitrol, Inc. 1.4% 0.6% - -------------------------------------------------------------------------------- NutriSystem, Inc. 1.4% 0.4% - -------------------------------------------------------------------------------- Geo Group Inc. (The) 1.4% -- - -------------------------------------------------------------------------------- Smith Micro Software Inc. 1.3% 0.2% - -------------------------------------------------------------------------------- Sirenza Microdevices, Inc. 1.3% -- - -------------------------------------------------------------------------------- Eagle Materials Inc. 1.3% 0.4% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares and are not reduced by any redemption fees. Had redemption fees been applied, returns would have been lower. Total returns for periods less than one year are not annualized. ** The Lipper Multi-Cap Core Funds Index returned 21.20% and 4.49% for the one- and five-year periods ended April 30, 2006, respectively. (continued) - ------ 5 Veedot - Portfolio Commentary stock market as the period progressed. The market's gains coincided with an increased interest in stock trading that buoyed transactions in the company's capital markets trading business. Veedot's top average overweight position in the period, ITG's shares rose 63%. OVERCOMING TROUBLE IN HEALTH CARE The health care sector encountered an array of difficult issues in the period, ranging from a lackluster new drug pipeline in the pharmaceuticals industry to reimbursement issues and rising costs that plagued managed care providers. Veedot maintained an advantageous underweight in the sector, but it couldn't avoid the pain caused by stakes in several health care providers and, in particular, one biotech drug company. That company, NPS Pharmaceuticals, ranked as Veedot's worst relative and absolute detractor. Shares in the Salt Lake City-based company fell 38% during one trading session in early March after the Food and Drug Administration requested additional clinical information concerning an osteoporosis drug the company wants to market. Veedot's technical process flags such precipitous declines, and the portfolio quickly shed its position in the company. Meanwhile, poor security selection in the oil and gas industry overshadowed strong returns from stakes in providers of energy equipment and services. For the most part, the energy sector benefited from a 20% gain in crude oil prices during the period. But a mild winter across much of the United States slashed natural gas prices almost in half -- and also slashed the share prices of several independent gas producers in the portfolio. INVESTMENT PHILOSOPHY Using its systematic and technically driven investment process, Veedot will continue focusing on finding companies whose fundamental characteristics meet strict requirements for accelerating earnings and revenue growth. For inclusion into the portfolio, such companies also must have historical stock price performance that suggests impending share price appreciation. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Capital Markets 9.0% 7.4% - -------------------------------------------------------------------------------- Energy Equipment & Services 7.5% 6.1% - -------------------------------------------------------------------------------- Commercial Banks 7.2% 2.8% - -------------------------------------------------------------------------------- Hotels, Restaurants & Leisure 5.4% 1.6% - -------------------------------------------------------------------------------- Communications Equipment 5.3% 3.8% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 85.4% 87.5% - -------------------------------------------------------------------------------- Foreign Common Stocks* 3.6% 11.8% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 89.0% 99.3% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.9% 0.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities 10.1% 0.1% - -------------------------------------------------------------------------------- * Includes depositary shares and foreign ordinary shares. - ------ 6 Shareholder Fee Example (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. (continued) - ------ 7 Shareholder Fee Example (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT ACCOUNT DURING PERIOD* ANNUALIZED VALUE VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - -------------------------------------------------------------------------------- VEEDOT SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,159.80 $8.03 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,159.90 $6.96 1.30% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.36 $7.50 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.35 $6.51 1.30% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 8 Veedot - Schedule of Investments APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS - 89.0% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE - 3.4% - -------------------------------------------------------------------------------- 66,000 HEICO Corp. $ 2,164,800 - -------------------------------------------------------------------------------- 62,500 Moog Inc. Cl A(1) 2,340,625 - -------------------------------------------------------------------------------- 31,000 United Industrial Corp. 2,036,700 - -------------------------------------------------------------------------------- 6,542,125 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS - 0.9% - -------------------------------------------------------------------------------- 15,000 FedEx Corporation 1,726,950 - -------------------------------------------------------------------------------- BIOTECHNOLOGY - 0.9% - -------------------------------------------------------------------------------- 31,000 Gilead Sciences, Inc.(1) 1,782,500 - -------------------------------------------------------------------------------- BUILDING PRODUCTS - 1.1% - -------------------------------------------------------------------------------- 31,500 Ameron International Corp. 2,069,235 - -------------------------------------------------------------------------------- CAPITAL MARKETS - 9.0% - -------------------------------------------------------------------------------- 12,500 Blackrock Inc. 1,894,250 - -------------------------------------------------------------------------------- 30,500 Greenhill & Co. Inc. 2,163,060 - -------------------------------------------------------------------------------- 66,500 Investment Technology Group Inc.(1) 3,523,835 - -------------------------------------------------------------------------------- 43,500 Investors Financial Services Corporation 2,081,910 - -------------------------------------------------------------------------------- 11,500 Lehman Brothers Holdings Inc. 1,738,225 - -------------------------------------------------------------------------------- 64,000 OptionsXpress Holdings, Inc. 2,016,000 - -------------------------------------------------------------------------------- 116,500 Schwab (Charles) Corp. 2,085,350 - -------------------------------------------------------------------------------- 24,000 T. Rowe Price Group Inc. 2,020,560 - -------------------------------------------------------------------------------- 17,523,190 - -------------------------------------------------------------------------------- CHEMICALS - 2.1% - -------------------------------------------------------------------------------- 77,466 American Vanguard Corp. 1,898,692 - -------------------------------------------------------------------------------- 252,500 PolyOne Corp.(1) 2,242,200 - -------------------------------------------------------------------------------- 4,140,892 - -------------------------------------------------------------------------------- COMMERCIAL BANKS - 7.2% - -------------------------------------------------------------------------------- 144,000 Banco Santander Central Hispano SA ADR 2,208,960 - -------------------------------------------------------------------------------- 65,500 Cascade Bancorp 1,908,670 - -------------------------------------------------------------------------------- 33,000 First Community Bancorp Inc. 1,914,000 - -------------------------------------------------------------------------------- 33,000 Intervest Bancshares Corp.(1) 1,319,670 - -------------------------------------------------------------------------------- 22,500 PNC Financial Services Group 1,608,075 - -------------------------------------------------------------------------------- 57,432 Seacoast Banking Corp. of Florida 1,582,826 - -------------------------------------------------------------------------------- 92,000 Sterling Bancshares, Inc. 1,523,520 - -------------------------------------------------------------------------------- 70,000 Trico Bancshares 1,910,300 - -------------------------------------------------------------------------------- 13,976,021 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES - 2.1% - -------------------------------------------------------------------------------- 75,000 Geo Group Inc. (The)(1) 2,688,000 - -------------------------------------------------------------------------------- 69,500 NCO Group, Inc.(1) 1,490,775 - -------------------------------------------------------------------------------- 4,178,775 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 5.3% - -------------------------------------------------------------------------------- 90,500 Cisco Systems Inc.(1) $ 1,895,975 - -------------------------------------------------------------------------------- 133,000 Foundry Networks, Inc.(1) 1,889,930 - -------------------------------------------------------------------------------- 150,500 Packeteer Inc.(1) 1,965,530 - -------------------------------------------------------------------------------- 38,500 QUALCOMM Inc. 1,976,590 - -------------------------------------------------------------------------------- 245,000 Sirenza Microdevices, Inc.(1) 2,592,100 - -------------------------------------------------------------------------------- 10,320,125 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 0.9% - -------------------------------------------------------------------------------- 106,500 LaserCard Corp.(1) 1,810,500 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING - 0.6% - -------------------------------------------------------------------------------- 13,500 Jacobs Engineering Group Inc.(1) 1,116,450 - -------------------------------------------------------------------------------- CONSTRUCTION MATERIALS - 3.5% - -------------------------------------------------------------------------------- 37,500 Eagle Materials Inc. 2,484,375 - -------------------------------------------------------------------------------- 21,000 Martin Marietta Materials, Inc. 2,229,360 - -------------------------------------------------------------------------------- 26,000 Vulcan Materials Co. 2,208,960 - -------------------------------------------------------------------------------- 6,922,695 - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES - 1.0% - -------------------------------------------------------------------------------- 71,000 AT&T Inc. 1,860,910 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT - 1.0% - -------------------------------------------------------------------------------- 23,500 Emerson Electric Co. 1,996,325 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.4% - -------------------------------------------------------------------------------- 147,000 Aeroflex Inc.(1) 1,853,670 - -------------------------------------------------------------------------------- 58,000 Littelfuse, Inc.(1) 1,872,820 - -------------------------------------------------------------------------------- 58,500 Molex Inc. 2,171,520 - -------------------------------------------------------------------------------- 109,000 Technitrol, Inc. 2,729,360 - -------------------------------------------------------------------------------- 8,627,370 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES - 7.5% - -------------------------------------------------------------------------------- 21,000 Diamond Offshore Drilling, Inc. 1,906,170 - -------------------------------------------------------------------------------- 31,000 ENSCO International Inc. 1,658,190 - -------------------------------------------------------------------------------- 40,500 Global SantaFe Corp. 2,479,005 - -------------------------------------------------------------------------------- 32,000 Schlumberger Ltd. 2,212,480 - -------------------------------------------------------------------------------- 42,500 TETRA Technologies, Inc.(1) 2,091,000 - -------------------------------------------------------------------------------- 36,000 Tidewater Inc. 2,096,640 - -------------------------------------------------------------------------------- 42,500 Weatherford International Ltd.(1) 2,249,525 - -------------------------------------------------------------------------------- 14,693,010 - -------------------------------------------------------------------------------- GAS UTILITIES - 2.1% - -------------------------------------------------------------------------------- 58,500 Laclede Group, Inc. (The) 1,994,850 - -------------------------------------------------------------------------------- 62,000 ONEOK, Inc. 2,046,620 - -------------------------------------------------------------------------------- 4,041,470 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES - 2.1% - -------------------------------------------------------------------------------- 30,000 Analogic Corporation 1,892,700 - -------------------------------------------------------------------------------- 82,500 Meridian Bioscience Inc. 2,141,700 - -------------------------------------------------------------------------------- 4,034,400 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 9 Veedot - Schedule of Investments APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 1.0% - -------------------------------------------------------------------------------- 39,500 Healthways, Inc.(1) $ 1,937,870 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE - 5.4% - -------------------------------------------------------------------------------- 71,500 Isle of Capri Casinos, Inc.(1) 2,230,800 - -------------------------------------------------------------------------------- 157,500 Multimedia Games, Inc.(1) 2,171,925 - -------------------------------------------------------------------------------- 49,000 Penn National Gaming, Inc.(1) 1,995,280 - -------------------------------------------------------------------------------- 57,500 Sonic Corp.(1) 1,949,825 - -------------------------------------------------------------------------------- 59,000 Starbucks Corporation(1) 2,198,930 - -------------------------------------------------------------------------------- 10,546,760 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES - 1.0% - -------------------------------------------------------------------------------- 106,000 Hooker Furniture Corp. 1,980,080 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES - 1.9% - -------------------------------------------------------------------------------- 24,000 3M Co. 2,050,320 - -------------------------------------------------------------------------------- 19,000 Textron Inc. 1,709,050 - -------------------------------------------------------------------------------- 3,759,370 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL - 2.4% - -------------------------------------------------------------------------------- 72,000 Coldwater Creek Inc.(1) 2,013,120 - -------------------------------------------------------------------------------- 40,000 NutriSystem, Inc.(1) 2,714,400 - -------------------------------------------------------------------------------- 4,727,520 - -------------------------------------------------------------------------------- MACHINERY - 2.7% - -------------------------------------------------------------------------------- 102,000 JLG Industries Inc. 2,925,360 - -------------------------------------------------------------------------------- 56,000 Kaydon Corporation 2,404,640 - -------------------------------------------------------------------------------- 5,330,000 - -------------------------------------------------------------------------------- METALS & MINING - 2.3% - -------------------------------------------------------------------------------- 65,000 Alcoa Inc. 2,195,700 - -------------------------------------------------------------------------------- 25,000 Reliance Steel & Aluminum Company 2,223,750 - -------------------------------------------------------------------------------- 4,419,450 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS - 3.0% - -------------------------------------------------------------------------------- 317,500 Blue Dolphin Energy Co.(1) 1,736,725 - -------------------------------------------------------------------------------- 21,500 Occidental Petroleum Corp. 2,208,910 - -------------------------------------------------------------------------------- 50,000 World Fuel Services Corp. 2,002,000 - -------------------------------------------------------------------------------- 5,947,635 - -------------------------------------------------------------------------------- ROAD & RAIL - 1.0% - -------------------------------------------------------------------------------- 21,500 Union Pacific Corp. 1,961,015 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.5% - -------------------------------------------------------------------------------- 327,000 Anadigics, Inc.(1) 2,926,650 - -------------------------------------------------------------------------------- 295,500 Skyworks Solutions, Inc.(1) 2,112,825 - -------------------------------------------------------------------------------- 67,500 Trident Microsystems, Inc.(1) 1,795,500 - -------------------------------------------------------------------------------- 6,834,975 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- SOFTWARE - 5.0% - -------------------------------------------------------------------------------- 45,000 FactSet Research Systems Inc. $ 1,986,300 - -------------------------------------------------------------------------------- 211,000 Smith Micro Software Inc.(1) 2,620,620 - -------------------------------------------------------------------------------- 357,500 SumTotal Systems Inc.(1) 2,398,825 - -------------------------------------------------------------------------------- 93,000 The9 Ltd. ADR(1) 2,789,070 - -------------------------------------------------------------------------------- 9,794,815 - -------------------------------------------------------------------------------- SPECIALTY RETAIL - 3.1% - -------------------------------------------------------------------------------- 55,500 Claire's Stores Inc. 1,954,710 - -------------------------------------------------------------------------------- 45,500 GameStop Corp. Cl B(1) 1,932,385 - -------------------------------------------------------------------------------- 41,000 Group 1 Automotive, Inc. 2,237,780 - -------------------------------------------------------------------------------- 6,124,875 - -------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE - 1.6% - -------------------------------------------------------------------------------- 33,000 FirstFed Financial Corp.(1) 2,075,370 - -------------------------------------------------------------------------------- 58,500 Willow Grove Bancorp, Inc. 1,033,110 - -------------------------------------------------------------------------------- 3,108,480 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $149,660,147) 173,835,788 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 0.9% - -------------------------------------------------------------------------------- Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 6.875% - 8.75%, 8/15/20 - 8/15/25, valued at $1,731,565), in a joint trading account at 4.65%, dated 4/28/06, due 5/1/06 (Delivery value $1,700,659) (Cost $1,700,000) 1,700,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 89.9% (Cost $151,360,147) 175,535,788 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 10.1% 19,698,953 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $195,234,741 ================================================================================ - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt (1) Non-income producing. See Notes to Financial Statements. - ------ 10 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $151,360,147) $175,535,788 - ------------------------------------------------------------ Receivable for investments sold 19,950,056 - ------------------------------------------------------------ Dividends and interest receivable 90,972 - -------------------------------------------------------------------------------- 195,576,816 - -------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of demand deposit cash 99,031 - ------------------------------------------------------------ Accrued management fees 243,044 - -------------------------------------------------------------------------------- 342,075 - -------------------------------------------------------------------------------- NET ASSETS $195,234,741 ================================================================================ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $241,603,548 - ------------------------------------------------------------ Accumulated net investment loss (668,383) - ------------------------------------------------------------ Accumulated net realized loss on investment and foreign currency transactions (69,876,065) - ------------------------------------------------------------ Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 24,175,641 - -------------------------------------------------------------------------------- $195,234,741 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $183,039,880 - ------------------------------------------------------------ Shares outstanding 28,338,104 - ------------------------------------------------------------ Net asset value per share $6.46 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $ 12,194,861 - ------------------------------------------------------------ Shares outstanding 1,867,250 - ------------------------------------------------------------ Net asset value per share $6.53 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 11 Statement of Operations FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ------------------------------------------------------------ Dividends (net of foreign taxes withheld of $13,086) $ 700,138 - ------------------------------------------------------------ Interest 80,947 - -------------------------------------------------------------------------------- 781,085 - -------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------------------ Management fees 1,445,536 - ------------------------------------------------------------ Directors' fees and expenses 1,363 - ------------------------------------------------------------ Other expenses 2,569 - -------------------------------------------------------------------------------- 1,449,468 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (668,383) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- Net realized gain (loss) on investment and foreign currency transactions 22,965,245 - ------------------------------------------------------------ Change in net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies 6,393,268 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 29,358,513 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $28,690,130 ================================================================================ See Notes to Financial Statements. - ------ 12 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ (668,383) $ (1,079,316) - ------------------------------------------------- Net realized gain (loss) 22,965,245 25,010,629 - ------------------------------------------------- Change in net unrealized appreciation (depreciation) 6,393,268 (2,501,295) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 28,690,130 21,430,018 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (22,973,041) (63,930,650) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 5,717,089 (42,500,632) - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 189,517,652 232,018,28 - -------------------------------------------------------------------------------- End of period $195,234,741 $189,517,652 ================================================================================ Accumulated net investment loss $(668,383) -- ================================================================================ See Notes to Financial Statements. - ------ 13 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Veedot Fund (the fund) is one fund in a series issued by the corporation. The fund is non-diversified under the 1940 Act. The fund's investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in common stocks that management believes to have better than average prospects for appreciation. The fund uses an approach to common stock investing developed by American Century. This approach relies heavily on quantitative tools to identify attractive investment opportunities, regardless of company size, industry type or geographic location, on a disciplined, consistent basis. The following is a summary of the fund's significant accounting policies. MULTIPLE CLASS -- The fund is authorized to issue the Investor Class and the Institutional Class. The share classes differ principally in their respective shareholder servicing and distribution expenses and arrangements. All shares of the fund represent an equal pro rata interest in the assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the fund to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. FUTURES CONTRACTS -- The fund may enter into futures contracts in order to manage the fund's exposure to changes in market conditions. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Upon entering into a futures contract, the fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. (continued) - ------ 14 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The fund may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the fund and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. REDEMPTION -- The fund may impose a 2% redemption fee on shares held less than five years. The redemption fee is recorded as a reduction in the cost of shares redeemed. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when a fund sells securities to meet investor redemptions. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. (continued) - ------ 15 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in the fund's investment strategy (strategy assets) to calculate the appropriate fee rate for the fund. The strategy assets include the fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for each class of the fund is as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $250 million 1.50% 1.30% - -------------------------------------------------------------------------------- Next $250 million 1.30% 1.10% - -------------------------------------------------------------------------------- Over $500 million 1.10% 0.90% - -------------------------------------------------------------------------------- The effective annual management fee for the six months ended April 30, 2006 was 1.50% and 1.30% for the Investor Class and Institutional Class, respectively. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation's transfer agent, American Century Services, LLC. The fund has a bank line of credit agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the six-months ended April 30, 2006, were $312,517,662 and $356,161,974, respectively. (continued) - ------ 16 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the fund were as follows: - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 200,000,000 ================================================================================ Sold 639,508 $ 4,010,271 - -------------------------------------------- Redeemed (4,247,373) (25,960,627)(1) - -------------------------------------------------------------------------------- Net increase (decrease) (3,607,865) $(21,950,356) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 200,000,000 ================================================================================ Sold 846,849 $ 4,523,633 - -------------------------------------------- Redeemed (12,307,748) (66,288,038)(2) - -------------------------------------------------------------------------------- Net increase (decrease) (11,460,899) $(61,764,405) ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000,000 ================================================================================ Sold 144,796 $ 915,169 - -------------------------------------------- Redeemed (309,259) (1,937,854) - -------------------------------------------------------------------------------- Net increase (decrease) (164,463) $ (1,022,685) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 50,000,000 ================================================================================ Sold 166,129 $ 917,669 - -------------------------------------------- Redeemed (565,545) (3,083,914) - -------------------------------------------------------------------------------- Net increase (decrease) (399,416) $ (2,166,245) ================================================================================ (1) Net of redemption fees of $49,379. (2) Net of redemption fees of $334,934. 5. BANK LINE OF CREDIT The fund, along with certain other funds managed by ACIM or ACGIM, has a $500,000,000 unsecured bank line of credit agreement with JPMCB, which was renewed from $575,000,000 effective December 14, 2005. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the six months ended April 30, 2006. 6. RISK FACTORS The fund's investment process may involve high portfolio turnover and high capital gains distributions. In addition, its investment approach may involve higher volatility and risk. (continued) - ------ 17 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 7. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- Federal tax cost of investments $151,409,759 ================================================================================ Gross tax appreciation of investments $25,824,524 - ---------------------------------------------------------------- Gross tax depreciation of investments (1,698,495) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $24,126,029 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of October 31, 2005, the fund had accumulated capital losses of $92,082,814, which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Capital loss carryovers of $59,765,362 and $32,317,452 expire in 2009 and 2010, respectively. - ------ 18 Veedot - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.57 $5.06 $4.99 $3.77 $4.32 $5.92 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------ Net Investment Income (Loss)(2) (0.02) (0.03) (0.03) (0.03) (0.01) --(3) - ------------------ Net Realized and Unrealized Gain (Loss) 0.91 0.53 0.09 1.24 (0.55) (1.60) - -------------------------------------------------------------------------------- Total From Investment Operations 0.89 0.50 0.06 1.21 (0.56) (1.60) - -------------------------------------------------------------------------------- Redemption Fees(4) --(3) 0.01 0.01 0.01 0.01 -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $6.46 $5.57 $5.06 $4.99 $3.77 $4.32 ================================================================================ TOTAL RETURN(5) 15.98% 10.08% 1.40% 32.36% (12.73)% (27.03)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(6) 1.50% 1.50% 1.50% 1.50% 1.50% - ------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.70)%(6) (0.51)% (0.57)% (0.68)% (0.31)% (0.09)% - ------------------ Portfolio Turnover Rate 162% 399% 344% 415% 330% 410% - ------------------ Net Assets, End of Period (in thousands) $183,040 $178,078 $219,618 $228,724 $187,451 $231,108 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per- share effect of redemption fees. Periods prior to November 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable redemption fees. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 19 Veedot - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ---------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ---------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.63 $5.10 $5.02 $3.79 $4.33 $5.92 - ---------------------------------------------------------------------------------- Income From Investment Operations - ------------------- Net Investment Income (Loss)(2) (0.02) (0.02) (0.02) (0.02) --(3) 0.01 - ------------------- Net Realized and Unrealized Gain (Loss) 0.92 0.54 0.09 1.24 (0.55) (1.60) - ---------------------------------------------------------------------------------- Total From Investment Operations 0.90 0.52 0.07 1.22 (0.55) (1.59) - ---------------------------------------------------------------------------------- Redemption Fees(4) --(3) 0.01 0.01 0.01 0.01 -- - ---------------------------------------------------------------------------------- Net Asset Value, End of Period $6.53 $5.63 $5.10 $5.02 $3.79 $4.33 ================================================================================== TOTAL RETURN(5) 15.99% 10.39% 1.59% 32.45% (12.47)% (26.86)% - ---------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(6) 1.30% 1.30% 1.30% 1.30% 1.30% - ------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.50)%(6) (0.31)% (0.37)% (0.48)% (0.11)% 0.11% - ------------------- Portfolio Turnover Rate 162% 399% 344% 415% 330% 410% - ------------------- Net Assets, End of Period (in thousands) $12,195 $11,440 $12,400 $12,458 $8,709 $9,659 - ---------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per- share effect of redemption fees. Periods prior to November 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable redemption fees. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 20 Share Class Information Two classes of shares are authorized for sale by the fund: Investor Class and Institutional Class. The total expense ratio for Institutional Class shares is lower than that of Investor Class shares. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the unified management fee of Institutional Class shares is 0.20% less than the unified management fee of Investor Class shares. All classes of shares represent a pro rata interest in the fund and generally have the same rights and preferences. - ------ 21 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 22 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The DOW JONES WILSHIRE 5000 TOTAL MARKET INDEX measures the performance of all U.S. headquartered equity securities with readily available price data. The LIPPER MULTI-CAP CORE FUNDS INDEX is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Multi-Cap Core fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL 3000(reg.tm) INDEX measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. As of the latest reconstitution, the average market capitalization was approximately $4 billion; the median market capitalization was approximately $700 million. The index had a total market capitalization range of approximately $309 billion to $128 million. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 23 Notes - ------ 24 [inside back cover - blank] [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0606 SH-SAN-49694S
[front cover] American Century Investments SEMIANNUAL REPORT [photo of boy and airplane] APRIL 30, 2006 Capital Value Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Six-Month Total Returns . . . . . . . . . . . . . . . . . . . . . . . . 2 CAPITAL VALUE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 6 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 9 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .11 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .12 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .13 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .14 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .19 OTHER INFORMATION Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .22 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .23 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 The opinions expressed in the Market Perspective and the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century Capital Value Fund for the six months ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor, and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective [photo of Chief Investment Officer] BY MARK MALLON, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS WHAT HAPPENED IN THE ECONOMY A short-lived economic slowdown on the heels of last summer's devastating Gulf Coast hurricanes gave way to a strong rebound after the first of the year, providing fuel for a dose of investor enthusiasm that pushed U.S. broad market indices to solid gains in the 6-month period ended April 30, 2006. As measured in gross domestic product (GDP), U.S. economic growth slowed to 1.7% in the fourth quarter of 2005 as energy supply interruptions caused by hurricanes Rita and Katrina - and a corresponding spike in oil and natural gas prices - filtered through the economy. Other temporary business and employment disruptions caused by those two storms further muted economic vitality in the final months of 2005. By January 2006, however, economic growth reaccelerated, with retailers reporting strong post-holiday sales and overall corporate profits remaining robust. Not even rising commodity prices and rising interest rates halted the momentum, with GDP growth of 5.3% in the first quarter of 2006 more than tripling the rate of the previous quarter. The surge in many commodity values gave the Federal Reserve one reason to keep its string of interest rate hikes intact, even though broader inflation remained modest. The Fed boosted its short-term rate target to 4.75% in the period with four consecutive quarter-point increases. WHAT HAPPENED IN THE MARKET The notion that the Fed might soon stop raising rates helped feed investors' appetites throughout the period, even after short-term interest rates briefly surpassed long-term yields in the final week of 2005. Such yield-curve inversions historically presage a recession. But long-term yields finally inched upward in early 2006, with the benchmark 10-year Treasury note topping the 5% level for the first time in four years. Investors normally disdain rising 10-year yields. Nevertheless, equity markets surged, and as they have since 1999, stocks with smaller capitalizations once more set the pace. But large-cap returns outperformed in the period's final month, when gasoline prices again crept to near $3 per gallon. Among small- and mid-cap stocks, returns on value stocks lagged returns for growth stocks in the 6-month period. Large-cap value continued surpassing large-cap growth, though, with the former garnering substantial support from energy conglomerates riding record profits and surging share prices. SIX-MONTH TOTAL RETURNS AS OF APRIL 30, 2006(1) - -------------------------------------------------------------------------------- S&P 500 Index 9.64% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 10.24% - -------------------------------------------------------------------------------- Nasdaq Composite Index 10.02% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. - ------ 2 Capital Value - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 9.71% 13.69% 6.94% 7.61% 3/31/99 Return After-Tax on Distributions(2) 9.30% 13.27% 6.60% 7.22% Return After-Tax on Distributions and Sale of Shares(2) 6.82% 9.42% 5.85% 6.43% - -------------------------------------------------------------------------------- RUSSELL 1000 VALUE INDEX(3) 12.87% 18.31% 7.30% 6.78% -- - -------------------------------------------------------------------------------- Institutional Class 9.77% 13.91% -- 8.27% 3/1/02 Return After-Tax on Distributions(2) 9.33% 13.45% -- 7.92% Return After-Tax on Distributions and Sale of Shares(2) 6.89% 9.60% -- 7.02% - -------------------------------------------------------------------------------- Advisor Class 9.45% 13.42% -- 15.44% 5/14/03 Return After-Tax on Distributions(2) 9.09% 13.04% -- 15.22% Return After-Tax on Distributions and Sale of Shares(2) 6.60% 9.19% -- 13.36% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. (3) Data provided by Lipper Inc. - A Reuters Company (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For more information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 3 Capital Value - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made March 31, 1999
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended April 30 - ---------------------------------------------------------------------------------------- 1999* 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------- Investor Class (before tax) 10.20% -6.71% 16.92% 0.21% -12.11% 26.67% 10.31% 13.69% - ---------------------------------------------------------------------------------------- Russell 1000 Value Index 9.34% -3.88% 6.43% -3.91% -13.01% 26.26% 13.92% 18.31% - ---------------------------------------------------------------------------------------- * From 3/31/99, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For more information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 4 Capital Value - Portfolio Commentary PORTFOLIO MANAGERS: BRENDAN HEALY, CHUCK RITTER, AND MARK MALLON. American Century Capital Value advanced 9.71%(1) during the six months ended April 30, 2006, trailing the 12.87% return of its benchmark, the Russell 1000 Value Index, but slightly surpassing the 9.64% gain of the S&P 500 Index(2), which measures the broader stock market. Over the long term, Capital Value has proved its worth. On a 5-year basis, the portfolio ranks in the top 12th percentile of the 286 funds in the Lipper large-cap value peer group(3). During that time, the fund's average annual return of 6.94% surpasses the Lipper Large-Cap Value Funds Index's return of 4.19%(4). OPPORTUNITIES IN BROADLY DIVERSIFIED, MEGA-CAP STOCKS The fund's investment process looks for stocks that appear attractively priced given their current fundamentals and business prospects. A sector or market group that underperforms the market tends to gain increasing attention in the portfolio. These moves to lagging areas can hurt the fund's performance in the short-term, but we make them with the belief that long-term performance will benefit from investments in areas of the market we perceive as cheap. One area of the market that certainly has gotten cheaper during the last few years is that of mega-cap value stocks. During the last five years, returns of the biggest large-cap value stocks, so-called mega-cap value stocks, have trailed other large-cap value stocks. In our view, that underperformance gradually has made many giants of American business more attractively priced than other large-cap stocks. Typically, these companies feature broadly diversified business models, generally leading to more stable fundamentals. Reacting to their attractive prices, the fund has increased its exposure to mega-cap stocks over the last few years and generally preferred more diversified business models rather than niche plays. SOLID RETURNS IN ENERGY In the 6-month period, the fund had a modest underweight in energy stocks, the broad market's best-performing sector since 2004. The fund's exposure generally consisted of multi-national integrated oil companies, such as Exxon Mobil and Chevron. TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Citigroup Inc. 4.9% 4.4% - -------------------------------------------------------------------------------- Exxon Mobil Corp. 4.7% 4.3% - -------------------------------------------------------------------------------- Bank of America Corp. 3.6% 3.4% - -------------------------------------------------------------------------------- Royal Dutch Shell plc ADR 2.9% 2.8% - -------------------------------------------------------------------------------- Freddie Mac 2.9% 3.2% - -------------------------------------------------------------------------------- J.P. Morgan Chase & Co. 2.7% 2.5% - -------------------------------------------------------------------------------- Chevron Corp. 2.5% 2.2% - -------------------------------------------------------------------------------- Wells Fargo & Co. 2.3% 2.1% - -------------------------------------------------------------------------------- ConocoPhillips 2.2% 2.4% - -------------------------------------------------------------------------------- Wachovia Corp. 1.8% 1.6% - -------------------------------------------------------------------------------- (1) All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. (2) The S&P 500 Index returned 15.42% and 2.70% for the one- and five-year periods ended April 30, 2006, respectively. (3) Capital Value ranks in the top 75th percentile of the 495 funds in the Lipper large-cap value peer group for the one-year period ended April 30, 2006. Lipper rankings are based on average annual total returns. (4) The Lipper Large-Cap Value Funds Index returned 16.96% for the one-year period ended April 30, 2006. (continued) - ------ 5 Capital Value - Portfolio Commentary While such energy stocks performed well on an absolute basis, they trailed more specialized energy stocks focused on refining, exploration or oil field services. While narrowly focused energy stocks may offer more operational leverage amid the sector's current favorable trends, we believe the benefits of diversification will become more apparent if the energy environment turns hostile. ABSOLUTE BOOST FROM FINANCIALS Capital Value derived almost half its absolute return in the period from financial stocks, with commercial banks, financial services providers and capital markets players leading the way. The sector also accounted for the portfolio's leading absolute stock performer, J.P. Morgan Chase, whose shares surged 26%. However, the fund's emphasis on diversified business models (such as J.P. Morgan) also affected performance in the capital markets industry. Two holdings in that industry, Merrill Lynch and Morgan Stanley, advanced nicely during the period. But they still trailed more specialized capital market stocks and detracted from relative performance. Security selection in the information technology sector further trimmed relative returns. Shares in Microsoft lost 5% of their value and topped Capital Value's list of leading relative detractors. That company's shares posted their biggest one-day loss in five years as the period ended, right after the software giant cited rising capital expenses for a reduction in it's earnings projections. The company said these additional expenses are necessary to keep pace with rivals such as Google. INVESTMENT PHILOSOPHY The Capital Value investment management team remains committed to its strategy of finding medium to large, fundamentally sound businesses trading at price levels it deems below fair market value. By keeping the portfolio positioned in attractively priced stocks regardless of short-term market movements, we believe we can deliver long-term investment rewards. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Oil, Gas & Consumable Fuels 13.0% 11.7% - -------------------------------------------------------------------------------- Commercial Banks 10.4% 10.0% - -------------------------------------------------------------------------------- Diversified Financial Services 7.6% 6.9% - -------------------------------------------------------------------------------- Pharmaceuticals 6.5% 5.6% - -------------------------------------------------------------------------------- Insurance 6.3% 6.2% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 10/31/05 - -------------------------------------------------------------------------------- Common Stocks 97.9% 96.0% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.9% 4.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities 0.2% (0.6)% - -------------------------------------------------------------------------------- - ------ 6 Shareholder Fee Example (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your (continued) - ------ 7 Shareholder Fee Example (Unaudited) ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 -- EXPENSE 11/1/05 4/30/06 4/30/06 RATIO* - -------------------------------------------------------------------------------- CAPITAL VALUE SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,097.10 $5.72 1.10% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,097.70 $4.68 0.90% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,094.50 $7.01 1.35% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,019.34 $5.51 1.10% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,020.33 $4.51 0.90% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,018.10 $6.76 1.35% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 8 Capital Value - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS - 97.9% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE - 0.7% - -------------------------------------------------------------------------------- 53,600 Northrop Grumman Corp. $ 3,585,840 - -------------------------------------------------------------------------------- AUTO COMPONENTS - 0.2% - -------------------------------------------------------------------------------- 45,900 Lear Corporation 1,082,322 - -------------------------------------------------------------------------------- BEVERAGES - 1.8% - -------------------------------------------------------------------------------- 106,400 Coca-Cola Company (The) 4,464,544 - -------------------------------------------------------------------------------- 129,200 Pepsi Bottling Group Inc. 4,147,320 - -------------------------------------------------------------------------------- 8,611,864 - -------------------------------------------------------------------------------- CAPITAL MARKETS - 4.0% - -------------------------------------------------------------------------------- 132,400 Bank of New York Co., Inc. (The) 4,653,860 - -------------------------------------------------------------------------------- 93,900 Merrill Lynch & Co., Inc. 7,160,814 - -------------------------------------------------------------------------------- 119,500 Morgan Stanley 7,683,850 - -------------------------------------------------------------------------------- 19,498,524 - -------------------------------------------------------------------------------- CHEMICALS - 2.1% - -------------------------------------------------------------------------------- 98,800 du Pont (E.I.) de Nemours & Co. 4,357,080 - -------------------------------------------------------------------------------- 84,900 PPG Industries, Inc. 5,698,488 - -------------------------------------------------------------------------------- 10,055,568 - -------------------------------------------------------------------------------- COMMERCIAL BANKS - 10.4% - -------------------------------------------------------------------------------- 353,200 Bank of America Corp. 17,631,744 - -------------------------------------------------------------------------------- 70,100 National City Corp. 2,586,690 - -------------------------------------------------------------------------------- 50,800 PNC Financial Services Group 3,630,676 - -------------------------------------------------------------------------------- 220,000 U.S. Bancorp 6,916,800 - -------------------------------------------------------------------------------- 149,000 Wachovia Corp. 8,917,650 - -------------------------------------------------------------------------------- 163,700 Wells Fargo & Co. 11,244,553 - -------------------------------------------------------------------------------- 50,928,113 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES - 1.3% - -------------------------------------------------------------------------------- 87,000 R.R. Donnelley & Sons Company 2,931,030 - -------------------------------------------------------------------------------- 95,400 Waste Management, Inc. 3,573,684 - -------------------------------------------------------------------------------- 6,504,714 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 0.3% - -------------------------------------------------------------------------------- 113,100 Avaya Inc.(1) 1,357,200 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 3.1% - -------------------------------------------------------------------------------- 255,500 Hewlett-Packard Co. 8,296,085 - -------------------------------------------------------------------------------- 85,100 International Business Machines Corp. 7,007,134 - -------------------------------------------------------------------------------- 15,303,219 - -------------------------------------------------------------------------------- DIVERSIFIED - 1.3% - -------------------------------------------------------------------------------- 50,000 Standard and Poor's 500 Depositary Receipt 6,565,000 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 7.6% - -------------------------------------------------------------------------------- 484,600 Citigroup Inc. 24,205,770 - -------------------------------------------------------------------------------- 291,900 J.P. Morgan Chase & Co. 13,246,422 - -------------------------------------------------------------------------------- 37,452,192 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES - 4.0% - -------------------------------------------------------------------------------- 302,748 AT&T Inc. $ 7,935,025 - -------------------------------------------------------------------------------- 158,500 BellSouth Corp. 5,354,130 - -------------------------------------------------------------------------------- 187,300 Verizon Communications 6,186,519 - -------------------------------------------------------------------------------- 19,475,674 - -------------------------------------------------------------------------------- ELECTRIC UTILITIES - 2.8% - -------------------------------------------------------------------------------- 142,300 Exelon Corporation 7,684,200 - -------------------------------------------------------------------------------- 203,800 PPL Corporation 5,918,352 - -------------------------------------------------------------------------------- 13,602,552 - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING - 1.8% - -------------------------------------------------------------------------------- 230,000 Kroger Co. (The)(1) 4,659,800 - -------------------------------------------------------------------------------- 86,800 Wal-Mart Stores, Inc. 3,908,604 - -------------------------------------------------------------------------------- 8,568,404 - -------------------------------------------------------------------------------- FOOD PRODUCTS - 2.2% - -------------------------------------------------------------------------------- 96,300 H.J. Heinz Company 3,997,413 - -------------------------------------------------------------------------------- 136,800 Sara Lee Corp. 2,444,616 - -------------------------------------------------------------------------------- 61,500 Unilever N.V. New York Shares 4,427,385 - -------------------------------------------------------------------------------- 10,869,414 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 0.5% - -------------------------------------------------------------------------------- 52,900 HCA Inc. 2,321,781 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE - 1.2% - -------------------------------------------------------------------------------- 166,900 McDonald's Corporation 5,769,733 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES - 0.7% - -------------------------------------------------------------------------------- 124,500 Newell Rubbermaid Inc. 3,413,790 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES - 2.2% - -------------------------------------------------------------------------------- 173,800 General Electric Co. 6,011,742 - -------------------------------------------------------------------------------- 186,800 Tyco International Ltd. 4,922,180 - -------------------------------------------------------------------------------- 10,933,922 - -------------------------------------------------------------------------------- INSURANCE - 6.3% - -------------------------------------------------------------------------------- 116,300 Allstate Corp. 6,569,787 - -------------------------------------------------------------------------------- 112,200 American International Group, Inc. 7,321,050 - -------------------------------------------------------------------------------- 67,300 Hartford Financial Services Group Inc. (The) 6,186,889 - -------------------------------------------------------------------------------- 38,600 Loews Corp. 4,097,390 - -------------------------------------------------------------------------------- 93,400 Marsh & McLennan Companies, Inc. 2,864,578 - -------------------------------------------------------------------------------- 65,400 Torchmark Corp. 3,931,194 - -------------------------------------------------------------------------------- 30,970,888 - -------------------------------------------------------------------------------- IT SERVICES - 1.3% - -------------------------------------------------------------------------------- 49,400 Computer Sciences Corp.(1) 2,892,370 - -------------------------------------------------------------------------------- 76,200 Fiserv, Inc.(1) 3,435,096 - -------------------------------------------------------------------------------- 6,327,466 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 9 Capital Value - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- MACHINERY - 3.3% - -------------------------------------------------------------------------------- 48,800 Deere & Co. $ 4,283,664 - -------------------------------------------------------------------------------- 72,300 Dover Corp. 3,596,925 - -------------------------------------------------------------------------------- 105,700 Ingersoll-Rand Company Cl A 4,624,375 - -------------------------------------------------------------------------------- 43,400 Parker-Hannifin Corp. 3,517,570 - -------------------------------------------------------------------------------- 16,022,534 - -------------------------------------------------------------------------------- MEDIA - 3.3% - -------------------------------------------------------------------------------- 50,150 CBS Corp. Cl B 1,277,321 - -------------------------------------------------------------------------------- 84,100 Gannett Co., Inc. 4,625,500 - -------------------------------------------------------------------------------- 460,800 Time Warner Inc. 8,017,919 - -------------------------------------------------------------------------------- 55,350 Viacom Inc. Cl B 2,204,591 - -------------------------------------------------------------------------------- 16,125,331 - -------------------------------------------------------------------------------- METALS & MINING - 0.5% - -------------------------------------------------------------------------------- 22,900 Nucor Corp. 2,491,978 - -------------------------------------------------------------------------------- MULTI-UTILITIES - 0.6% - -------------------------------------------------------------------------------- 143,300 NiSource Inc. 3,025,063 - -------------------------------------------------------------------------------- MULTILINE RETAIL - 0.5% - -------------------------------------------------------------------------------- 149,600 Dollar General Corp. 2,612,016 - -------------------------------------------------------------------------------- OFFICE ELECTRONICS - 0.7% - -------------------------------------------------------------------------------- 241,700 Xerox Corp.(1) 3,393,468 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS - 13.0% - -------------------------------------------------------------------------------- 14,800 Anadarko Petroleum Corp. 1,551,336 - -------------------------------------------------------------------------------- 202,958 Chevron Corp. 12,384,497 - -------------------------------------------------------------------------------- 163,880 ConocoPhillips 10,963,572 - -------------------------------------------------------------------------------- 22,100 Devon Energy Corporation 1,328,431 - -------------------------------------------------------------------------------- 368,300 Exxon Mobil Corp. 23,232,365 - -------------------------------------------------------------------------------- 211,800 Royal Dutch Shell plc ADR 14,429,934 - -------------------------------------------------------------------------------- 63,890,135 - -------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS - 1.1% - -------------------------------------------------------------------------------- 78,684 Weyerhaeuser Co. 5,544,861 - -------------------------------------------------------------------------------- PHARMACEUTICALS - 6.5% - -------------------------------------------------------------------------------- 161,100 Abbott Laboratories 6,885,414 - -------------------------------------------------------------------------------- 111,000 Johnson & Johnson 6,505,710 - -------------------------------------------------------------------------------- 89,000 Merck & Co., Inc. 3,063,380 - -------------------------------------------------------------------------------- 345,200 Pfizer Inc. 8,743,916 - -------------------------------------------------------------------------------- 141,700 Wyeth 6,896,539 - -------------------------------------------------------------------------------- 32,094,959 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.8% - -------------------------------------------------------------------------------- 202,500 Intel Corp. 4,045,950 - -------------------------------------------------------------------------------- SOFTWARE - 2.4% - -------------------------------------------------------------------------------- 330,639 Microsoft Corp. 7,984,932 - -------------------------------------------------------------------------------- 238,800 Oracle Corp.(1) 3,484,092 - -------------------------------------------------------------------------------- 11,469,024 - -------------------------------------------------------------------------------- Shares/Principal Amount Value - -------------------------------------------------------------------------------- SPECIALTY RETAIL - 1.0% - -------------------------------------------------------------------------------- 162,500 Gap, Inc. (The) $ 2,939,625 - -------------------------------------------------------------------------------- 51,800 Home Depot, Inc. (The) 2,068,374 - -------------------------------------------------------------------------------- 5,007,999 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS - 1.3% - -------------------------------------------------------------------------------- 82,900 Liz Claiborne, Inc. 3,237,245 - -------------------------------------------------------------------------------- 54,300 VF Corp. 3,322,617 - -------------------------------------------------------------------------------- 6,559,862 - -------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE - 4.8% - -------------------------------------------------------------------------------- 232,800 Freddie Mac 14,214,768 - -------------------------------------------------------------------------------- 37,500 MGIC Investment Corp. 2,651,250 - -------------------------------------------------------------------------------- 151,800 Washington Mutual, Inc. 6,840,108 - -------------------------------------------------------------------------------- 23,706,126 - -------------------------------------------------------------------------------- TOBACCO - 1.4% - -------------------------------------------------------------------------------- 97,100 Altria Group Inc. 7,103,836 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES - 0.9% - -------------------------------------------------------------------------------- 181,200 Sprint Nextel Corp. 4,493,760 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $396,598,677) 480,785,082 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 1.9% $9,300,000 FNMA Discount Notes, 4.71%, 5/1/06(2) (Cost $9,300,000) 9,300,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.8% (Cost $405,898,677) 490,085,082 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.2% 1,027,339 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $491,112,421 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt FNMA = Federal National Mortgage Association (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------ 10 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $405,898,677) $490,085,082 - ------------------------------------------------------------------ Receivable for investments sold 1,628,299 - ------------------------------------------------------------------ Receivable for capital shares sold 87,879 - ------------------------------------------------------------------ Dividends and interest receivable 865,419 - -------------------------------------------------------------------------------- 492,666,679 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Disbursements in excess of demand deposit cash 151,878 - ------------------------------------------------------------------ Payable for investments purchased 963,620 - ------------------------------------------------------------------ Accrued management fees 432,408 - ------------------------------------------------------------------ Distribution fees payable 3,176 - ------------------------------------------------------------------ Service fees payable 3,176 - -------------------------------------------------------------------------------- 1,554,258 - -------------------------------------------------------------------------------- NET ASSETS $491,112,421 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $400,799,925 - ------------------------------------------------------------------ Undistributed net investment income 1,867,235 - ------------------------------------------------------------------ Undistributed net realized gain on investment transactions 4,258,856 - ------------------------------------------------------------------ Net unrealized appreciation on investments 84,186,405 - -------------------------------------------------------------------------------- $491,112,421 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $442,147,646 - ------------------------------------------------------------------ Shares outstanding 57,804,824 - ------------------------------------------------------------------ Net asset value per share $7.65 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $33,223,161 - ------------------------------------------------------------------ Shares outstanding 4,341,324 - ------------------------------------------------------------------ Net asset value per share $7.65 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $15,741,614 - ------------------------------------------------------------------ Shares outstanding 2,060,050 - ------------------------------------------------------------------ Net asset value per share $7.64 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 11 Statement of Operations FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ------------------------------------------------------------------ Dividends (net of foreign taxes withheld $46,103) $ 6,627,614 - ------------------------------------------------------------------ Interest 269,154 - -------------------------------------------------------------------------------- 6,896,768 - -------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------------------------ Management fees 2,704,843 - ------------------------------------------------------------------ Distribution fees - Advisor Class 19,198 - ------------------------------------------------------------------ Service fees - Advisor Class 19,198 - ------------------------------------------------------------------ Directors' fees and expenses 3,783 - ------------------------------------------------------------------ Other expenses 1,038 - -------------------------------------------------------------------------------- 2,748,060 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 4,148,708 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- Net realized gain (loss) on investment transactions 4,685,385 - ------------------------------------------------------------------ Change in net unrealized appreciation (depreciation) on investments 37,696,776 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 42,382,161 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $46,530,869 ================================================================================ See Notes to Financial Statements. - ------ 12 Statement of Changes in Net Assets SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2005 - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ 4,148,708 $ 6,319,371 - ---------------------------------------------------- Net realized gain (loss) 4,685,385 7,227,289 - ---------------------------------------------------- Change in net unrealized appreciation (depreciation) 37,696,776 17,982,905 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 46,530,869 31,529,565 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income: - ---------------------------------------------------- Investor Class (6,466,576) (3,184,833) - ----------------------------------------------------- Institutional Class (610,968) (335,120) - ----------------------------------------------------- Advisor Class (174,997) (80,961) - ----------------------------------------------------- From net realized gains: - ---------------------------------------------------- Investor Class (5,171,997) -- - ----------------------------------------------------- Institutional Class (428,777) -- - ----------------------------------------------------- Advisor Class (170,420) -- - -------------------------------------------------------------------------------- Decrease in net assets from distributions (13,023,735) (3,600,914) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (53,015,668) 195,715,76 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (19,508,534) 223,644,42 - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 510,620,955 286,976,53 - -------------------------------------------------------------------------------- End of period $491,112,421 $510,620,955 ================================================================================ Undistributed net investment income $1,867,235 $4,971,068 ================================================================================ See Notes to Financial Statements. - ------ 13 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Capital Value Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund's investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in common stocks that management believes to be undervalued at the time of purchase. The fund also seeks to minimize the impact of federal income taxes on shareholder returns by attempting to minimize taxable distributions to shareholders. The following is a summary of the fund's significant accounting policies. MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the Institutional Class and the Advisor Class. The share classes differ principally in their respective shareholder servicing and distribution expenses and arrangements. All shares of the fund represent an equal pro rata interest in the assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the fund to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. (continued) - ------ 14 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in the fund's investment strategy (strategy assets) to calculate the appropriate fee rate for the fund. The strategy assets include the fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for each class is as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR CLASS CLASS CLASS - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $500 million 1.10% 0.90% 0.85% - -------------------------------------------------------------------------------- Next $500 million 1.00% 0.80% 0.75% - -------------------------------------------------------------------------------- Over $1 billion 0.90% 0.70% 0.65% - -------------------------------------------------------------------------------- The effective annual management fee for the fund for the six months ended April 30, 2006, was 1.10%, 0.90%, and 0.85%, for the Investor Class, Institutional Class and Advisor Class, respectively. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan (the plan) for the Advisor Class, pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the Advisor Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution fee equal to 0.25% and an annual service fee equal to 0.25%. The fees are computed and accrued daily based on the Advisor Class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred by financial intermediaries in connection with distributing shares of the Advisor Class including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the fund. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers. Fees incurred under the plan during the six months ended April 30, 2006, are detailed in the Statement of Operations. (continued) - ------ 15 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. The fund has a bank line of credit agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2006, were $34,601,723 and $86,542,415, respectively. (continued) - ------ 16 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the fund were as follows: - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 200,000,000 ================================================================================ Sold 4,400,472 $ 32,388,691 - ---------------------------------------------- Issued in reinvestment of distributions 1,417,919 10,279,913 - ---------------------------------------------- Redeemed (12,092,245) (89,107,164) - -------------------------------------------------------------------------------- Net increase (decrease) (6,273,854) $ (46,438,560) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 200,000,000 ================================================================================ Sold 35,843,118 $251,786,243 - ---------------------------------------------- Issued in reinvestment of distributions 398,001 2,778,045 - ---------------------------------------------- Redeemed (10,808,116) (76,893,821) - -------------------------------------------------------------------------------- Net increase (decrease) 25,433,003 $177,670,467 ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 15,000,000 ================================================================================ Sold 321,269 $ 2,364,132 - ---------------------------------------------- Issued in reinvestment of distributions 126,734 918,825 - ---------------------------------------------- Redeemed (1,344,970) (9,805,839) - -------------------------------------------------------------------------------- Net increase (decrease) (896,967) $(6,522,882) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 15,000,000 ================================================================================ Sold 2,861,961 $20,546,551 - ---------------------------------------------- Issued in reinvestment of distributions 46,241 322,764 - ---------------------------------------------- Redeemed (1,211,707) (8,746,880) - -------------------------------------------------------------------------------- Net increase (decrease) 1,696,495 $12,122,435 ================================================================================ ADVISOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2006 SHARES AUTHORIZED 50,000,000 ================================================================================ Sold 178,399 $1,311,863 - ---------------------------------------------- Issued in reinvestment of distributions 47,294 342,881 - ---------------------------------------------- Redeemed (231,518) (1,708,970) - -------------------------------------------------------------------------------- Net increase (decrease) (5,825) $ (54,226) ================================================================================ YEAR ENDED OCTOBER 31, 2005 SHARES AUTHORIZED 50,000,000 ================================================================================ Sold 1,049,941 $7,346,149 - ---------------------------------------------- Issued in reinvestment of distributions 11,581 80,831 - ---------------------------------------------- Redeemed (211,844) (1,504,113) - -------------------------------------------------------------------------------- Net increase (decrease) 849,678 $5,922,867 ================================================================================ (continued) - ------ 17 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 5. BANK LINE OF CREDIT The fund, along with certain other funds managed by ACIM or ACGIM, has a $500,000,000 unsecured bank line of credit agreement with JPMCB, which was renewed from $575,000,000 effective December 14, 2005. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the six months ended April 30, 2006. 6. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- Federal tax cost of investments $406,354,181 ================================================================================ Gross tax appreciation of investments $86,762,195 - ---------------------------------------------------------------- Gross tax depreciation of investments (3,031,294) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $83,730,901 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. - ------ 18 Capital Value - Financial Highlights For a Share Outstanding Throughout the Years Ended October 31 (except as noted) - ------------------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.15 $6.61 $5.86 $4.88 $5.39 $5.50 - ------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income (Loss) 0.06(2) 0.10(2) 0.09(2) 0.08(2) 0.07(2) 0.06 - -------------------------- Net Realized and Unrealized Gain (Loss) 0.62 0.51 0.72 0.97 (0.52) (0.09) - ------------------------------------------------------------------------------------------- Total From Investment Operations 0.68 0.61 0.81 1.05 (0.45) (0.03) - ------------------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.10) (0.07) (0.06) (0.07) (0.06) (0.08) - -------------------------- From Net Realized Gains (0.08) -- -- -- -- -- - ------------------------------------------------------------------------------------------- Total Distributions (0.18) (0.07) (0.06) (0.07) (0.06) (0.08) - ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.65 $7.15 $6.61 $5.86 $4.88 $5.39 =========================================================================================== TOTAL RETURN(3) 9.71% 9.29% 13.94% 21.67% (8.49)% (0.47)% - ------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.10%(4) 1.10% 1.10% 1.10% 1.10% 1.10% - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.64%(4) 1.42% 1.44% 1.54% 1.32% 1.18% - -------------------------- Portfolio Turnover Rate 7% 28% 15% 22% 42% 56% - -------------------------- Net Assets, End of Period (in thousands) $442,148 $458,354 $255,504 $91,960 $50,425 $47,542 - ------------------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 19 Capital Value - Financial Highlights For a Share Outstanding Throughout the Years Ended October 31 (except as noted) - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.16 $6.62 $5.87 $4.88 $5.87 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income (Loss)(3) 0.07 0.12 0.10 0.09 0.06 - -------------------------- Net Realized and Unrealized Gain (Loss) 0.62 0.51 0.72 0.97 (1.05) - -------------------------------------------------------------------------------- Total From Investment Operations 0.69 0.63 0.82 1.06 (0.99) - -------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.12) (0.09) (0.07) (0.07) -- - -------------------------- From Net Realized Gains (0.08) -- -- -- -- - -------------------------------------------------------------------------------- Total Distributions (0.20) (0.09) (0.07) (0.07) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.65 $7.16 $6.62 $5.87 $4.88 ================================================================================ TOTAL RETURN(4) 9.77% 9.50% 14.15% 22.07% (16.87)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.90%(5) 0.90% 0.90% 0.90% 0.90%(5) - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.84%(5) 1.62% 1.64% 1.74% 1.56%(5) - -------------------------- Portfolio Turnover Rate 7% 28% 15% 22% 42%(6) - -------------------------- Net Assets, End of Period (in thousands) $33,223 $37,523 $23,449 $11,244 $3,779 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) March 1, 2002 (commencement of sale) through October 31, 2002. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2002. See Notes to Financial Statements. - ------ 20 Capital Value - Financial Highlights For a Share Outstanding Throughout the Years Ended October 31 (except as noted) - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.14 $6.60 $5.86 $5.19 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income (Loss)(3) 0.05 0.08 0.08 0.03 - -------------------------- Net Realized and Unrealized Gain (Loss) 0.61 0.52 0.71 0.64 - -------------------------------------------------------------------------------- Total From Investment Operations 0.66 0.60 0.79 0.67 - -------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.08) (0.06) (0.05) -- - -------------------------- From Net Realized Gains (0.08) -- -- -- - -------------------------------------------------------------------------------- Total Distributions (0.16) (0.06) (0.05) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.64 $7.14 $6.60 $5.86 ================================================================================ TOTAL RETURN(4) 9.45% 9.04% 13.60% 12.91% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.35%(5) 1.35% 1.35% 1.35%(5) - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.39%(5) 1.17% 1.19% 1.03%(5) - -------------------------- Portfolio Turnover Rate 7% 28% 15% 22%(6) - -------------------------- Net Assets, End of Period (in thousands) $15,742 $14,744 $8,023 $201 - -------------------------------------------------------------------------------- (1) Six months ended April 30, 2006 (unaudited). (2) May 14, 2003 (commencement of sale) through October 31, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2003. See Notes to Financial Statements. - ------ 21 Share Class Information Three classes of shares are authorized for sale by the fund: Investor Class, Institutional Class and Advisor Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratio of Advisor Class shares is higher than that of Investor Class shares. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the unified management fee of Institutional Class shares is 0.20% less than the unified management fee of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. All classes of shares represent a pro rata interest in the fund and generally have the same rights and preferences. - ------ 22 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 23 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The LIPPER LARGE-CAP VALUE FUNDS INDEX is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Large-Cap Value fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL 1000(reg.tm) INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest companies in the Russell 3000 Index (the 3,000 largest publicly traded U.S. companies, based on total market capitalization). The RUSSELL 1000(reg.tm) VALUE INDEX measures the performance of those Russell 1000 companies (the 1,000 largest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth rates. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 24 [inside back cover - blank] [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0606 SH-SAN-49690S
[front cover] American Century Investments SEMIANNUAL REPORT [photo of boy and airplane] APRIL 30, 2006 American Century-Mason Street Mid Cap Growth Fund American Century-Mason Street Small Cap Growth Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 One-Month Total Returns . . . . . . . . . . . . . . . . . . . . . . . . 2 MID CAP GROWTH Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 7 SMALL CAP GROWTH Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . .13 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . .13 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .14 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . . . .17 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .20 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .22 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .23 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .25 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .31 OTHER INFORMATION Approval of Management Agreement for Mid Cap Growth and Small Cap Growth . . . . . . . . . . . . . . . . . . . .43 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .45 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .47 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century-Mason Street Mid Cap Growth and Small Cap Growth funds for the one-month ended April 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site currently highlights American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of Fortune magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. /s/James E. Stowers III James E. Stowers, Jr. James E. Stowers III FOUNDER CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. AMERICAN CENTURY COMPANIES, INC. - ------ 1 Market Perspective [photo of Mark Mallon] BY MARK MALLON, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS Conflicting economic data in the last week of April 2006 sent a sobering message to otherwise strong U.S. equity markets -- a message that trimmed the month's gains and helped send the 10-year Treasury yield to its highest level in four years. Equity market indices surged 1-3% in the third week of April after minutes released from the Federal Reserve's Open Market Committee meeting in March indicated an end to its string of short-term interest rate hikes may have neared. Ben Bernanke, the Fed's new chairman, provided additional fuel to that expectation with remarks to Congress in late April, when he said the Fed may soon "pause" as it digests additional economic reports. In addition, a variety of economic data, implying a potential slowdown that would give the Fed the leeway it desires to stop its rate-hike campaign, helped feed rising equity markets. Solid first-quarter earnings reports by most U.S. companies aided the markets' strength. However, data released the last week of the month showed the economy might not have slowed as much as previously thought. With home sales up, orders for durable goods rising and consumer confidence shooting to its highest level since May 2002, investors feared the Fed would have to keep its rate-hike campaign intact, especially with soaring commodity prices stoking inflation fears. Those same inflation fears sent the yield on the benchmark 10-year Treasury note above 5% for the first time since June 2002. The surge didn't prevent equity markets from closing higher for the month, but it did prevent consistent upward traction. Such consistency likely will remain elusive until investors can better discern a stopping point for the Fed's rate hikes. With the heightened uncertainty that the month's economic data produced, investors increasingly steered toward stocks in large companies with solid balance sheets. Returns on large-cap stocks, highlighted by a 5-year high in the S&P 500, topped those of small-cap stocks, reversing the dominant trend of the previous month. In addition, value stocks once again outperformed growth stocks, extending a trend that dates to the collapse of the technology stock bubble in early 2000. ONE-MONTH TOTAL RETURNS AS OF APRIL 30, 2006(1) - -------------------------------------------------------------------------------- S&P 500 Index 1.34% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 2.48% - -------------------------------------------------------------------------------- Nasdaq Composite Index -0.71% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. - ------ 2 Mid Cap Growth - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------------- SINCE INCEPTION 1 MONTH(1) 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------------- A CLASS 3/31/97 No sales charge* 0.07% 26.45% 2.93%(2) 10.73%(2) With sales charge* -5.66% 19.22% 1.72%(2) 10.02%(2) - -------------------------------------------------------------------------------------- S&P MIDCAP 400 INDEX(3) 1.41% 28.32% 10.73% 14.98% -- - -------------------------------------------------------------------------------------- RUSSELL MIDCAP GROWTH INDEX 0.42% 28.27% 5.77% 9.69% -- - -------------------------------------------------------------------------------------- Investor Class -- -- -- 0.41%(1) 4/3/06 - -------------------------------------------------------------------------------------- Institutional Class -- -- -- 0.41%(1) 4/3/06 - -------------------------------------------------------------------------------------- B Class(2) 3/31/97 No sales charge* 0.00% 25.64% 2.25% 10.00% With sales charge* -5.00% 21.64% 2.06% 10.00% - -------------------------------------------------------------------------------------- C Class 4/3/06 No sales charge* -- -- -- 0.34%(1) With sales charge* -- -- -- -0.66%(1) - -------------------------------------------------------------------------------------- R Class -- -- -- 0.41%(1) 4/3/06 - -------------------------------------------------------------------------------------- *Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information pages for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Class returns would have been lower if fees had not been waived. (3) Data provided by Lipper Inc. -- A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. (continued) - ------ 3 Mid Cap Growth - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made March 31, 1997
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended April 30 - ---------------------------------------------------------------------------------------------------- 1997* 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------------------- A Class (no sales charge)** 1.30% 51.49% 3.76% 62.75% -15.64% -8.63% -20.47% 23.58% 1.74% 26.45% - ---------------------------------------------------------------------------------------------------- S&P MidCap 400 Index 2.59% 47.92% 6.43% 23.52% 7.04% 6.57% -17.51% 34.45% 9.74% 28.32% - ---------------------------------------------------------------------------------------------------- Russell Midcap Growth Index 2.45% 40.84% 12.33% 53.02% -29.47% -15.01% -16.67% 36.14% 7.05% 28.27% - ---------------------------------------------------------------------------------------------------- *From 3/31/97, the A Class's inception date. Not annualized. Mid Cap Growth A Class's initial investment is $9,425 to reflect the maximum 5.75% initial sales charge. **Class returns would have been lower, along with ending value, if fees had not been waived. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 4 Mid Cap Growth - Portfolio Commentary PORTFOLIO MANAGER: WILLIAM R. WALKER, CFA We are pleased to provide this initial report on your investment with American Century Investments. On March 31, 2006, American Century Investments acquired all of the net assets of Mason Street Aggressive Growth Stock pursuant to a plan of reorganization approved by the acquired fund's shareholders. This fund was reorganized as a series issued by American Century Mutual Funds, Inc. (ACMF). Therefore, a one-month report is being provided based on the financial statement reporting period of other funds offered by ACMF. We at American Century Investments look forward to helping you achieve your financial goals. Over the past month since the reorganization, American Century-Mason Street Mid Cap Growth posted a gain of 0.07%* for the one-month ended April 30, 2006, trailing the 0.42% return of the Russell Midcap Growth Index. The investment objective of the fund is long-term growth of capital. Normally the fund invests at least 80% of net assets in stocks of U.S. companies with market capitalizations in the range represented by the S&P MidCap 400 Index. The fund invests primarily in the stocks of mid-sized companies selected for their above-average growth potential giving consideration to factors such as company management, growth rate of revenues and earnings, opportunities for margin expansion and strong financial characteristics. The stocks of mid-sized companies may experience substantial price volatility. INDUSTRIALS LEAD THE PORTFOLIO Industrial stocks proved to be Mid Cap Growth's largest contributors to absolute performance. Within this space, we were well-rewarded for taking positions in Monster Worldwide Inc. (Monster.com), and NutriSystem. Monster performed well on strong demand for professional jobs and a turnaround in European operations. NutriSystem is a provider of diet programs, which benefited from the typically strong first quarter demand for diets. A transportation holding, J.B. Hunt Transport, also added to the funds positive performance. TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 3/31/06 - -------------------------------------------------------------------------------- Corporate Executive Board Co. (The) 2.9% 2.7% - -------------------------------------------------------------------------------- Monster Worldwide Inc. 2.8% 2.4% - -------------------------------------------------------------------------------- Cognizant Technology Solutions Corporation CI A 2.1% 2.0% - -------------------------------------------------------------------------------- Jabil Circuit, Inc. 2.0% 2.2% - -------------------------------------------------------------------------------- Expeditors International of Washington, Inc. 1.9% 1.9% - -------------------------------------------------------------------------------- DaVita Inc. 1.9% 2.1% - -------------------------------------------------------------------------------- Fastenal Co. 1.9% 1.9% - -------------------------------------------------------------------------------- Choice Hotels International Inc. 1.8% 1.5% - -------------------------------------------------------------------------------- Graco Inc. 1.8% 1.7% - -------------------------------------------------------------------------------- O'Reilly Automotive Inc. 1.7% 1.9% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for A Class shares and are not reduced by sales charges. A Class shares are subject to a maximum sales charge of 5.75%. Had the sales charge been applied, returns would be lower than those shown. Total returns for periods less than one year are not annualized. (continued) - ------ 5 Mid Cap Growth - Portfolio Commentary ENERGY ANOTHER PLUS In Energy, the portfolio benefited from rising energy cost during much of this period. We were well-rewarded for taking positions in Consol Energy because of rising raw material prices. The portfolio was also lifted by BJ Services and National Oilwell Varco. CONSUMER DISCRETIONARY ADDS VALUE Consumer Discretionary was one of the brighter segments. Our stock selection provided to be advantageous. Stocks in gaming and lodging holdings, such as Scientific Games and Choice Hotels International, provided strong market positions. Holdings in AnnTaylor Stores also contributed to the results. SOME DISAPPOINTMENTS Disappointments in Health Care holdings due to stock specific issues coupled with concerns over industry wide pricing led to unfavorable results. Cytyc and DaVita had modest disappointing performance for the period. INVESTMENT PHILOSOPHY The American Century-Mason Street Mid Cap Growth investment management team remains committed to its strategy of identifying and investing in companies with above-average growth potential. They use extensive research to identify companies that are well-managed, have solid growth in revenue and earnings, and have strong financial characteristics. We continue to believe earnings growth will be above average for mid cap stocks which should help drive relative performance. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 3/31/06 - -------------------------------------------------------------------------------- Commercial Services & Supplies 8.4% 7.1% - -------------------------------------------------------------------------------- IT Services 7.4% 6.7% - -------------------------------------------------------------------------------- Health Care Providers & Services 6.6% 6.8% - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 6.4% 6.6% - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 6.0% 6.4% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 3/31/06 - -------------------------------------------------------------------------------- Common Stocks 93.9% 91.1% - -------------------------------------------------------------------------------- Commercial Paper 4.9% -- - -------------------------------------------------------------------------------- Temporary Cash Investments 0.2% 7.1% - -------------------------------------------------------------------------------- Other Assets and Liabilities 1.0% 1.8% - -------------------------------------------------------------------------------- - ------ 6 Mid Cap Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 93.9% AIR FREIGHT & LOGISTICS -- 1.9% - -------------------------------------------------------------------------------- 45,810 Expeditors International of Washington, Inc. $ 3,921,794 - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 1.9% - -------------------------------------------------------------------------------- 49,000 Celgene Corp.(1) 2,065,840 - -------------------------------------------------------------------------------- 31,520 Neurocrine Biosciences Inc.(1) 1,807,987 - -------------------------------------------------------------------------------- 3,873,827 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 5.4% - -------------------------------------------------------------------------------- 65,740 Investors Financial Services Corporation 3,146,317 - -------------------------------------------------------------------------------- 25,205 Legg Mason, Inc. 2,986,288 - -------------------------------------------------------------------------------- 39,600 Nuveen Investments Inc. Cl A 1,905,552 - -------------------------------------------------------------------------------- 157,050 TD Ameritrade Holding Corp. 2,914,848 - -------------------------------------------------------------------------------- 10,953,005 - -------------------------------------------------------------------------------- CHEMICALS -- 2.5% - -------------------------------------------------------------------------------- 44,520 Lubrizol Corp. 1,941,517 - -------------------------------------------------------------------------------- 55,030 Praxair, Inc. 3,088,834 - -------------------------------------------------------------------------------- 5,030,351 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 2.4% - -------------------------------------------------------------------------------- 120,800 Colonial BancGroup Inc. (The) 3,132,344 - -------------------------------------------------------------------------------- 35,000 SVB Financial Group(1) 1,776,950 - -------------------------------------------------------------------------------- 4,909,294 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 8.4% - -------------------------------------------------------------------------------- 54,760 Corporate Executive Board Co. (The) 5,866,439 - -------------------------------------------------------------------------------- 97,650 Monster Worldwide Inc.(1) 5,605,110 - -------------------------------------------------------------------------------- 14,300 Ritchie Bros Auctioneers Inc. 770,770 - -------------------------------------------------------------------------------- 70,380 Robert Half International Inc. 2,974,963 - -------------------------------------------------------------------------------- 28,490 Stericycle Inc.(1) 1,875,782 - -------------------------------------------------------------------------------- 17,093,064 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 1.4% - -------------------------------------------------------------------------------- 56,490 Harris Corp. 2,630,739 - -------------------------------------------------------------------------------- CONSUMER FINANCE -- 0.6% - -------------------------------------------------------------------------------- 32,600 Nelnet Inc. Cl A(1) 1,268,140 - -------------------------------------------------------------------------------- CONTAINERS & PACKAGING -- 0.8% - -------------------------------------------------------------------------------- 99,620 Crown Holdings Inc.(1) 1,596,909 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 2.4% - -------------------------------------------------------------------------------- 6,060 Chicago Mercantile Exchange Holdings Inc. 2,775,480 - -------------------------------------------------------------------------------- 29,012 IntercontinentalExchange Inc.(1) 2,068,846 - -------------------------------------------------------------------------------- 4,844,326 - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.8% - -------------------------------------------------------------------------------- 48,110 NeuStar, Inc. Cl A(1) 1,688,661 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 4.0% - -------------------------------------------------------------------------------- 50,360 Amphenol Corp. Cl A $ 2,910,808 - -------------------------------------------------------------------------------- 66,060 Cogent, Inc.(1) 1,080,742 - -------------------------------------------------------------------------------- 104,380 Jabil Circuit, Inc.(1) 4,069,776 - -------------------------------------------------------------------------------- 8,061,326 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 4.9% - -------------------------------------------------------------------------------- 74,600 BJ Services Co. 2,838,529 - -------------------------------------------------------------------------------- 51,250 ENSCO International Inc. 2,741,363 - -------------------------------------------------------------------------------- 58,980 Nabors Industries Ltd.(1) 2,201,723 - -------------------------------------------------------------------------------- 32,250 National Oilwell Varco, Inc.(1) 2,224,283 - -------------------------------------------------------------------------------- 10,005,898 - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING -- 0.5% - -------------------------------------------------------------------------------- 15,595 Whole Foods Market, Inc. 957,221 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 6.0% - -------------------------------------------------------------------------------- 94,910 Cytyc Corp.(1) 2,453,424 - -------------------------------------------------------------------------------- 27,000 Gen-Probe Inc.(1) 1,443,690 - -------------------------------------------------------------------------------- 3,500 Intuitive Surgical Inc.(1) 444,500 - -------------------------------------------------------------------------------- 21,836 Kinetic Concepts Inc.(1) 953,360 - -------------------------------------------------------------------------------- 52,520 ResMed Inc.(1) 2,266,238 - -------------------------------------------------------------------------------- 38,380 St. Jude Medical, Inc.(1) 1,515,242 - -------------------------------------------------------------------------------- 50,560 Varian Medical Systems, Inc.(1) 2,648,332 - -------------------------------------------------------------------------------- 9,200 Ventana Medical Systems Inc.(1) 448,040 - -------------------------------------------------------------------------------- 12,172,826 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 6.6% - -------------------------------------------------------------------------------- 36,667 Caremark Rx Inc.(1) 1,670,182 - -------------------------------------------------------------------------------- 63,630 Centene Corp.(1) 1,634,655 - -------------------------------------------------------------------------------- 39,380 Covance Inc.(1) 2,297,823 - -------------------------------------------------------------------------------- 69,500 DaVita Inc.(1) 3,910,070 - -------------------------------------------------------------------------------- 33,010 Lincare Holdings Inc.(1) 1,304,885 - -------------------------------------------------------------------------------- 85,480 VCA Antech Inc.(1) 2,657,573 - -------------------------------------------------------------------------------- 13,475,188 - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 5.4% - -------------------------------------------------------------------------------- 51,050 Cheesecake Factory Inc.(1) 1,611,138 - -------------------------------------------------------------------------------- 68,170 Choice Hotels International Inc. 3,649,140 - -------------------------------------------------------------------------------- 80,700 Scientific Games Corp. Cl A(1) 3,073,863 - -------------------------------------------------------------------------------- 33,200 Station Casinos Inc. 2,559,056 - -------------------------------------------------------------------------------- 10,893,197 - -------------------------------------------------------------------------------- INSURANCE -- 2.1% - -------------------------------------------------------------------------------- 86,145 Assured Guaranty Ltd.(1) 2,140,703 - -------------------------------------------------------------------------------- 69,350 Brown & Brown Inc. 2,165,801 - -------------------------------------------------------------------------------- 4,306,504 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 1.1% - -------------------------------------------------------------------------------- 31,900 NutriSystem, Inc.(1) 2,164,734 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 Mid Cap Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 1.6% - -------------------------------------------------------------------------------- 80,000 Valueclick Inc.(1) $ 1,348,000 - -------------------------------------------------------------------------------- 54,800 WebEx Communications, Inc.(1) 1,937,180 - -------------------------------------------------------------------------------- 3,285,180 - -------------------------------------------------------------------------------- IT SERVICES -- 7.4% - -------------------------------------------------------------------------------- 59,200 Alliance Data Systems Corp.(1) 3,256,000 - -------------------------------------------------------------------------------- 67,380 Cognizant Technology Solutions Corporation CI A(1) 4,286,041 - -------------------------------------------------------------------------------- 63,100 Euronet Worldwide Inc.(1) 2,255,194 - -------------------------------------------------------------------------------- 32,812 Paychex, Inc. 1,325,277 - -------------------------------------------------------------------------------- 43,900 SRA International, Inc. Cl A(1) 1,405,678 - -------------------------------------------------------------------------------- 79,000 VeriFone Holdings Inc.(1) 2,445,840 - -------------------------------------------------------------------------------- 14,974,030 - -------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS -- 0.8% - -------------------------------------------------------------------------------- 36,300 SCP Pool Corp. 1,695,936 - -------------------------------------------------------------------------------- MACHINERY -- 2.4% - -------------------------------------------------------------------------------- 77,010 Graco Inc. 3,600,217 - -------------------------------------------------------------------------------- 18,668 Joy Global Inc. 1,226,301 - -------------------------------------------------------------------------------- 4,826,518 - -------------------------------------------------------------------------------- MEDIA -- 1.2% - -------------------------------------------------------------------------------- 30,800 Lamar Advertising Co. Cl A(1) 1,693,692 - -------------------------------------------------------------------------------- 10,620 Pixar(1) 682,760 - -------------------------------------------------------------------------------- 2,376,452 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 4.0% - -------------------------------------------------------------------------------- 30,080 Consol Energy Inc. 2,561,613 - -------------------------------------------------------------------------------- 7,400 Frontier Oil Corp. 447,922 - -------------------------------------------------------------------------------- 46,420 Newfield Exploration Company(1) 2,070,332 - -------------------------------------------------------------------------------- 81,330 Range Resources Corporation 2,157,685 - -------------------------------------------------------------------------------- 13,400 Tesoro Corporation 936,928 - -------------------------------------------------------------------------------- 8,174,480 - -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS -- 1.2% - -------------------------------------------------------------------------------- 75,120 Ventas, Inc. 2,454,170 - -------------------------------------------------------------------------------- ROAD & RAIL -- 1.1% - -------------------------------------------------------------------------------- 97,810 J.B. Hunt Transport Services, Inc. 2,330,812 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 6.4% - -------------------------------------------------------------------------------- 98,320 Altera Corp.(1) 2,147,309 - -------------------------------------------------------------------------------- 121,800 ATI Technologies Inc.(1) 1,890,336 - -------------------------------------------------------------------------------- 64,450 Broadcom Corp. Cl A(1) 2,649,540 - -------------------------------------------------------------------------------- 73,810 Cree, Inc.(1) 2,201,014 - -------------------------------------------------------------------------------- 36,250 KLA-Tencor Corp. 1,745,800 - -------------------------------------------------------------------------------- 61,397 Microchip Technology Inc. 2,287,652 - -------------------------------------------------------------------------------- 12,921,651 - -------------------------------------------------------------------------------- Shares/Principal Amount Value - -------------------------------------------------------------------------------- SOFTWARE -- 3.1% - -------------------------------------------------------------------------------- 72,797 Activision, Inc.(1) $ 1,032,989 - -------------------------------------------------------------------------------- 38,800 Citrix Systems, Inc.(1) 1,548,896 - -------------------------------------------------------------------------------- 24,550 Cognos, Inc.(1) 914,979 - -------------------------------------------------------------------------------- 32,990 NAVTEQ Corp.(1) 1,369,745 - -------------------------------------------------------------------------------- 37,800 Salesforce.com Inc.(1) 1,324,890 - -------------------------------------------------------------------------------- 6,191,499 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 3.7% - -------------------------------------------------------------------------------- 58,470 AnnTaylor Stores Corporation(1) 2,182,685 - -------------------------------------------------------------------------------- 50,160 Michaels Stores, Inc. 1,897,553 - -------------------------------------------------------------------------------- 103,470 O'Reilly Automotive Inc.(1) 3,505,564 - -------------------------------------------------------------------------------- 7,585,802 - -------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS -- 1.9% - -------------------------------------------------------------------------------- 81,410 Fastenal Co. 3,810,802 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $152,959,251) 190,474,336 - -------------------------------------------------------------------------------- COMMERCIAL PAPER(2) -- 4.9% $3,000,000 DaimlerChrysler Auto, 4.85%, 5/18/06(3) 2,993,019 - -------------------------------------------------------------------------------- 2,600,000 New Century Asset Trust, 4.78%, 5/3/06 2,599,298 - -------------------------------------------------------------------------------- 1,700,000 Rabobank USA Financial Corp., 4.82%, 5/1/06(3) 1,700,000 - -------------------------------------------------------------------------------- 2,600,000 Windmill Funding Corp., 4.76%, 5/4/06 (Acquired 4/3/06, Cost $2,589,343)(4) 2,598,944 - -------------------------------------------------------------------------------- TOTAL COMMERCIAL PAPER (Cost $9,891,407) 9,891,261 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.2% 500,000 FNMA Discount Notes, 4.77%, 6/28/06(2)(3) (Cost $496,162) 496,097 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.0% (Cost $163,346,820) 200,861,694 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 1.0% 2,020,923 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $ 202,882,617 ================================================================================ See Notes to Financial Statements. (continued) - ------ 8 Mid Cap Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FUTURES CONTRACTS* Underlying Face Unrealized Contracts Purchased Expiration Date Amount at Value Gain (Loss) - --------------------------------------------------------------------------------- 12 S&P MidCap 400 Index Futures June 2006 $4,842,000 $228,243 ============================= *FUTURES CONTRACTS typically are based on an index or specific securities and tend to track the performance of the index or specific securities while remaining very liquid (easy to buy and sell). By investing its cash assets in futures, the fund has increased exposure to certain markets while maintaining easy access to cash. NOTES TO SCHEDULE OF INVESTMENTS FNMA = Federal National Mortgage Association (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Security, or a portion thereof, has been segregated for a futures contract. (4) Security was purchased under Rule 144A or Section 4(2) of the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be sold to qualified institutional investors. The aggregate value of restricted securities at April 30, 2006 was $2,598,944, which represented 1.3% of total net assets. See Notes to Financial Statements. - ------ 9 Small Cap Growth - Performance TOTAL RETURNS AS OF APRIL 30, 2006 ---------------------- AVERAGE ANNUAL RETURNS - ---------------------------------------------------------------------------------- SINCE INCEPTION 1 MONTH(1) 1 YEAR 5 YEARS INCEPTION DATE - ---------------------------------------------------------------------------------- A CLASS(2) 7/12/99 No sales charge* 1.29% 31.66% 9.31% 14.14% With sales charge* -4.54% 24.11% 8.02% 13.16% - ---------------------------------------------------------------------------------- S&P SMALLCAP 600 INDEX(3) -0.01% 31.39% 13.34% 12.44%(4) -- - ---------------------------------------------------------------------------------- RUSSELL 2000 GROWTH INDEX -0.29% 36.13% 6.05% 3.17%(4) -- - ---------------------------------------------------------------------------------- Investor Class -- -- -- 2.25%(1) 4/3/06 - ---------------------------------------------------------------------------------- Institutional Class -- -- -- 2.31%(1) 4/3/06 - ---------------------------------------------------------------------------------- B Class(2) 7/12/99 No sales charge* 1.29% 30.84% 8.61% 13.43% With sales charge* -3.71% 26.84% 8.47% 13.43% - ---------------------------------------------------------------------------------- C Class 4/3/06 No sales charge* -- -- -- 2.19%(1) With sales charge* -- -- -- 1.19%(1) - ---------------------------------------------------------------------------------- R Class -- -- -- 2.25%(1) 4/3/06 - ---------------------------------------------------------------------------------- *Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information pages for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Class returns would have been lower if fees had not been waived. (3) Data provided by Lipper Inc. -- A Reuters Company. (c) 2006 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (4) Since 7/14/99, the date nearest the A Class's inception for which data are available. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. (continued) - ------ 10 Small Cap Growth - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made July 12, 1999
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended April 30 - -------------------------------------------------------------------------------------------- 2000* 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------------------- A Class (no sales charge)** 73.88% -9.33% 5.41% -20.83% 34.30% 5.76% 31.66% - -------------------------------------------------------------------------------------------- S&P SmallCap 600 Index 9.74% 8.09% 16.54% -20.95% 39.94% 10.43% 31.39% - -------------------------------------------------------------------------------------------- Russell 2000 Growth Index 22.64% -24.85% -8.52% -23.50% 41.57% -0.55% 36.13% - -------------------------------------------------------------------------------------------- *From 7/12/99, the A Class's inception date. Index data from 7/14/99, the date nearest the A Class's inception for which data are available. Not annualized. Small Cap Growth A Class's initial investment is $9,425 to reflect the maximum 5.75% initial sales charge. **Class returns would have been lower, along with ending value, if fees had not been waived. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 11 Small Cap Growth - Portfolio Commentary PORTFOLIO MANAGER: WILLIAM R. WALKER, CFA We are pleased to provide this initial report on your investment with American Century Investments. On March 31, 2006, American Century Investments acquired all of the net assets of Mason Street Small Cap Growth Stock pursuant to a plan of reorganization approved by the acquired fund's shareholders. This fund was reorganized as a series issued by American Century Mutual Funds, Inc. (ACMF). Therefore, a one-month report is being provided based on the financial statement reporting period of other funds offered by ACMF. We at American Century Investments look forward to helping you achieve your financial goals. Over the past month since the reorganization, American Century-Mason Street Small Cap Growth posted a gain of 1.29%* for the one-month ended April 30, 2006, ahead of the -0.29% return of the Russell 2000 Growth Index. Normally, the fund invests at least 80% of net assets in common stocks of U.S. companies with market capitalizations that do not exceed the maximum market capitalizations of any security in the S&P SmallCap 600 Index at the time of purchase. The stocks of small capitalization companies may experience substantial price volatility. The fund's objective is long-term growth of capital and its strategy is to identify and invest in companies with above-average potential for growth. The investment process involves detailed studies of individual companies. In evaluating individual companies, factors such as the company management team, the growth rate of revenues and earnings, opportunities for margin expansion and strong financial characteristics are important variables. ENERGY LEADS THE PORTFOLIO Stocks that added to the fund's performance for the fiscal year included anything energy-related, as the Energy sector continued to outperform. Grant Prideco benefited from very strong pricing for tubular supplies to the oil and natural gas market. TOP TEN HOLDINGS AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 3/31/06 - -------------------------------------------------------------------------------- Beacon Roofing Supply, Inc. 2.4% 2.6% - -------------------------------------------------------------------------------- LCA-Vision Inc. 2.3% 2.1% - -------------------------------------------------------------------------------- Pediatrix Medical Group, Inc. 2.1% 2.2% - -------------------------------------------------------------------------------- Orient-Express Hotels Ltd. Cl A 2.1% 2.1% - -------------------------------------------------------------------------------- OptionsXpress Holdings, Inc. 2.1% 2.0% - -------------------------------------------------------------------------------- Advisory Board Co. (The) 2.0% 2.1% - -------------------------------------------------------------------------------- FMC Technologies Inc. 1.9% 1.8% - -------------------------------------------------------------------------------- Plexus Corp. 1.9% 1.7% - -------------------------------------------------------------------------------- Golf Galaxy Inc. 1.9% 1.6% - -------------------------------------------------------------------------------- Silgan Holdings Inc. 1.9% 2.0% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for A Class shares and are not reduced by sales charges. A Class shares are subject to a maximum sales charge of 5.75%. Had the sales charge been applied, returns would be lower than those shown. Total returns for periods less than one year are not annualized. Class returns would have been lower if fees had not been waived. (continued) - ------ 12 Small Cap Growth - Portfolio Commentary FINANCIALS ANOTHER PLUS First Republic Bank and OptionsXpress Holdings, our top-contributing securities, led our investments in the financials sector. First Republic announced its intentions to spin off Ryan Beck, a small broker dealer in the southeast. OptionsXpress, along with Portfolio Recovery Associates and Bankrate benefited from strong first quarter earnings. HEALTH CARE ADD VALUE Health Care performed very well post earnings as first quarter's correction set up an interesting trading opportunity. Kyphon and LCA-Vision were our leaders, as consensus had proven low for both companies. LCA-Vision, one of our largest holdings, corrected significantly in the first quarter which we took the opportunity to increase our position because of our view of the strength of the LASIK market. SOME DISAPPOINTMENTS While we provided strong performance, we experienced some difficulties. Our largest detractors were Beacon Roofing Supply and United Natural Foods. Beacon Roofing corrected as investors became more concerned about the housing market, a wrong assessment as first quarter earnings estimates had proven to be too low. LOOKING AHEAD American Century-Mason Street Small Cap Growth seeks to buy high quality fast growing small cap companies. We believe that relative to small cap value, growth offers greater opportunities through cheaper relative value and strong earnings per share growth. We will continue to adhere to our discipline of identifying well-managed companies that appear to be under-valued for reasons unrelated to their fundamental or financial health. TOP FIVE INDUSTRIES AS OF APRIL 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 3/31/06 - -------------------------------------------------------------------------------- Health Care Providers & Services 12.0% 12.5% - -------------------------------------------------------------------------------- Commercial Services & Supplies 9.9% 8.7% - -------------------------------------------------------------------------------- Hotels, Restaurants & Leisure 6.7% 6.9% - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 6.3% 6.7% - -------------------------------------------------------------------------------- Specialty Retail 5.9% 5.6% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 4/30/06 3/31/06 - -------------------------------------------------------------------------------- Common Stocks 93.7% 96.6% - -------------------------------------------------------------------------------- Commercial Paper 6.3% -- - -------------------------------------------------------------------------------- Temporary Cash Investments 0.6% 1.8% - -------------------------------------------------------------------------------- Other Assets and Liabilities (0.6)% 1.6% - -------------------------------------------------------------------------------- - ------ 13 Small Cap Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 93.7% AEROSPACE & DEFENSE -- 1.5% - -------------------------------------------------------------------------------- 46,400 Essex Corp.(1) $ 989,713 - -------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS -- 2.9% - -------------------------------------------------------------------------------- 18,840 C.H. Robinson Worldwide Inc. 835,554 - -------------------------------------------------------------------------------- 26,675 Forward Air Corp. 1,071,535 - -------------------------------------------------------------------------------- 1,907,089 - -------------------------------------------------------------------------------- AUTO COMPONENTS -- 1.3% - -------------------------------------------------------------------------------- 41,400 LKQ Corporation(1) 871,056 - -------------------------------------------------------------------------------- CAPITAL MARKETS -- 3.8% - -------------------------------------------------------------------------------- 11,375 Greenhill & Co. Inc. 806,715 - -------------------------------------------------------------------------------- 6,300 Investors Financial Services Corporation 301,518 - -------------------------------------------------------------------------------- 44,889 OptionsXpress Holdings, Inc. 1,414,004 - -------------------------------------------------------------------------------- 2,522,237 - -------------------------------------------------------------------------------- CHEMICALS -- 0.9% - -------------------------------------------------------------------------------- 15,325 Airgas Inc. 619,896 - -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 3.9% - -------------------------------------------------------------------------------- 15,825 First Republic Bank 688,704 - -------------------------------------------------------------------------------- 36,350 Greater Bay Bancorp 1,003,987 - -------------------------------------------------------------------------------- 31,500 Nexity Financial Corp.(1) 395,325 - -------------------------------------------------------------------------------- 18,725 Placer Sierra Bancshares 497,149 - -------------------------------------------------------------------------------- 2,585,165 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 9.9% - -------------------------------------------------------------------------------- 11,300 ACCO Brands Corp.(1) 242,724 - -------------------------------------------------------------------------------- 24,200 Advisory Board Co. (The)(1) 1,358,103 - -------------------------------------------------------------------------------- 15,700 Brady Corp. Cl A 564,729 - -------------------------------------------------------------------------------- 8,600 Corporate Executive Board Co. (The) 921,318 - -------------------------------------------------------------------------------- 26,060 Corrections Corp. of America(1) 1,169,573 - -------------------------------------------------------------------------------- 28,800 Hudson Highland Group Inc.(1) 580,320 - -------------------------------------------------------------------------------- 20,900 Huron Consulting Group Inc.(1) 742,995 - -------------------------------------------------------------------------------- 23,600 ICT Group Inc.(1) 566,400 - -------------------------------------------------------------------------------- 13,384 Kenexa Corp.(1) 444,750 - -------------------------------------------------------------------------------- 6,590,912 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 0.6% - -------------------------------------------------------------------------------- 24,900 RADWARE Ltd.(1) 394,665 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING -- 0.5% - -------------------------------------------------------------------------------- 12,800 Williams Scotsman International, Inc.(1) 314,496 - -------------------------------------------------------------------------------- CONTAINERS & PACKAGING -- 2.0% - -------------------------------------------------------------------------------- 8,900 Intertape Polymer Group Inc.(1) 78,498 - -------------------------------------------------------------------------------- 32,120 Silgan Holdings Inc. 1,247,220 - -------------------------------------------------------------------------------- 1,325,718 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES -- 2.2% - -------------------------------------------------------------------------------- 27,730 Marlin Business Services Corp.(1) $ 604,514 - -------------------------------------------------------------------------------- 16,650 Portfolio Recovery Associates Inc.(1) 856,643 - -------------------------------------------------------------------------------- 1,461,157 - -------------------------------------------------------------------------------- ELECTRIC UTILITIES -- 0.1% - -------------------------------------------------------------------------------- 2,475 ITC Holdings Corp. 63,929 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 2.3% - -------------------------------------------------------------------------------- 46,873 International DisplayWorks, Inc.(1) 263,426 - -------------------------------------------------------------------------------- 28,900 Plexus Corp.(1) 1,258,884 - -------------------------------------------------------------------------------- 1,522,310 - -------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES -- 5.2% - -------------------------------------------------------------------------------- 23,275 FMC Technologies Inc.(1) 1,270,349 - -------------------------------------------------------------------------------- 21,745 Grant Prideco Inc.(1) 1,113,344 - -------------------------------------------------------------------------------- 123,950 Grey Wolf Inc.(1) 966,810 - -------------------------------------------------------------------------------- 3,400 Warrior Energy Service Corp.(1) 102,000 - -------------------------------------------------------------------------------- 3,452,503 - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING -- 1.7% - -------------------------------------------------------------------------------- 34,675 United Natural Foods Inc.(1) 1,108,560 - -------------------------------------------------------------------------------- FOOD PRODUCTS -- 0.6% - -------------------------------------------------------------------------------- 13,900 Peet's Coffee & Tea Inc.(1) 432,846 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 6.3% - -------------------------------------------------------------------------------- 16,100 Foxhollow Technologies Inc.(1) 501,515 - -------------------------------------------------------------------------------- 23,050 Kyphon Inc.(1) 957,728 - -------------------------------------------------------------------------------- 10,800 PolyMedica Corp. 446,148 - -------------------------------------------------------------------------------- 24,540 ResMed Inc.(1) 1,058,900 - -------------------------------------------------------------------------------- 11,400 SonoSite Inc.(1) 430,350 - -------------------------------------------------------------------------------- 15,750 Ventana Medical Systems Inc.(1) 767,025 - -------------------------------------------------------------------------------- 4,161,666 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 12.0% - -------------------------------------------------------------------------------- 6,300 HealthExtras Inc.(1) 183,078 - -------------------------------------------------------------------------------- 27,140 Horizon Health Corp.(1) 567,226 - -------------------------------------------------------------------------------- 27,225 LCA-Vision Inc. 1,528,955 - -------------------------------------------------------------------------------- 11,500 Nighthawk Radiology Holdings Inc.(1) 278,645 - -------------------------------------------------------------------------------- 28,220 Pediatrix Medical Group, Inc.(1) 1,428,496 - -------------------------------------------------------------------------------- 35,284 Providence Service Corp. (The)(1) 1,105,095 - -------------------------------------------------------------------------------- 24,200 PSS World Medical Inc.(1) 436,568 - -------------------------------------------------------------------------------- 31,700 Psychiatric Solutions, Inc.(1) 1,048,002 - -------------------------------------------------------------------------------- 19,275 Radiation Therapy Services Inc.(1) 492,476 - -------------------------------------------------------------------------------- 38,950 Symbion Inc.(1) 896,240 - -------------------------------------------------------------------------------- 1,700 Visicu Inc.(1) 40,460 - -------------------------------------------------------------------------------- 8,005,241 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 14 Small Cap Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE -- 6.7% - -------------------------------------------------------------------------------- 17,375 Life Time Fitness Inc.(1) $ 795,775 - -------------------------------------------------------------------------------- 43,200 Morton's Restaurant Group Inc.(1) 725,760 - -------------------------------------------------------------------------------- 34,638 Orient-Express Hotels Ltd. Cl A 1,420,158 - -------------------------------------------------------------------------------- 32,800 Pinnacle Entertainment Inc.(1) 895,439 - -------------------------------------------------------------------------------- 14,100 Red Robin Gourmet Burgers Inc.(1) 633,936 - -------------------------------------------------------------------------------- 4,471,068 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 2.1% - -------------------------------------------------------------------------------- 17,500 Blue Nile Inc.(1) 609,000 - -------------------------------------------------------------------------------- 18,600 Coldwater Creek Inc.(1) 520,056 - -------------------------------------------------------------------------------- 10,400 Stamps.com Inc.(1) 293,280 - -------------------------------------------------------------------------------- 1,422,336 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 0.5% - -------------------------------------------------------------------------------- 7,550 Bankrate Inc.(1) 364,439 - -------------------------------------------------------------------------------- IT SERVICES -- 2.3% - -------------------------------------------------------------------------------- 25,375 Euronet Worldwide Inc.(1) 906,903 - -------------------------------------------------------------------------------- 22,900 Heartland Payment Systems Inc.(1) 600,896 - -------------------------------------------------------------------------------- 1,507,799 - -------------------------------------------------------------------------------- MACHINERY -- 1.2% - -------------------------------------------------------------------------------- 14,918 Bucyrus International, Inc. Cl A 774,393 - -------------------------------------------------------------------------------- METALS & MINING -- 0.6% - -------------------------------------------------------------------------------- 17,350 Steel Technologies Inc. 403,041 - -------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS -- 1.8% - -------------------------------------------------------------------------------- 16,750 James River Coal Co.(1) 588,763 - -------------------------------------------------------------------------------- 29,600 Western Refining Inc. 598,808 - -------------------------------------------------------------------------------- 1,187,571 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 1.5% - -------------------------------------------------------------------------------- 23,259 Adams Respiratory Therapeutics Inc.(1) 997,579 - -------------------------------------------------------------------------------- ROAD & RAIL -- 2.2% - -------------------------------------------------------------------------------- 45,265 Knight Transportation Inc. 884,026 - -------------------------------------------------------------------------------- 27,221 Marten Transport Ltd.(1) 592,873 - -------------------------------------------------------------------------------- 1,476,899 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 4.8% - -------------------------------------------------------------------------------- 17,000 Eagle Test Systems Inc.(1) 268,600 - -------------------------------------------------------------------------------- 82,590 Entegris, Inc.(1) 840,766 - -------------------------------------------------------------------------------- 30,425 Genesis Microchip Inc.(1) 478,281 - -------------------------------------------------------------------------------- 27,100 MKS Instruments, Inc.(1) 646,877 - -------------------------------------------------------------------------------- 30,350 Tessera Technologies Inc.(1) 973,325 - -------------------------------------------------------------------------------- 3,207,849 - -------------------------------------------------------------------------------- Shares/Principal Amount Value - -------------------------------------------------------------------------------- SOFTWARE -- 3.9% - -------------------------------------------------------------------------------- 33,350 Blackboard Inc.(1) $ 979,490 - -------------------------------------------------------------------------------- 50,825 Sonic Solutions(1) 900,619 - -------------------------------------------------------------------------------- 26,800 THQ Inc.(1) 686,884 - -------------------------------------------------------------------------------- 2,566,993 - -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 5.9% - -------------------------------------------------------------------------------- 35,322 Aaron Rents Inc. 948,749 - -------------------------------------------------------------------------------- 48,250 Golf Galaxy Inc.(1) 1,249,674 - -------------------------------------------------------------------------------- 11,000 Guitar Center, Inc.(1) 591,360 - -------------------------------------------------------------------------------- 27,600 Hibbett Sporting Goods Inc.(1) 836,556 - -------------------------------------------------------------------------------- 9,325 Lithia Motors Inc. Cl A 316,024 - -------------------------------------------------------------------------------- 3,942,363 - -------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE -- 0.2% - -------------------------------------------------------------------------------- 11,500 BankAtlantic Bancorp, Inc. Cl A 171,580 - -------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS -- 2.3% - -------------------------------------------------------------------------------- 42,350 Beacon Roofing Supply, Inc.(1) 1,566,950 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $51,169,541) 62,390,019 - -------------------------------------------------------------------------------- COMMERCIAL PAPER(2) -- 6.3% $3,000,000 Morgan Stanley, 4.76%, 5/5/06 (Acquired 4/26/06, Cost $2,996,430)(3) 2,998,389 - -------------------------------------------------------------------------------- 1,200,000 Rabobank USA Financial Corp., 4.82%, 5/1/06 1,200,000 - -------------------------------------------------------------------------------- TOTAL COMMERCIAL PAPER (Cost $4,198,413) 4,198,389 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.6% 400,000 FNMA Discount Notes, 4.77%, 6/28/06(2)(4) (Cost $396,929) 396,878 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.6% (Cost $55,764,883) 66,985,286 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (0.6)% (412,913) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $ 66,572,373 ================================================================================ See Notes to Financial Statements. (continued) - ------ 15 Small Cap Growth - Schedule of Investments APRIL 30, 2006 (UNAUDITED) FUTURES CONTRACTS* Underlying Face Unrealized Contracts Purchased Expiration Date Amount at Value Gain (Loss) - -------------------------------------------------------------------------------- 1 Russell 2000 Index Futures June 2006 $384,750 $(4,747) =============================== *FUTURES CONTRACTS typically are based on an index or specific securities and tend to track the performance of the index or specific securities while remaining very liquid (easy to buy and sell). By investing its cash assets in futures, the fund has increased exposure to certain markets while maintaining easy access to cash. NOTES TO SCHEDULE OF INVESTMENTS FNMA = Federal National Mortgage Association (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Security was purchased under Rule 144A or Section 4(2) of the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be sold to qualified institutional investors. The aggregate value of restricted securities at April 30, 2006 was $2,998,389, which represented 4.5% of total net assets. (4) Security, or a portion thereof, has been segregated for a futures contract. See Notes to Financial Statements. - ------ 16 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2005 to April 30, 2006 (except as noted). ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. (continued) - ------ 17 Shareholder Fee Examples (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO(1) - -------------------------------------------------------------------------------------------- MID CAP GROWTH SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------------------- Investor Class $1,000 $1,004.10(2) $0.78(3) 1.05% - -------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,004.10(2) $0.63(3) 0.85% - -------------------------------------------------------------------------------------------- A Class $1,000 $1,000.70(4) $1.07(5) 1.30% - -------------------------------------------------------------------------------------------- B Class (after waiver)(6) $1,000 $1,000.00(4) $1.60(5) 1.95% - -------------------------------------------------------------------------------------------- B Class (before waiver) $1,000 $1,000.00(4)(7) $1.68(5) 2.05% - -------------------------------------------------------------------------------------------- C Class $1,000 $1,003.40(2) $1.52(3) 2.05% - -------------------------------------------------------------------------------------------- R Class $1,000 $1,004.10(2) $1.15(3) 1.55% - -------------------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------------------- Investor Class $1,000 $1,019.59(8) $5.26(8) 1.05% - -------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,020.58(8) $4.26(8) 0.85% - -------------------------------------------------------------------------------------------- A Class $1,000 $1,018.35 $6.51 1.30% - -------------------------------------------------------------------------------------------- B Class (after waiver)(6) $1,000 $1,015.12 $9.74 1.95% - -------------------------------------------------------------------------------------------- B Class (before waiver) $1,000 $1,014.63 $10.24 2.05% - -------------------------------------------------------------------------------------------- C Class $1,000 $1,014.63(8) $10.24(8) 2.05% - -------------------------------------------------------------------------------------------- R Class $1,000 $1,017.11(8) $7.75(8) 1.55% - -------------------------------------------------------------------------------------------- (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (2) Ending account value based on actual return from April 3, 2006 (commencement of sale) through April 30, 2006. (3) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 27, the number of days in the period from April 3, 2006 (commencement of sale) through April 30, 2006, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. (4) Ending account value based on actual return from April 1, 2006 through April 30, 2006. (5) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 30, the number of days in the period from April 1, 2006 through April 30, 2006, divided by 365, to reflect the period. Had the class been available throughout the entire fiscal half-year period, the expenses paid during the period would have been higher. (6) During the period ended April 30, 2006, the class received a partial waiver of its distribution and service fees. (7) Ending account value assumes the return earned after waiver. The return would have been lower had fees not been waived and may have resulted in a lower ending account value. (8) Ending account value and expenses paid during period assumes the class had been available throughout the entire fiscal half-year period and are calculated using the class's annualized expense ratio listed in the table above. (continued) - ------ 18 Shareholder Fee Examples (Unaudited) - -------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 11/1/05 - EXPENSE 11/1/05 4/30/06 4/30/06 RATIO(1) - -------------------------------------------------------------------------------------------- SMALL CAP GROWTH SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------------------- Investor Class $1,000 $1,022.50(2) $0.97(3) 1.30% - -------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,023.10(2) $0.82(3) 1.10% - -------------------------------------------------------------------------------------------- A Class (after waiver)(4) $1,000 $1,012.90(5) $1.16(6) 1.40% - -------------------------------------------------------------------------------------------- A Class (before waiver) $1,000 $1,012.90(5)(7) $1.28(6) 1.55% - -------------------------------------------------------------------------------------------- B Class (after waiver)(4) $1,000 $1,012.90(5) $1.70(6) 2.05% - -------------------------------------------------------------------------------------------- B Class (before waiver) $1,000 $1,012.90(5)(7) $1.90(6) 2.30% - -------------------------------------------------------------------------------------------- C Class $1,000 $1,021.90(2) $1.72(3) 2.30% - -------------------------------------------------------------------------------------------- R Class $1,000 $1,022.50(2) $1.35(3) 1.80% - -------------------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------------------- Investor Class $1,000 $1,018.35(8) $6.51(8) 1.30% - -------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.34(8) $5.51(8) 1.10% - -------------------------------------------------------------------------------------------- A Class (after waiver)(4) $1,000 $1,017.85 $7.00 1.40% - -------------------------------------------------------------------------------------------- A Class (before waiver) $1,000 $1,017.11 $7.75 1.55% - -------------------------------------------------------------------------------------------- B Class (after waiver)(4) $1,000 $1,014.63 $10.24 2.05% - -------------------------------------------------------------------------------------------- B Class (before waiver) $1,000 $1,013.39 $11.48 2.30% - -------------------------------------------------------------------------------------------- C Class $1,000 $1,013.39(8) $11.48(8) 2.30% - -------------------------------------------------------------------------------------------- R Class $1,000 $1,015.87(8) $9.00(8) 1.80% - -------------------------------------------------------------------------------------------- (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (2) Ending account value based on actual return from April 3, 2006 (commencement of sale) through April 30, 2006. (3) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 27, the number of days in the period from April 3, 2006 (commencement of sale) through April 30, 2006, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. (4) During the period ended April 30, 2006, the class received a partial waiver of its distribution and service fees. (5) Ending account value based on actual return from April 1, 2006 through April 30, 2006. (6) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 30, the number of days in the period from April 1, 2006 through April 30, 2006, divided by 365, to reflect the period. Had the class been available throughout the entire fiscal half-year period, the expenses paid during the period would have been higher. (7) Ending account value assumes the return earned after waiver. The return would have been lower had fees not been waived and may have resulted in a lower ending account value. (8) Ending account value and expenses paid during period assumes the class had been available throughout the entire fiscal half-year period and are calculated using the class's annualized expense ratio listed in the table above. - ------ 19 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- MID CAP GROWTH SMALL CAP GROWTH - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $163,346,820 and $55,764,883, respectively) $200,861,694 $66,985,286 - -------------------------------------------- Cash 140,935 64,661 - -------------------------------------------- Receivable for investments sold 4,529,783 663,664 - -------------------------------------------- Receivable for capital shares sold 3,733 108,909 - -------------------------------------------- Receivable for variation margin on futures contracts 31,800 3,350 - -------------------------------------------- Interest and dividend receivable 46,256 2,127 - -------------------------------------------------------------------------------- 205,614,201 67,827,997 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for investments purchased 2,557,383 1,171,497 - -------------------------------------------- Payable for capital shares redeemed 4,238 4,204 - -------------------------------------------- Accrued management fees 150,173 70,076 - -------------------------------------------- Distribution fees payable 5,507 5,140 - -------------------------------------------- Service fees (and distribution fees - A Class and R Class) payable 14,283 4,707 - -------------------------------------------------------------------------------- 2,731,584 1,255,624 - -------------------------------------------------------------------------------- NET ASSETS $202,882,617 $66,572,373 ================================================================================ See Notes to Financial Statements. (continued) - ------ 20 Statement of Assets and Liabilities APRIL 30, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- MID CAP GROWTH SMALL CAP GROWTH - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital paid in $156,564,392 $52,781,636 - -------------------------------------------- Accumulated net investment loss (47,339) (58,201) - -------------------------------------------- Undistributed net realized gain on investment transactions 8,622,447 2,633,282 - -------------------------------------------- Net unrealized appreciation on investments 37,743,117 11,215,656 - -------------------------------------------------------------------------------- $202,882,617 $66,572,373 ================================================================================ INVESTOR CLASS - -------------------------------------------------------------------------------- Net assets $33,192 $25,565 - -------------------------------------------- Shares outstanding 2,236 1,483 - -------------------------------------------- Net asset value per share $14.84 $17.24 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- Net assets $149,761,702 $25,568 - -------------------------------------------- Shares outstanding 10,089,307 1,483 - -------------------------------------------- Net asset value per share $14.84 $17.24 - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- Net assets $44,227,046 $58,097,989 - -------------------------------------------- Shares outstanding 2,980,544 3,369,974 - -------------------------------------------- Net asset value per share $14.84 $17.24 - -------------------------------------------- Maximum offering price (net asset value divided by 0.9425) $15.75 $18.29 - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- Net assets $8,806,312 $8,340,538 - -------------------------------------------- Shares outstanding 630,593 504,104 - -------------------------------------------- Net asset value per share $13.97 $16.55 - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- Net assets $29,270 $57,153 - -------------------------------------------- Shares outstanding 1,974 3,318 - -------------------------------------------- Net asset value per share $14.83 $17.23 - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- Net assets $25,095 $25,560 - -------------------------------------------- Shares outstanding 1,691 1,483 - -------------------------------------------- Net asset value per share $14.84 $17.24 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 21 Statement of Operations FOR THE ONE-MONTH ENDED APRIL 30, 2006 (UNAUDITED) AND YEAR ENDED MARCH 31, 2006 - -------------------------------------------------------------------------------------------------------------- MID CAP GROWTH SMALL CAP GROWTH - -------------------------------------------------------------------------------------------------------------- APRIL 30, 2006(1) MARCH 31, 2006 APRIL 30, 2006(1) MARCH 31, 2006 - -------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------------------------------------- INCOME: - --------------------------------------- Dividends $ 66,300 $ 1,846,186 $ 10,679 $ 149,013 - --------------------------------------- Interest 56,325 378,804 11,043 164,040 - -------------------------------------------------------------------------------------------------------------- 122,625 2,224,990 21,722 313,053 - -------------------------------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------- Management fees 150,173 1,382,888 70,076 460,953 - --------------------------------------- Distribution fees: - --------------------------------------- A Class -- 41,392 -- 45,290 - --------------------------------------- B Class 5,483 69,276 5,111 56,761 - --------------------------------------- C Class 15 6,393 19 9,886 - --------------------------------------- Service fees: - --------------------------------------- B Class 1,828 -- 1,704 -- - --------------------------------------- C Class 5 -- 6 -- - --------------------------------------- Service and distribution fees: - --------------------------------------- A Class 13,182 -- 11,753 -- - --------------------------------------- R Class 9 -- 9 -- - --------------------------------------- Shareholder servicing fees (A Class, B Class and C Class) -- 461,530 -- 136,465 - --------------------------------------- Transfer agent fees -- 194,216 -- 167,210 - --------------------------------------- Administrative fees -- 184,385 -- 54,230 - --------------------------------------- Other expenses -- 107,902 -- 128,498 - --------------------------------------- Directors' fees and expenses -- 6,682 -- 6,682 - -------------------------------------------------------------------------------------------------------------- 170,695 2,454,664 88,678 1,065,975 - --------------------------------------- Amount waived (731) (8,480) (8,755) (250,993) - -------------------------------------------------------------------------------------------------------------- 169,964 2,446,184 79,923 814,982 - -------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (47,339) (221,194) (58,201) (501,929) - -------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investment transactions (927,344) 22,217,148 (157,766) 6,012,587 - --------------------------------------- Change in net unrealized appreciation (depreciation) on investments 1,171,905 12,871,022 1,064,149 5,599,924 - -------------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 244,561 35,088,170 906,383 11,612,511 - -------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 197,222 $ 34,866,976 $ 848,182 $ 11,110,582 ============================================================================================================== (1) The funds' fiscal year end was changed from March 31 to October 31, resulting in a one-month semiannual reporting period (see Note 7). See Notes to Financial Statements. - ------ 22 Statement of Changes in Net Assets ONE-MONTH ENDED APRIL 30, 2006 (UNAUDITED) AND YEARS ENDED MARCH 31, 2006 AND MARCH 31, 2005, RESPECTIVELY - ---------------------------------------------------------------------------------------------- MID CAP GROWTH - ---------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS APRIL 30, 2006(1) MARCH 31, 2006 MARCH 31, 2005 - ---------------------------------------------------------------------------------------------- OPERATIONS - ---------------------------------------------------------------------------------------------- Net investment income (loss) $ (47,339) $ (221,194) $ (1,396,429) - ------------------------------------------- Net realized gain (loss) (927,344) 22,217,148 13,428,989 - ------------------------------------------- Change in net unrealized appreciation (depreciation) 1,171,905 12,871,022 (2,865,722) - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 197,222 34,866,976 9,166,838 - ---------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------- From net realized gains: - ------------------------------------------- A Class -- (15,783,919) -- - ------------------------------------------- B Class -- (836,858) -- - ------------------------------------------- C Class -- (88,602) -- - ---------------------------------------------------------------------------------------------- Decrease in net assets from distributions -- (16,709,379) -- - ---------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (376,414) 11,335,375 4,266,819 - ---------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (179,192) 29,492,972 13,433,657 NET ASSETS - ---------------------------------------------------------------------------------------------- Beginning of period 203,061,809 173,568,837 160,135,180 - ---------------------------------------------------------------------------------------------- End of period $202,882,617 $203,061,809 $173,568,837 ============================================================================================== Accumulated net investment loss $(47,339) -- -- ============================================================================================== (1) The fund's fiscal year end was changed from March 31 to October 31, resulting in a one-month semiannual reporting period (see Note 7). See Notes to Financial Statements. (continued) - ------ 23 Statement of Changes in Net Assets ONE-MONTH ENDED APRIL 30, 2006 (UNAUDITED) AND YEARS ENDED MARCH 31, 2006 AND MARCH 31, 2005, RESPECTIVELY - ---------------------------------------------------------------------------------------------- SMALL CAP GROWTH - ---------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS APRIL 30, 2006(1) MARCH 31, 2006 MARCH 31, 2005 - ---------------------------------------------------------------------------------------------- OPERATIONS - ---------------------------------------------------------------------------------------------- Net investment income (loss) $ (58,201) $ (501,929) $ (420,997) - ------------------------------------------- Net realized gain (loss) (157,766) 6,012,587 3,721,650 - ------------------------------------------- Change in net unrealized appreciation (depreciation) 1,064,149 5,599,924 594,057 - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 848,182 11,110,582 3,894,710 - ---------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------- From net realized gains: - ------------------------------------------- A Class -- (4,765,611) (1,329,074) - ------------------------------------------- B Class -- (758,743) (320,858) - ------------------------------------------- C Class -- (150,496) (34,300) - ---------------------------------------------------------------------------------------------- Decrease in net assets from distributions -- (5,674,850) (1,684,232) - ---------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 636,113 17,960,189 8,175,057 - ---------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 1,484,295 23,395,921 10,385,535 NET ASSETS - ---------------------------------------------------------------------------------------------- Beginning of period 65,088,078 41,692,157 31,306,622 - ---------------------------------------------------------------------------------------------- End of period $66,572,373 $65,088,078 $41,692,157 ============================================================================================== Accumulated net investment loss $(58,201) -- -- ============================================================================================== (1) The fund's fiscal year end was changed from March 31 to October 31, resulting in a one-month semiannual reporting period (see Note 7). See Notes to Financial Statements. - ------ 24 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. American Century-Mason Street Mid Cap Growth Fund (Mid Cap Growth) and American Century-Mason Street Small Cap Growth Fund (Small Cap Growth) (the funds) are two funds in a series issued by the corporation (see Note 7). The funds are diversified under the 1940 Act. The funds' investment objective is to seek long-term capital growth. Mid Cap Growth invests primarily in stocks of mid-sized companies. Small Cap Growth invests primarily in stocks of smaller market capitalization companies. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- The funds are authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of each fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the funds are allocated to each class of shares based on their relative net assets. Sale of the funds' Investor Class, Institutional Class, C Class and R Class commenced on April 3, 2006. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Debt securities maturing within 60 days may be valued at cost, plus or minus any amortized discount or premium. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the funds determine that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the funds to fair value a security include: an event occurred after the close of the exchange on which a portfolio security principally trades (but before the close of the New York Stock Exchange) that was likely to have changed the value of the security; a security has been declared in default; or trading in a security has been halted during the trading day. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. FUTURES CONTRACTS -- The funds may enter into futures contracts in order to manage the funds' exposure to changes in market conditions. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Upon entering into a futures contract, the funds are required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the funds. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The funds recognize a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. (continued) - ------ 25 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. INCOME TAX STATUS -- It is each fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income and net realized gains, if any, are declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with American Century Investment Management, Inc. (ACIM), under which ACIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee). The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for each class of Mid Cap Growth is as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B, C & R INSTITUTIONAL - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $500 million 1.05% 0.85% - -------------------------------------------------------------------------------- Over $500 million 1.00% 0.80% - -------------------------------------------------------------------------------- (continued) - ------ 26 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) The annual management fee schedule for each class of Small Cap Growth is as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B, C & R INSTITUTIONAL - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $1 billion 1.30% 1.10% - -------------------------------------------------------------------------------- Over $1 billion 1.10% 0.90% - -------------------------------------------------------------------------------- For the one-month ended April 30, 2006, the effective annual management fee for each class of each fund was as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B, C & R INSTITUTIONAL - -------------------------------------------------------------------------------- Mid Cap Growth 1.05% 0.85% - -------------------------------------------------------------------------------- Small Cap Growth 1.30% 1.10% - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the B Class and C Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution fee and service fee of 0.75% and 0.25%, respectively. The plans provide that the A Class and the R Class will pay ACIS an annual distribution and service fee of 0.25% for the A Class and 0.50% for the R Class. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for A Class, B Class, C Class and R Class shares. ACIM has agreed to voluntarily waive a portion of its service and distribution fees through March 31, 2008, by 0.10% for the B Class of Mid Cap Growth and by 0.15% and 0.25% for the A Class and B Class of Small Cap Growth, respectively. The total amount of the waivers for the one-month ended April 30, 2006, is as follows: - -------------------------------------------------------------------------------- A B - -------------------------------------------------------------------------------- Mid Cap Growth -- $731 - -------------------------------------------------------------------------------- Small Cap Growth $7,051 $1,704 - -------------------------------------------------------------------------------- Fees incurred under the plans during the one-month ended April 30, 2006, are detailed in the Statement of Operations. ACIM has entered into a Subadvisory Agreement with Mason Street Advisors LLC (Mason Street) on behalf of the funds. The subadvisor makes investment decisions for the funds in accordance with the funds' investment objectives, policies, and restrictions under the supervision of ACIM and the Board of Directors. ACIM pays all costs associated with retaining Mason Street as the subadvisor of the funds. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. JPMorgan Chase Bank is a custodian of the funds and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. (continued) - ------ 27 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the one-month ended April 30, 2006, were as follows: MID CAP GROWTH SMALL CAP GROWTH - -------------------------------------------------------------------------------- Purchases $13,520,446 $2,649,096 - -------------------------------------------------------------------------------- Proceeds from sales $8,156,657 $4,029,088 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows (see Note 7): - --------------------------------------------------------------------------------------------- MID CAP GROWTH SMALL CAP GROWTH - --------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------------- PERIOD ENDED APRIL 30, 2006(1) SHARES AUTHORIZED 55,000,000 55,000,000 ============================================================================================= Sold 2,236 $33,002 1,483 $25,000 ============================================================================================= INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------- PERIOD ENDED APRIL 30, 2006(1) SHARES AUTHORIZED 50,000,000 50,000,000 ============================================================================================= Sold 10,089,307 $149,765,515 1,483 $25,000 ============================================================================================= A CLASS - --------------------------------------------------------------------------------------------- PERIOD ENDED APRIL 30, 2006(2) SHARES AUTHORIZED 20,000,000 20,000,000 ============================================================================================= Sold 105,107 $ 1,515,797 200,939 $ 3,419,630 - -------------------------------- Redeemed (10,214,350) (151,517,671) (172,719) (2,870,033) - --------------------------------------------------------------------------------------------- Net increase (decrease) (10,109,243) $(150,001,874) 28,220 $ 549,597 ============================================================================================= YEAR ENDED MARCH 31, 2006 SHARES AUTHORIZED 149,148,534 149,635,857 ============================================================================================= Sold 628,722 $ 8,754,617 1,409,502 $ 23,405,269 - -------------------------------- Issued in reinvestment of distributions 1,142,004 15,702,632 288,264 4,537,275 - -------------------------------- Redeemed (835,676) (11,797,915) (674,623) (11,197,022) - --------------------------------------------------------------------------------------------- Net increase (decrease) 935,050 $ 12,659,334 1,023,143 $ 16,745,522 ============================================================================================= YEAR ENDED MARCH 31, 2005 SHARES AUTHORIZED 149,148,534 149,635,857 ============================================================================================= Sold 970,357 $12,678,022 950,771 $14,037,646 - -------------------------------- Issued in reinvestment of distributions -- -- 80,483 1,259,556 - -------------------------------- Redeemed (537,458) (7,066,240) (480,513) (7,192,504) - --------------------------------------------------------------------------------------------- Net increase (decrease) 432,899 $ 5,611,782 550,741 $ 8,104,698 ============================================================================================= (1) April 3, 2006 (commencement of sale) through April 30, 2006. (2) April 1, 2006 through April 30, 2006. The funds' fiscal year end was changed from March 31 to October 31, resulting in a one-month semiannual reporting period (see Note 7). (continued) - ------ 28 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - --------------------------------------------------------------------------------------------- MID CAP GROWTH SMALL CAP GROWTH - --------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------------- B CLASS - --------------------------------------------------------------------------------------------- PERIOD ENDED APRIL 30, 2006(1) SHARES AUTHORIZED 10,000,000 10,000,000 ============================================================================================= Sold 4,956 $ 68,814 3,780 $ 61,703 - -------------------------------- Redeemed (21,306) (296,282) (6,556) (106,516) - --------------------------------------------------------------------------------------------- Net increase (decrease) (16,350) $(227,468) (2,776) $ (44,813) ============================================================================================= YEAR ENDED MARCH 31, 2006 SHARES AUTHORIZED 75,851,466 75,364,143 ============================================================================================= Sold 82,194 $ 1,102,818 64,896 $ 1,034,592 - -------------------------------- Issued in reinvestment of distributions 64,131 831,774 48,853 739,630 - -------------------------------- Redeemed (264,539) (3,535,355) (78,509) (1,249,817) - --------------------------------------------------------------------------------------------- Net increase (decrease) (118,214) $(1,600,763) 35,240 $ 524,405 ============================================================================================= YEAR ENDED MARCH 31, 2005 SHARES AUTHORIZED 75,851,466 75,364,143 ============================================================================================= Sold 87,432 $ 1,093,104 71,250 $1,014,827 - -------------------------------- Issued in reinvestment of distributions -- -- 20,580 313,025 - -------------------------------- Redeemed (148,836) (1,871,389) (51,611) (744,166) - --------------------------------------------------------------------------------------------- Net increase (decrease) (61,404) $ (778,285) 40,219 $ 583,686 ============================================================================================= C CLASS - --------------------------------------------------------------------------------------------- PERIOD ENDED APRIL 30, 2006(2) SHARES AUTHORIZED 10,000,000 10,000,000 ============================================================================================= Sold 1,974 $29,411 3,318 $56,329 ============================================================================================= C CLASS -- ACQUIRED FUND (SEE NOTE 7) - --------------------------------------------------------------------------------------------- YEAR ENDED MARCH 31, 2006 SHARES AUTHORIZED 75,000,000 75,000,000 ============================================================================================= Sold 25,969 $ 344,127 41,416 $ 664,850 - -------------------------------- Issued in reinvestment of distributions 6,748 87,593 9,618 145,522 - -------------------------------- Redeemed (11,732) (154,916) (7,626) (120,110) - --------------------------------------------------------------------------------------------- Net increase (decrease) 20,985 $ 276,804 43,408 $ 690,262 ============================================================================================= YEAR ENDED MARCH 31, 2005 SHARES AUTHORIZED 75,000,000 75,000,000 ============================================================================================= Sold 44,778 $ 561,515 45,157 $ 647,586 - -------------------------------- Issued in reinvestment of distributions -- -- 2,193 33,355 - -------------------------------- Redeemed (86,859) (1,128,193) (79,839) (1,194,268) - --------------------------------------------------------------------------------------------- Net increase (decrease) (42,081) $ (566,678) (32,489) $ (513,327) ============================================================================================= R CLASS - --------------------------------------------------------------------------------------------- PERIOD ENDED APRIL 30, 2006(2) SHARES AUTHORIZED 10,000,000 10,000,000 ============================================================================================= Sold 1,691 $25,000 1,483 $25,000 ============================================================================================= (1) April 1, 2006 through April 30, 2006. The funds' fiscal year end was changed from March 31 to October 31, resulting in a one-month semiannual reporting period (see Note 7). (2) April 3, 2006 (commencement of sale) through April 30, 2006. (continued) - ------ 29 Notes to Financial Statements APRIL 30, 2006 (UNAUDITED) 5. RISK FACTORS Small Cap Growth concentrates its investments in common stocks of small companies. Because of this, Small Cap Growth may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies. 6. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of April 30, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- MID CAP GROWTH SMALL CAP GROWTH - -------------------------------------------------------------------------------- Federal tax cost of investments $163,631,415 $55,902,656 ================================================================================ Gross tax appreciation of investments $39,038,552 $12,190,596 - ------------------------------------------ Gross tax depreciation of investments (1,808,273) (1,107,966) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $37,230,279 $11,082,630 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. 7. REORGANIZATION PLAN As of the close of business on March 31, 2006, Mid Cap Growth and Small Cap Growth acquired all of the net assets of two funds issued by Mason Street Funds, Inc., Mason Street Aggressive Growth Stock Fund (Aggressive Growth Stock) and Mason Street Small Cap Growth Stock Fund (Small Cap Growth Stock), respectively, pursuant to a plan of reorganization approved by the acquired funds' shareholders on March 15, 2006. The surviving funds for the purposes of maintaining the financial statements and performance history in the post-reorganization period are Aggressive Growth Stock and Small Cap Growth Stock. These funds were also reorganized as funds issued by American Century Mutual Funds, Inc. The funds' fiscal year end was changed from March 31 to October 31. Prior to the reorganization, Aggressive Growth Stock and Small Cap Growth Stock had A Class, B Class and C Class shares. At the close of business and as a result of the reorganization, A Class shares and B Class shares of the acquired funds were converted to A Class shares and B Class shares, respectively, of the surviving funds. C Class shares of the acquired funds were converted to A Class shares of the surviving funds. A Class, B Class and C Class net assets of Aggressive Growth Stock before the reorganization were $193,018,755, $9,032,496 and $1,010,558, respectively. Immediately after the reorganization, A Class, B Class and C Class net assets of Mid Cap Growth were $194,029,313, $9,032,496 and $-, respectively. A Class, B Class and C Class net assets of Small Cap Growth Stock before the reorganization were $55,084,794, $8,283,664 and $1,719,620, respectively. Immediately after the reorganization, A Class, B Class and C Class net assets of Small Cap Growth were $56,804,414, $8,283,664 and $-, respectively. - ------ 30 Mid Cap Growth - Financial Highlights For a Share Outstanding Throughout the Period Indicated - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.78 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------------------- Net Investment Income (Loss)(2) --(3) - --------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.06 - -------------------------------------------------------------------------------- Total From Investment Operations 0.06 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $14.84 ================================================================================ TOTAL RETURN(4) 0.41% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.05%(5) - --------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.23)%(5) - --------------------------------------------------------------- Portfolio Turnover Rate 4%(6) - --------------------------------------------------------------- Net Assets, End of Period (in thousands) $33 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the one-month period ended April 30, 2006. See Notes to Financial Statements. - ------ 31 Mid Cap Growth - Financial Highlights For a Share Outstanding Throughout the Period Indicated - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.78 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------------- Net Investment Income (Loss)(2) --(3) - -------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.06 - -------------------------------------------------------------------------------- Total From Investment Operations 0.06 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $14.84 ================================================================================ TOTAL RETURN(4) 0.41% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 0.85%(5) - -------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.03)%(5) - -------------------------------------------------------------- Portfolio Turnover Rate 4%(6) - -------------------------------------------------------------- Net Assets, End of Period (in thousands) $149,762 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the one-month period ended April 30, 2006. See Notes to Financial Statements. - ------ 32 Mid Cap Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended March 31 (except as noted) - -------------------------------------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------------------------------------- 2006(1) 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.83 $13.50 $12.78 $9.83 $12.93 $13.70 - -------------------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss) (0.01)(2) (0.01)(2) (0.10)(2) (0.09)(2) (0.09)(2) (0.09) - ----------------------------------- Net Realized and Unrealized Gain (Loss) 0.02 2.65 0.82 3.04 (3.01) 0.43 - -------------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.01 2.64 0.72 2.95 (3.10) 0.34 - -------------------------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Realized Gains -- (1.31) -- -- -- (1.11) - -------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $14.84 $14.83 $13.50 $12.78 $9.83 $12.93 ============================================================================================================== TOTAL RETURN(3) 0.07% 20.28% 5.63% 30.01% (23.98)% 2.54% - -------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(4) 1.29% 1.30% 1.30% 1.30% 1.30% - ----------------------------------- Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) 1.30%(4) 1.29% 1.36% 1.40% 1.55% 1.55% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.56)%(4) (0.08)% (0.79)% (0.74)% (0.86)% (0.61)% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) (0.56)%(4) (0.08)% (0.85)% (0.84)% (1.11)% (0.86)% - ----------------------------------- Portfolio Turnover Rate 4% 89% 70% 72% 35% 68% - ----------------------------------- Net Assets, End of Period (in thousands) $44,227 $193,019 $163,069 $148,862 $105,728 $66,062 - -------------------------------------------------------------------------------------------------------------- (1) April 1, 2006 through April 30, 2006 (unaudited). The fund's fiscal year was changed from March 31 to October 31, resulting in a one-month semiannual reporting period. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 33 Mid Cap Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended March 31 (except as noted) - -------------------------------------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------------------------------------- 2006(1) 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $13.96 $12.86 $12.25 $9.49 $12.55 $13.43 - -------------------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss) (0.03)(2) (0.10)(2) (0.18)(2) (0.16)(2) (0.16)(2) (0.09) - ----------------------------------- Net Realized and Unrealized Gain (Loss) 0.04 2.51 0.79 2.92 (2.90) 0.32 - -------------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.01 2.41 0.61 2.76 (3.06) 0.23 - -------------------------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Realized Gains -- (1.31) -- -- -- (1.11) - -------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $13.97 $13.96 $12.86 $12.25 $9.49 $12.55 ============================================================================================================== TOTAL RETURN(3) 0.00% 19.48% 4.98% 29.08% (24.38)% 1.75% - -------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.95%(4) 1.95% 1.95% 1.95% 1.95% 1.95% - ----------------------------------- Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) 2.05%(4)(5) 2.02% 2.04% 2.05% 2.20% 2.20% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.21)%(4) (0.78)% (1.44)% (1.40)% (1.52)% (1.26)% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) (1.31)%(4)(5) (0.85)% (1.53)% (1.50)% (1.77)% (1.51)% - ----------------------------------- Portfolio Turnover Rate 4% 89% 70% 72% 35% 68% - ----------------------------------- Net Assets, End of Period (in thousands) $8,806 $9,032 $9,839 $10,128 $7,978 $10,302 - -------------------------------------------------------------------------------------------------------------- (1) April 1, 2006 through April 30, 2006 (unaudited). The fund's fiscal year was changed from March 31 to October 31, resulting in a one-month semiannual reporting period. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value on the last business day. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) During the period ended April 30, 2006, the distributor voluntarily waived a portion of its distribution and service fees. See Notes to Financial Statements. - ------ 34 Mid Cap Growth - Financial Highlights For a Share Outstanding Throughout the Period Indicated - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.78 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------------- Net Investment Income (Loss)(2) --(3) - -------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.05 - -------------------------------------------------------------------------------- Total From Investment Operations 0.05 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $14.83 ================================================================================ TOTAL RETURN(4) 0.34% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.05%(5) - -------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.23)%(5) - -------------------------------------------------------------- Portfolio Turnover Rate 4%(6) - -------------------------------------------------------------- Net Assets, End of Period (in thousands) $29 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the one-month period ended April 30, 2006. See Notes to Financial Statements. - ------ 35 Mid Cap Growth - Financial Highlights For a Share Outstanding Throughout the Period Indicated - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.78 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------------- Net Investment Income (Loss)(2) (0.01) - -------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.07 - -------------------------------------------------------------------------------- Total From Investment Operations 0.06 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $14.84 ================================================================================ TOTAL RETURN(3) 0.41% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.55%(4) - -------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.73)%(4) - -------------------------------------------------------------- Portfolio Turnover Rate 4%(5) - -------------------------------------------------------------- Net Assets, End of Period (in thousands) $25 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the one-month period ended April 30, 2006. See Notes to Financial Statements. - ------ 36 Small Cap Growth - Financial Highlights For a Share Outstanding Throughout the Period Indicated - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.86 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------------- Net Investment Income (Loss)(2) --(3) - -------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.38 - -------------------------------------------------------------------------------- Total From Investment Operations 0.38 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $17.24 ================================================================================ TOTAL RETURN(4) 2.25% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(5) - -------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.90)%(5) - -------------------------------------------------------------- Portfolio Turnover Rate 4%(6) - -------------------------------------------------------------- Net Assets, End of Period (in thousands) $26 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the one-month period ended April 30, 2006. See Notes to Financial Statements. - ------ 37 Small Cap Growth - Financial Highlights For a Share Outstanding Throughout the Period Indicated - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.86 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------------- Net Investment Income (Loss)(2) --(3) - -------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.38 - -------------------------------------------------------------------------------- Total From Investment Operations 0.38 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $17.24 ================================================================================ TOTAL RETURN(4) 2.31% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.10%(5) - -------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.70)%(5) - -------------------------------------------------------------- Portfolio Turnover Rate 4%(6) - -------------------------------------------------------------- Net Assets, End of Period (in thousands) $26 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value on the last business day. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the one-month period ended April 30, 2006. See Notes to Financial Statements. - ------ 38 Small Cap Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended March 31 (except as noted) - ------------------------------------------------------------------------------------------------------------ A CLASS - ------------------------------------------------------------------------------------------------------------ 2006(1) 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $17.02 $15.27 $14.38 $10.11 $13.38 $11.61 - ------------------------------------------------------------------------------------------------------------ Income From Investment Operations - ----------------------------------- Net Investment Income (Loss) --(2)(3) (0.14)(3) (0.15)(3) (0.15)(3) (0.12)(3) (0.11) - ----------------------------------- Net Realized and Unrealized Gain (Loss) 0.22 3.53 1.75 4.42 (3.15) 1.88 - ------------------------------------------------------------------------------------------------------------ Total From Investment Operations 0.22 3.39 1.60 4.27 (3.27) 1.77 - ------------------------------------------------------------------------------------------------------------ Distributions - ----------------------------------- From Net Realized Gains -- (1.64) (0.71) -- -- -- - ------------------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $17.24 $17.02 $15.27 $14.38 $10.11 $13.38 ============================================================================================================ TOTAL RETURN(4) 1.29% 23.08% 10.99% 42.24% (24.44)% 15.25% - ------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.40%(5) 1.40% 1.40% 1.40% 1.40% 1.40% - ----------------------------------- Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) 1.55%(5)(6) 1.86% 2.03% 2.21% 2.29% 2.46% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.00)%(5) (0.82)% (1.05)% (1.16)% (1.10)% (0.89)% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) (1.15)%(5)(6) (1.28)% (1.68)% (1.97)% (1.99)% (1.95)% - ----------------------------------- Portfolio Turnover Rate 4% 81% 86% 98% 49% 58% - ----------------------------------- Net Assets, End of Period (in thousands) $58,098 $55,085 $33,791 $23,914 $14,623 $13,997 - ------------------------------------------------------------------------------------------------------------ (1) April 1, 2006 through April 30, 2006 (unaudited). The fund's fiscal year was changed from March 31 to October 31, resulting in a one-month semiannual reporting period. (2) Per-share amount was less than $0.005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) During the period ended April 30, 2006, the distributor voluntarily waived a portion of its distribution and service fees. See Notes to Financial Statements. - ------ 39 Small Cap Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended March 31 (except as noted) - ----------------------------------------------------------------------------------------------------------- B CLASS - ----------------------------------------------------------------------------------------------------------- 2006(1) 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.34 $14.81 $14.06 $9.95 $13.25 $11.58 - ----------------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss) --(2)(3) (0.24)(3) (0.24)(3) (0.23)(3) (0.19)(3) (0.11) - ----------------------------------- Net Realized and Unrealized Gain (Loss) 0.21 3.41 1.70 4.34 (3.11) 1.78 - ----------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.21 3.17 1.46 4.11 (3.30) 1.67 - ----------------------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Realized Gains -- (1.64) (0.71) -- -- -- - ----------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.55 $16.34 $14.81 $14.06 $9.95 $13.25 =========================================================================================================== TOTAL RETURN(4) 1.29% 22.29% 10.23% 41.31% (24.91)% 14.42% - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.05%(5) 2.05% 2.05% 2.05% 2.05% 2.05% - ----------------------------------- Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) 2.30%(5)(6) 2.51% 2.68% 2.86% 2.94% 3.11% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.65)%(5) (1.48)% (1.70)% (1.81)% (1.74)% (1.54)% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) (1.90)%(5)(6) (1.94)% (2.33)% (2.62)% (2.63)% (2.60)% - ----------------------------------- Portfolio Turnover Rate 4% 81% 86% 98% 49% 58% - ----------------------------------- Net Assets, End of Period (in thousands) $8,341 $8,284 $6,986 $6,066 $3,674 $3,525 - ----------------------------------------------------------------------------------------------------------- (1) April 1, 2006 through April 30, 2006 (unaudited). The fund's fiscal year was changed from March 31 to October 31, resulting in a one-month semiannual reporting period. (2) Per-share amount was less than $0.005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) During the period ended April 30, 2006, the distributor voluntarily waived a portion of its distribution and service fees. See Notes to Financial Statements. - ------ 40 Small Cap Growth - Financial Highlights For a Share Outstanding Throughout the Period Indicated - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.86 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------- Net Investment Income (Loss)(2) --(3) - ------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.37 - -------------------------------------------------------------------------------- Total From Investment Operations 0.37 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $17.23 ================================================================================ TOTAL RETURN(4) 2.19% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.30%(5) - ------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.90)%(5) - ------------------------------------------------------------- Portfolio Turnover Rate 4%(6) - ------------------------------------------------------------- Net Assets, End of Period (in thousands) $57 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the one-month period ended April 30, 2006. See Notes to Financial Statements. - ------ 41 Small Cap Growth - Financial Highlights For a Share Outstanding Throughout the Period Indicated - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.86 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------- Net Investment Income (Loss)(2) --(3) - ------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.38 - -------------------------------------------------------------------------------- Total From Investment Operations 0.38 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $17.24 ================================================================================ TOTAL RETURN(4) 2.25% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.80%(5) - ------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.40)%(5) - ------------------------------------------------------------- Portfolio Turnover Rate 4%(6) - ------------------------------------------------------------- Net Assets, End of Period (in thousands) $26 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through April 30, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the one-month period ended April 30, 2006. See Notes to Financial Statements. - ------ 42 Approval of Management Agreement for Mid Cap Growth and Small Cap Growth Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund's independent directors each year. Under a Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for its board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. At a meeting held December 13, 2005, the board of directors unanimously approved the initial management agreement for Mid Cap Growth and Small Cap Growth (the "funds"). In advance of the board's consideration, American Century Investment Management, Inc. (the "Advisor") provided information concerning the proposed funds. The information considered and the discussions held at the meeting included, but were not limited to: * the nature, extent, and quality of investment management, shareholder services, and other services to be provided to the funds under the management agreement; * the wide range of programs and services to be provided by the Advisor to the funds and their shareholders on a routine and non-routine basis; and * data comparing the cost of owning the Investor Class of the funds to the cost of owning similar funds. Consistent with the Advisor's business strategy for all of its funds, the Advisor proposed a unified management fee. Under the unified fee structure, the Advisor charges a single, all-inclusive fee for providing all services for the management and operation of the funds, except brokerage expenses, taxes, interest, the fees and expenses of the funds' independent directors (including their independent legal counsel), and extraordinary costs. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, record keeping, marketing, and shareholder services, or arranging and supervising third parties who provide such services. By contrast, most other fund groups are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and Rule 12b-1 distribution fees, all other components of the total fees other advisors charge to their shareholders may be increased without shareholder approval. The Advisor and the board believe that the unified fee structure is a benefit to fund shareholders because it clearly discloses the cost of owning fund shares, and, since the unified fee cannot be increased without a vote of fund shareholders, it shifts to the Advisor the risk of increased costs of operating the funds and provides a direct incentive to minimize administrative inefficiencies. The Advisor proposed to place Mid Cap Growth in an initial unified management fee for the fund of 1.05%. In evaluating the proposed fee, the board reviewed data comparing the total expense ratio of the Mid Cap Growth Investor Class to the total expense ratios of other funds in its applicable fund universe. The proposed fee level is in the lowest quartile of the total expense ratios of its peer group. The proposed fee also (continued) - ------ 43 Approval of Management Agreement for Mid Cap Growth and Small Cap Growth contains breakpoints that reduce fees as the overall fund complex and the fund increase in size. The Advisor proposed to place Small Cap Growth in an initial unified management fee for the fund of 1.30%. In evaluating the proposed fee, the board reviewed data comparing the total expense ratio of the Small Cap Growth Investor Class to the total expense ratios of other funds in its applicable fund universe. The proposed fee level is below the median of the total expense ratios of its peer group. The proposed fee also contains breakpoints that reduce fees as the overall fund complex and the fund increase in size. When considering the proposed fee, the board considered the entrepreneurial risk that the Advisor assumes in launching a new fund. In particular, they considered the effect of the unified management fee structure and the fact that the total expense ratio of the funds would require the Advisor to assume a substantial part of the start-up costs of the funds and imposes on the Advisor the risk that the funds will grow to a level that will become profitable at the proposed fee level. The board is aware that the Advisor is likely to lose money on the funds initially and the board will receive information in connection with the annual contract renewal process that will enable it to determine when, if ever, adjustments to one or more breakpoints may be appropriate. Finally, the board considered the benefits to shareholders of adding the new funds to the American Century product line. Not specifically discussed, but important in the decision to approve the management agreement, is the directors' familiarity with the Advisor. The board of directors oversees and evaluates on a continuous basis the nature and quality of all services the Advisor performs for other funds within the American Century complex. As such, the directors have confidence in the Advisor's integrity and competence in providing services to funds. In their deliberations, the directors did not identify any single factor as being all important or controlling, and each director attributed different weights to various factors. However, based on their evaluation of all material factors and assisted by the advice of independent legal counsel, the board, including the independent directors, concluded that the overall arrangements between the funds and the Advisor, as provided in the management agreement, were fair and reasonable in light of the services to be performed and should be approved. At the meeting held December 13, 2005, the board of directors also unanimously approved an investment subadvisory agreement by which Mason Street Advisors LLC ("Mason Street") would be engaged to manage the investments of the funds. In approving the subadvisory agreement, the board considered all material factors including the nature, extent, and quality of investment management services to be provided to the funds under the agreement. As a part of this review, the board evaluated Mason Street's historical performance, investment experience, and capabilities, as well as its compliance policies, procedures, and regulatory experience. The management fees to be paid to Mason Street under the subadvisory agreement were subject to arm's length negotiation between the Advisor and Mason Street and will be paid by the Advisor out of its unified management fee. - ------ 44 Share Class Information Six classes of shares are authorized for sale by the funds: Investor Class, Institutional Class, A Class, B Class, C Class and R Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratios of A Class, B Class, C Class and R Class shares are higher than that of Investor Class shares. Mid Cap Growth and Small Cap Growth are available for purchase only through financial intermediaries by investors who seek advice from them. The funds are closed to other investors, but those with open accounts may make additional investments and reinvest dividends and capital gains distributions as long as such accounts remain open. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the unified management fee of Institutional Class shares is 0.20% less than the unified management fee of Investor Class shares. A CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. A Class shares are sold at their offering price, which is net asset value plus an initial sales charge that ranges from 5.75% to 0.00% for equity funds, depending on the amount invested. The initial sales charge is deducted from the purchase amount before it is invested. A Class shares may be subject to a contingent deferred sales charge (CDSC). There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The prospectus contains information regarding reductions and waivers of sales charges for A Class shares. The unified management fee for A Class shares is the same as for Investor Class shares. A Class shares also are subject to a 0.25% annual Rule 12b-1 distribution and service fee. B CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% after the sixth year. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for B Class shares is the same as for Investor Class shares. B Class shares also are subject to a 1.00% annual Rule 12b-1 distribution and service fee. B Class shares automatically convert to A Class shares (with lower expenses) eight years after their purchase date. (continued) - ------ 45 Share Class Information C CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a CDSC of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for C Class shares is the same as for Investor Class shares. C Class shares also are subject to a Rule 12b-1 distribution and service fee of 1.00%. R CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. The unified management fee for R Class shares is the same as for Investor Class shares. R Class shares are subject to a 0.50% annual Rule 12b-1 distribution and service fee. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 46 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the funds' investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at americancentury.com and on the Securities and Exchange Commission's Web site at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 47 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL 2000(reg.sm) INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000(reg.sm) GROWTH INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth rates. The RUSSELL MIDCAP(reg.sm) INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP(reg.sm) GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. The S&P MIDCAP 400 INDEX, a capitalization-weighted index consisting of 400 domestic stocks, measures the performance of the mid-size company segment of the U.S. market. The S&P SMALLCAP 600 INDEX, a capitalization-weighted index consisting of 600 domestic stocks, measures the small company segment of the U.S. market. - ------ 48 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 INVESTORS USING ADVISORS: 1-800-378-9878 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0606 SH-SAN-49750N American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved.
ITEM 2. CODE OF ETHICS. Not applicable for semiannual report filings. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semiannual report filings. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semiannual report filings. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant's board. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable for semiannual report filings. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY MUTUAL FUNDS, INC. By: /s/ William M. Lyons -------------------------------------------------- Name: William M. Lyons Title: President Date: June 26, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ William M. Lyons -------------------------------------------------- Name: William M. Lyons Title: President (principal executive officer) Date: June 26, 2006 By: /s/ Maryanne L. Roepke -------------------------------------------------- Name: Maryanne L. Roepke Title: Sr. Vice President, Treasurer, and Chief Financial Officer (principal financial officer) Date: June 26, 2006