TWENTIETH CENTURY INVESTORS INC, 497, 1996-12-23

TWENTIETH CENTURY INVESTORS INC
497, 1996-12-23

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PROSPECTUS

[company logo]

AMERICAN
CENTURY (SM)
SEPTEMBER 3, 1996

REVISED JANUARY 1, 1997

TWENTIETH

CENTURY(reg.tm)

GROUP

[company logo]

Select

Heritage

Growth

Ultra

Vista

INVESTOR CLASS

[front cover]

AMERICAN CENTURY INVESTMENTS

FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering stocks,
bonds, money markets, specialty investments and blended portfolios. To help you
find the funds that may meet your needs, American Century funds have been
divided into three groups based on investment style and objectives. These
groups, which appear below, are designed to help simplify your fund decisions.

American Century Investments

Benham Group(reg.tm)

MONEY MARKET FUNDS

GOVERNMENT BOND FUNDS

DIVERSIFIED BOND FUNDS

MUNICIPAL BOND FUNDS

American Century Group

ASSET ALLOCATION & BALANCED FUNDS

CONSERVATIVE EQUITY FUNDS

SPECIALTY FUNDS

Twentieth Century Group

GROWTH FUNDS

INTERNATIONAL FUNDS

Select * Heritage * Growth

Ultra * Vista

PROSPECTUS

SEPTEMBER 3, 1996

REVISED JANUARY 1, 1997

Select * Heritage * Growth

Ultra * Vista

INVESTOR CLASS

AMERICAN CENTURY MUTUAL FUNDS, INC.

American Century Mutual Funds, Inc. is a part of American Century Investments, a
family of funds that includes nearly 70 no-load mutual funds covering a variety
of investment opportunities. Five of the funds from our Twentieth Century Group
that invest primarily in equity securities are described in this Prospectus.
Their investment objectives are listed on page 2 of this Prospectus. The other
funds are described in separate prospectuses.

Through its Investor Class of shares, American Century offers investors a full
line of no-load funds, investments that have no sales charges or commissions.

This Prospectus gives you information about the funds that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated September 3, 1996, and filed with the Securities and Exchange
Commission. It is incorporated into this Prospectus by reference. To obtain a
copy without charge, call or write:

American Century Investments 4500 Main Street * P.O. Box 419200 Kansas City,
Missouri 64141-6200 * 1-800-345-2021 International calls: 816-531-5575
Telecommunications Device for the Deaf: 1-800-634-4113 * In Missouri:
816-753-1865 Internet: www.americancentury.com

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus 1

INVESTMENT OBJECTIVES OF THE FUNDS

AMERICAN CENTURY - TWENTIETH CENTURY SELECT FUND
- -------------------------------------------------------------------------------

AMERICAN CENTURY - TWENTIETH CENTURY HERITAGE FUND
- -------------------------------------------------------------------------------

The Select and Heritage funds seek capital growth. The funds intend to pursue
their investment objectives by investing primarily in common stocks of companies
that are considered by management to have better-than-average prospects for
appreciation. As a matter of fundamental policy, 80% of the assets of Select and
Heritage must be invested in securities of companies that have a record of
paying dividends or have committed themselves to the payment of regular
dividends, or otherwise produce income.

AMERICAN CENTURY - TWENTIETH CENTURY GROWTH FUND
- -------------------------------------------------------------------------------

AMERICAN CENTURY - TWENTIETH CENTURY ULTRA FUND
- -------------------------------------------------------------------------------

AMERICAN CENTURY - TWENTIETH CENTURY VISTA FUND
- -------------------------------------------------------------------------------

The Growth, Ultra and Vista funds seek capital growth. The funds intend to
pursue their investment objectives by investing primarily in common stocks that
are considered by management to have better-than-average prospects for
appreciation.

There is no assurance that the funds will achieve their respective investment
objectives.

NO PERSON IS AUTHORIZED BY THE FUNDS TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUNDS, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.

2 Investment Objectives American Century Investments

TABLE OF CONTENTS

Transaction and Operating Expense Table . . . . . . . . . . . . . . . . . . .4

Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

INFORMATION REGARDING THE FUNDS

Investment Policies of the Funds. . . . . . . . . . . . . . . . . . . . . . 10

Growth Equity Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Select and Heritage . . . . . . . . . . . . . . . . . . . . . . . . . 10

Growth, Ultra and Vista . . . . . . . . . . . . . . . . . . . . . . . 10

Other Investment Practices, Their Characteristics and Risks. . . . . . . . 11

Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Forward Currency Exchange Contracts . . . . . . . . . . . . . . . . . . 11

Portfolio Turnover. . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 12

Derivative Securities . . . . . . . . . . . . . . . . . . . . . . . . . 13

Portfolio Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

When-Issued Securities . . . . . . . . . . . . . . . . . . . . . . . . 14

Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . 14

Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Performance Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . 14

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

American Century Investments. . . . . . . . . . . . . . . . . . . . . . . . 16

Investing in American Century . . . . . . . . . . . . . . . . . . . . . . . 16

How to Open an Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 16

By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

By Wire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

By Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

In Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Subsequent Investments . . . . . . . . . . . . . . . . . . . . . . . 17

By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . 17

By Online Access . . . . . . . . . . . . . . . . . . . . . . . . 17

By Wire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

In Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Automatic Investment Plan . . . . . . . . . . . . . . . . . . . . . 17

How to Exchange from One Account to Another . . . . . . . . . . . . . . . . 17

By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . 18

By Online Access . . . . . . . . . . . . . . . . . . . . . . . . 18

How to Redeem Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . 18

By Check-A-Month . . . . . . . . . . . . . . . . . . . . . . . . 18

Other Automatic Redemptions . . . . . . . . . . . . . . . . . . . 18

Redemption Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 18

By Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

By Wire and ACH . . . . . . . . . . . . . . . . . . . . . . . . . 19

Special Requirements for Large Redemptions . . . . . . . . . . . . . 19

Redemption of Shares in Low-Balance Accounts . . . . . . . . . . . . 19

Signature Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Special Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . . 20

Automated Information Line . . . . . . . . . . . . . . . . . . . 20

Online Account Access . . . . . . . . . . . . . . . . . . . . . . 20

Open Order Service . . . . . . . . . . . . . . . . . . . . . . . 20

Tax-Qualified Retirement Plans . . . . . . . . . . . . . . . . . 20

Important Policies Regarding Your Investments . . . . . . . . . . . . . . . 20

Reports to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Employer-Sponsored Retirement Plans and Institutional Accounts. . . . . . . 22

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

When Share Price Is Determined . . . . . . . . . . . . . . . . . . . . 23

How Share Price Is Determined . . . . . . . . . . . . . . . . . . . . . 23

Where to Find Information About Share Price . . . . . . . . . . . . . . 24

Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Tax-Deferred Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 24

Taxable Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Investment Management . . . . . . . . . . . . . . . . . . . . . . . . . 26

Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Transfer and Administrative Services . . . . . . . . . . . . . . . . . 27

Distribution of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . 28

Further Information About American Century. . . . . . . . . . . . . . . . . 28

Prospectus Table of Contents 3

TRANSACTION AND OPERATING EXPENSE TABLE

Select, Heritage,
Growth, Ultra, Vista
SHAREHOLDER TRANSACTION EXPENSES:
- --------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases . . . . . . . . . . . . . . . . none

Maximum Sales Load Imposed on Reinvested Dividends. . . . . . . . . . . none

Deferred Sales Load . . . . . . . . . . . . . . . . . . . . . . . . . . none

Redemption Fee(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . none

Exchange Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . none

ANNUAL FUND OPERATING EXPENSES: (as a percentage of net assets)
- --------------------------------------------------------------------------------
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00%

12b-1 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . none

Other Expenses(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%

Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . 1.00%

EXAMPLE
- --------------------------------------------------------------------------------
You would pay the following expenses on a 1 year $10
$1,000 investment, assuming a 5% annual return and 3 years 32
redemption at the end of each time period: 5 years 55
10 years 122

(1) REDEMPTION PROCEEDS SENT BY WIRE ARE SUBJECT TO A $10 PROCESSING FEE.

(2) OTHER EXPENSES, WHICH INCLUDES THE FEES AND EXPENSES (INCLUDING LEGAL
COUNSEL FEES) OF THOSE DIRECTORS WHO ARE NOT "INTERESTED PERSONS" AS DEFINED IN
THE INVESTMENT COMPANY ACT, WERE 0.0014 OF 1% OF AVERAGE NET ASSETS FOR THE MOST
RECENT FISCAL YEAR.

The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of the funds offered by
this Prospectus. The example set forth above assumes reinvestment of all
dividends and distributions and uses a 5% annual rate of return as required by
Securities and Exchange Commission regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE CONSIDERED
INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS AND EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN.

The shares offered by this Prospectus are Investor Class shares and have no
up-front or deferred sales charges, commissions, or 12b-1 fees. The funds offer
three other classes of shares, primarily to institutional investors, that have
different fee structures than the Investor Class, resulting in different
performance for the other classes. For additional information about the various
classes, see "FURTHER INFORMATION ABOUT AMERICAN CENTURY," page 28.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS

SELECT

The Financial Highlights for each of the periods presented have been audited by
Baird, Kurtz & Dobson, independent certified public accountants, whose report
thereon appears in the fund's annual report, which is incorporated by reference
into the Statement of Additional Information. The annual report contains
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended October 31, except as noted.

<TABLE>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period .............$37.67 $45.76 $39.18 $40.79 $34.19 $35.98 $27.85 $32.69 $35.40 $26.48

Income from Investment Operations

Net Investment Income ............ .33(1) .40 .46 .53 .63 .62 1.10 .64 .33 .43

Net Realized and Unrealized Gain
(Loss) on Investment Transactions 4.68 (3.59) 7.94 .34 8.17 (1.29) 7.74 1.37 .80 9.01

Total from
Investment Operations ............ 5.01 (3.19) 8.40 .87 8.80 (.67) 8.84 2.01 1.13 9.44

Distributions

From Net Investment Income ....... (.281) (.432) (.495) (.653) (.652) (1.116) (.707) (.481) (.380) (.515)

From Net Realized Gains
on Investment Transactions .......(2.750) (4.466) (1.313) (1.823) (1.551) -- -- (6.367) (3.462) --

In Excess of Net Realized Gains
on Investment Transactions ....... (.125) -- (.016) -- -- -- -- -- -- --

Total Distributions ..............(3.156) (4.898) (1.824) (2.476) (2.203) (1.116) (.707) (6.848) (3.842) (.515)

Net Asset Value, End of Period ..$39.52 $37.67 $45.76 $39.18 $40.79 $34.19 $35.98 $27.85 $32.69 $35.40

Total Return(2) ..................15.02% (7.37)% 22.20% 1.76% 27.05% (2.03)% 32.59% 7.31% 3.47% 36.13%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ............ 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.01%

Ratio of Net Investment Income
to Average Net Assets ............ .9% 1.0% 1.1% 1.4% 1.7% 1.8% 3.4% 2.2% 1.1% 1.6%

Portfolio Turnover Rate ..........106% 126% 82% 95% 84% 83% 93% 140% 123% 85%

Average Commission Paid per
Investment Security Traded ....... $.046 --(3) --(3) --(3) --(3) --(3) --(3) --(3) --(3) --(3)

Net Assets, End
of Period (in millions) ..........$4,008 $4,278 $5,160 $4,534 $4,163 $2,953 $2,721 $2,367 $2,417 $1,978

</TABLE>
(1) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(2) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY.

(3) NOT COMPUTED FOR PERIOD INDICATED.

Prospectus Financial Highlights 5

FINANCIAL HIGHLIGHTS

HERITAGE

<TABLE>
1995 1994 1993 1992 1991 1990 1989 1988(1)
---- ---- ---- ---- ---- ---- ---- ------

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period .............. $10.32 $11.03 $9.30 $8.59 $6.55 $8.15 $6.21 $5.00

Income from Investment Operations

Net Investment Income ............ .05(2) .07 .07 .10 .11 .10 .08 .06

Net Realized and Unrealized Gain
(Loss) on Investment Transactions 1.96 (.21) 2.43 .72 2.04 (.94) 1.93 1.16

Total from Investment Operations . 2.01 (.14) 2.50 .82 2.15 (.84) 2.01 1.22

Distributions

From Net Investment Income ....... (.033) (.068) (.093) (.113) (.110) (.065) (.066) (.013)

From Net Realized Gains
on Investment Transactions ....... (.514) (.500) (.679) -- -- (.691) -- --

In Excess of Net Realized Gains
on Investment Transactions ....... (.030) (.006) -- -- -- -- -- --

Total Distributions .............. (.577) (.574) (.772) (.113) (.110) (.756) (.066) (.013)

Net Asset Value, End of Period ... $11.75 $10.32 $11.03 $9.30 $8.59 $6.55 $8.15 $6.21

Total Return(3) .................. 21.04% (1.13)% 28.64% 9.65% 33.25% (11.62)% 32.65% 25.75%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ............ .99% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%(4)

Ratio of Net Investment Income
to Average Net Assets ............ .5% .7% .7% 1.1% 1.5% 1.6% 1.3% 1.4%(4)

Portfolio Turnover Rate .......... 121% 136% 116% 119% 146% 127% 159% 130%(4)

Average Commission Paid per
Investment Security Traded ....... $.042 --(5) --(5) --(5) --(5) --(5) --(5) --(5)

Net Assets, End
of Period (in millions) ..........$1,008 $897 $702 $369 $269 $199 $117 $55

</TABLE>

(1) NOVEMBER 10, 1987 (INCEPTION) THROUGH OCTOBER 31, 1988

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) TOTAL RETURN FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS, IF ANY.

(4) ANNUALIZED.

(5) NOT COMPUTED FOR PERIOD INDICATED.

6 Financial Highlights American Century Investments

FINANCIAL HIGHLIGHTS

GROWTH

<TABLE>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period ............ $22.99 $25.27 $23.64 $22.32 $14.81 $17.44 $12.54 $15.62 $19.47 $14.16

Income from Investment Operations

Net Investment Income (Loss) ... .08(1) .06 .06 (.02) .04 .09 .08 .30 .01 .12

Net Realized and Unrealized
Gain (Loss) on Investment
Transactions ................... 4.08 .48 1.94 1.35 8.47 (2.05) 5.14 .13 1.30 5.37

Total from Investment Operations 4.16 .54 2.00 1.33 8.51 (1.96) 5.22 .43 1.31 5.49

Distributions

From Net Investment Income ..... (.051) (.056) -- (.013) (.111) (.079) (.320) (.046) (.086) (.182)

From Net Realized Gains
on Investment Transactions ..... (3.183) (2.764) (.353) -- (.891) (.592) -- (3.460) (5.076) --

In Excess of Net Realized Gains
on Investment Transactions ..... (.040) (.002) (.013) -- -- -- -- -- -- --

Total Distributions ............ (3.274) (2.822) (.366) (.013) (1.002) (.671) (.320) (3.506) (5.162) (.182)

Net Asset Value, End of Period .$23.88 $22.99 $25.27 $23.64 $22.32 $14.81 $17.44 $12.54 $15.62 $19.47

Total Return(2) ................ 22.31% 2.66% 8.48% 5.96% 60.64% (11.72)% 42.74% 3.18% 9.32% 39.09%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets .......... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.01%

Ratio of Net Investment Income
(Loss) to Average Net Assets ... .4% .3% .2% (.1)% .2% .6% .5% 2.4% .2% .6%

Portfolio Turnover Rate ........ 141% 100% 94% 53% 69% 118% 98% 143% 114% 105%

Average Commission Paid per
Investment Security Traded ..... $.040 --(3) --(3) --(3) --(3) --(3) --(3) --(3) --(3) --(3)

Net Assets, End
of Period (in millions) ........ $5,130 $4,363 $4,641 $4,472 $3,193 $1,697 $1,597 $1,229 $1,188 $965

</TABLE>

(1) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(2) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY.

(3) NOT COMPUTED FOR PERIOD INDICATED.

Prospectus Financial Highlights 7

FINANCIAL HIGHLIGHTS

ULTRA

<TABLE>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period ............. $21.16 $21.61 $15.46 $15.53 $7.73 $9.63 $6.86 $8.76 $9.06 $7.13

Income from Investment Operations

Net Investment Income (Loss) .... (.07)(1) (.03) (.09) (.05) (.03) (.03) .19 (.02) (.07) .00

Net Realized and Unrealized
Gain (Loss) on Investment
Transactions .................... 7.58 (.42) 6.24 (.02) 7.86 (.73) 2.58 1.38 (.22) 1.94

Total from Investment
Operations ...................... 7.51 (.45) 6.15 (.07) 7.83 (.76) 2.77 1.36 (.29) 1.94

Distributions

From Net Investment Income ...... -- -- -- -- -- (.196) -- -- (.007) (.010)

From Net Realized Gains
on Investment Transactions ...... (.645) -- -- -- (.028) (.947) -- (3.258) -- --

Total Distributions ............. (.645) -- -- -- (.028) (1.143) -- (3.258) (.007) (.010)

Net Asset Value, End of Period .. $28.03 $21.16 $21.61 $15.46 $15.53 $7.73 $9.63 $6.86 $8.76 $9.06

Total Return(2) ................. 36.89% (2.08)% 39.78% (.45)% 101.51% (9.02)% 40.37% 19.52% (3.23)% 27.22%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ........... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.01%

Ratio of Net Investment Income
(Loss) to Average Net Assets .... (.3)% (.1)% (.6)% (.4)% (.5)% (.3)% 2.2% (.3)% (.5)% --

Portfolio Turnover Rate ......... 87% 78% 53% 59% 42% 141% 132% 140% 137% 99%

Average Commission Paid per
Investment Security Traded ...... $.033 --(3) --(3) --(3) --(3) --(3) --(3) --(3) --(3) --(3)

Net Assets, End
of Period (in millions) ........$14,376 $10,344 $8,037 $4,275 $2,148 $330 $347 $258 $236 $315

</TABLE>

(1) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(2) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY.

(3) NOT COMPUTED FOR PERIOD INDICATED.

8 Financial Highlights American Century Investments

FINANCIAL HIGHLIGHTS

VISTA

<TABLE>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period ............ $10.94 $12.24 $11.01 $10.53 $6.28 $8.74 $5.91 $5.73 $6.88 $4.68

Income from Investment Operations

Net Investment Income (Loss) ... (.08)(1) (.08) (.07) (.04) (.02) (.01) (.03) .01 (.05) (.02)

Net Realized and Unrealized
Gain (Loss) on Investment
Transactions ................... 4.90 .45 1.95 .52 4.27 (1.76) 2.87 .63 (.45) 2.22

Total from Investment
Operations ..................... 4.82 .37 1.88 .48 4.25 (1.77) 2.84 .64 (.50) 2.20

Distributions

From Net Investment Income ..... -- -- -- -- -- -- (.012) -- -- --

From Net Realized Gains
on Investment Transactions ..... (.030) (1.663) (.641) -- -- (.693) -- (.462) (.651) --

In Excess of Net Realized Gains
on Investment Transactions ..... -- (.012) (.006) -- -- -- -- -- -- --

Total Distributions ............ (.030) (1.675) (.647) -- -- (.693) (.012) (.462) (.651) --

Net Asset Value,
End of Period ..................$15.73 $10.94 $12.24 $11.01 $10.53 $6.28 $8.74 $5.91 $5.73 $6.88

Total Return(2) ................ 44.20% 4.16% 17.71% 4.55% 67.67% (22.17)% 48.19% 11.41% (7.70)% 47.00%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets .......... .98% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.01%

Ratio of Net Investment Income
(Loss) to Average Net Assets ... (.6)% (.8)% (.6)% (.4)% (.3)% (.1)% (.4)% .2% (.7)% (.3)%

Portfolio Turnover Rate ........ 89% 111% 133% 87% 92% 103% 125% 145% 123% 121%

Average Commission Paid per
Investment Security Traded ..... $.033 --(3) --(3) --(3) --(3) --(3) --(3) --(3) --(3) --(3)

Net Assets, End
of Period (in millions) ........ $1,676 $792 $847 $830 $622 $341 $264 $206 $187 $160

</TABLE>

(1) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(2) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY.

(3) NOT COMPUTED FOR PERIOD INDICATED.

Prospectus Financial Highlights 9

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS

The funds have adopted certain investment restrictions that are set forth in the
Statement of Additional Information. Those restrictions, as well as the
investment objectives of the funds identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The funds have implemented additional investment policies
and practices to guide their activities in the pursuit of their respective
investment objectives. These policies and practices, which are described
throughout this Prospectus, are not designated as fundamental policies and may
be changed without shareholder approval.

GROWTH EQUITY FUNDS

All of the funds offered by this Prospectus seek capital growth by investing in
securities, primarily common stocks, that meet certain fundamental and technical
standards of selection (relating primarily to earnings and revenues
acceleration) and have, in the opinion of the funds' manager,
better-than-average potential for appreciation. So long as a sufficient number
of such securities are available, the manager intends to keep the funds fully
invested in these securities regardless of the movement of stock prices
generally. In most circumstances, the funds' actual level of cash and cash
equivalents will fluctuate between 0% and 10% of total assets with 90% to 100%
of its assets committed to equity and equity equivalent investments. The funds
may purchase securities only of companies that have a record of at least three
years of continuous operation.

SELECT AND HERITAGE

Securities of companies chosen for the Select and Heritage funds are chosen
primarily for their growth potential. Additionally, as a matter of fundamental
policy, 80% of the assets of Select and Heritage must be invested in securities
of companies that have a record of paying dividends, or have committed
themselves to the payment of regular dividends, or otherwise produce income. The
remaining 20% of fund assets may be invested in any otherwise permissible
securities that the manager believes will contribute to the funds' stated
investment objectives. The income payments of equity securities are only a
secondary consideration; therefore, the income return that Select and Heritage
provide may not be significant. Otherwise, Select and Heritage follow the same
investment techniques described below for Growth, Ultra and Vista.

Since Select is one of our larger funds and Heritage is substantially smaller,
Select will invest in shares of larger companies with larger share trading
volume, and Heritage will tend to invest in smaller companies with smaller share
trading volume. However, the two funds are not mutually exclusive, and a given
security may be owned by both funds. For the reasons stated in the next section,
it should be expected that Heritage will be more volatile and subject to greater
short-term risk and long-term opportunity than Select.

Because of its size, and because it invests primarily in securities that pay
dividends or are committed to the payment of dividends, Select may be expected
to be the least volatile of the funds described in this Prospectus.

GROWTH, ULTRA AND VISTA

Management selects for the portfolios of the Growth, Ultra and Vista funds,
securities of companies whose earnings and revenue trends meet management's
standards of selection.

Growth generally invests in large, established companies. Ultra generally
invests in medium to large size companies, while Vista invests in medium-sized
and smaller companies. As of February 1, 1996, the size of the companies (as
reflected by their capitalizations) held by the funds is as follows:

10 Information Regarding the Funds American Century Investments

Median Capitalization
of Companies Held
- --------------------------------------------------------------------------------
Growth $5,076,231,000
Ultra $3,542,263,000
Vista $ 871,313,000
- --------------------------------------------------------------------------------

The median capitalization of the companies in a given fund may change over time.
In addition, the criteria outlined previously are not mutually exclusive, and a
given security may be owned by more than one of the funds.

The size of companies in which a fund invests tends to give each fund its own
characteristics of volatility and risk. These differences come about because
developments such as new or improved products or methods, which would be
relatively insignificant to a large company, may have a substantial impact on
the earnings and revenues of a small company and create a greater demand and a
higher value for its shares. However, a new product failure, which could readily
be absorbed by a large company, can cause a rapid decline in the value of the
shares of a smaller company. Hence, it could be expected that funds investing in
smaller companies would be more volatile than funds investing in larger
companies.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS AND RISKS

For additional information, see "ADDITIONAL INVESTMENT RESTRICTIONS" in the
Statement of Additional Information.

FOREIGN SECURITIES

Each of the funds may invest an unlimited amount of its assets in the securities
of foreign issuers, primarily from developed markets, when these securities meet
its standards of selection. The funds may make such investments either directly
in foreign securities, or by purchasing Depositary Receipts (" DRs") for foreign
securities. DRs are securities listed on exchanges or quoted in the
over-the-counter market in one country but represent the shares of issuers
domiciled in other countries. DRs may be sponsored or unsponsored. Direct
investments in foreign securities may be made either on foreign securities
exchanges or in the over-the-counter markets.

Subject to their individual investment objectives and policies, the funds may
invest in common stocks, convertible securities, preferred stocks, bonds, notes
and other debt securities of foreign issuers, and debt securities of foreign
governments and their agencies. The funds will limit their purchase of debt
securities to investment grade obligations.

Investments in foreign securities may present certain risks, including those
resulting from fluctuations in currency exchange rates, future political and
economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.

FORWARD CURRENCY EXCHANGE CONTRACTS

Some of the foreign securities held by the funds may be denominated in foreign
currencies. Other securities, such as DRs, may be denominated in U.S. dollars,
but have a value that is dependent on the performance of a foreign security, as
valued in the currency of its home country. As a result, the value of a fund's
portfolio may be affected by changes in the exchange rates between foreign
currencies and the U.S. dollar, as well as by changes in the market values of
the securities themselves. The performance of foreign currencies relative to the
U.S. dollar may be a factor in the overall performance of a fund.

To protect against adverse movements in exchange rates between currencies, the
funds may, for hedging purposes only, enter into forward currency exchange
contracts. A forward currency exchange contract obligates the fund to purchase
or sell a specific currency at a future date at a specific price.

A fund may elect to enter into a forward currency exchange contract with respect
to a specific purchase or sale of a security, or with respect to the fund's
portfolio positions generally.

By entering into a forward currency exchange contract with respect to the
specific purchase or sale of a security denominated in a foreign currency, a
fund can "lock in" an exchange rate between the trade and settlement dates for
that purchase or sale. This practice is sometimes referred to as "transaction

Prospectus Information Regarding the Funds 11

hedging." Each fund may enter into transaction hedging contracts with respect to
all or a substantial portion of its foreign securities trades.

When the manager believes that a particular currency may decline in value
compared to the U.S. dollar, a fund may enter into forward currency exchange
contracts to sell the value of some or all of the fund's portfolio securities
either denominated in, or whose value is tied to, that currency. This practice
is sometimes referred to as "portfolio hedging." A fund may not enter into a
portfolio hedging transaction where it would be obligated to deliver an amount
of foreign currency in excess of the aggregate value of its portfolio securities
or other assets denominated in, or whose value is tied to, that currency.

Each fund will make use of portfolio hedging to the extent deemed appropriate by
the manager. However, it is anticipated that a fund will enter into portfolio
hedges much less frequently than transaction hedges.

If a fund enters into a forward currency exchange contract, the fund, when
required, will instruct its custodian bank to segregate cash or liquid
high-grade securities in a separate account in an amount sufficient to cover its
obligation under the contract. Those assets will be valued at market daily, and
if the value of the segregated securities declines, additional cash or
securities will be added so that the value of the account is not less than the
amount of the fund's commitment. At any given time, no more than 10% of a fund's
assets will be committed to a segregated account in connection with portfolio
hedging transactions.

Predicting the relative future values of currencies is very difficult, and there
is no assurance that any attempt to protect a fund against adverse currency
movements through the use of forward currency exchange contracts will be
successful. In addition, the use of forward currency exchange contracts tends to
limit the potential gains that might result from a positive change in the
relationships between the foreign currency and the U.S. dollar.

PORTFOLIO TURNOVER

The total portfolio turnover rates of the funds are shown in the Financial
Highlights tables on pages 5-9 of this Prospectus.

Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to a fund's objectives. The
manager believes that the rate of portfolio turnover is irrelevant when it
determines a change is in order to achieve those objectives and accordingly, the
annual portfolio turnover rate cannot be anticipated.

The portfolio turnover of each fund may be higher than other mutual funds with
similar investment objectives. Higher turnover would generate correspondingly
greater brokerage commissions, which is a cost that the funds pay directly.
Portfolio turnover may also affect the character of capital gains, if any,
realized and distributed by a fund since short-term capital gains are taxable as
ordinary income.

REPURCHASE AGREEMENTS

Each fund may invest in repurchase agreements when such transactions present an
attractive short-term return on cash that is not otherwise committed to the
purchase of securities pursuant to the investment policies of that fund.

A repurchase agreement occurs when, at the time the fund purchases an
interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to repurchase it on a
specified date in the future at an agreed-upon price. The repurchase price
reflects an agreed-upon interest rate during the time the fund's money is
invested in the security.

Since the security purchased constitutes security for the repurchase obligation,
a repurchase agreement can be considered a loan collateralized by the security
purchased. The fund's risk is the ability of the seller to pay the agreed-upon
repurchase price on the repurchase date. If the seller defaults, the fund may
incur costs in disposing of the collateral, which would reduce the amount
realized thereon. If the seller seeks relief under the bankruptcy laws, the
disposition of the collateral may be delayed or limited. To the extent the value
of the security decreases, the fund could experience a loss.

12 Information Regarding the Funds American Century Investments

dealers who are deemed creditworthy pursuant to criteria adopted by
the funds' Board of Directors.

No fund will invest more than 15% of its assets in repurchase agreements
maturing in more than seven days.

DERIVATIVE SECURITIES

To the extent permitted by its investment objectives and policies, each of the
funds may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as "
index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed securities
are in many respects like any other investment, although they may be more
volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to use
them. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a fund from exposure to changing interest rates, securities
prices, or currency exchange rates and for cash management purposes as a
low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.

No fund may invest in a derivative security unless the reference index or the
instrument to which it relates is an eligible investment for the fund. For
example, a security whose underlying value is linked to the price of oil would
not be a permissible investment since the funds may not invest in oil and gas
leases or futures.

The return on a derivative security may increase or decrease, depending upon
changes in the reference index or instrument to which it relates.

There are a range of risks associated with derivative investments, including:

* the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the portfolio manager
anticipates;

* the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange, either
of which may make it difficult or impossible to close out a position when
desired;

* the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and

* the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the manager's policy regarding investments
in derivative securities. That policy specifies factors that must be considered
in connection with a purchase of derivative securities. The policy also
establishes a committee that must review certain proposed purchases before the
purchases can be made. The manager will report on fund activity in derivative
securities to the Board of Directors as necessary. In addition, the board will
review the manager's policy for investments in derivative securities annually.

PORTFOLIO LENDING

In order to realize additional income, each fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including the
right to call the loan to enable the fund to vote the securities. Such loans may
not exceed one-third of the fund's net assets taken at market. Interest on
loaned securities may not exceed 10% of the annual gross income of the fund
(without offset for realized capital gains). The portfolio lending policy
described

Prospectus Information Regarding the Funds 13

in this paragraph is a fundamental policy that may be changed only by a vote of
a majority of fund shareholders.

WHEN-ISSUED SECURITIES

Each of the funds may sometimes purchase new issues of securities on a
when-issued basis without limit when, in the opinion of the manager, such
purchases will further the investment objectives of the fund. The price of
when-issued securities is established at the time the commitment to purchase is
made. Delivery of and payment for these securities typically occur 15 to 45 days
after the commitment to purchase. Market rates of interest on debt securities at
the time of delivery may be higher or lower than those contracted for on the
when-issued security. Accordingly, the value of such security may decline prior
to delivery, which could result in a loss to the fund. A separate account for
each fund consisting of cash or high-quality liquid debt securities in an amount
at least equal to the when-issued commitments will be established and maintained
with the custodian. No income will accrue to the fund prior to delivery.

RULE 144A SECURITIES

The funds may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the funds'
criteria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional investors rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.

With respect to securities eligible for resale under Rule 144A, the staff of the
Securities and Exchange Commission has taken the position that the liquidity of
such securities in the portfolio of a fund offering redeemable securities is a
question of fact for the board of directors to determine, such determination to
be based upon a consideration of the readily available trading markets and the
review of any contractual restrictions. Accordingly, the Board of Directors is
responsible for developing and establishing the guidelines and procedures for
determining the liquidity of Rule 144A securities. As allowed by Rule 144A, the
Board of Directors of the funds has delegated the day-to-day function of
determining the liquidity of Rule 144A securities to the manager. The board
retains the responsibility to monitor the implementation of the guidelines and
procedures it has adopted.

Since the secondary market for such securities is limited to certain qualified
institutional investors, the liquidity of such securities may be limited
accordingly and a fund may, from time to time, hold a Rule 144A security that is
illiquid. In such an event, the funds' manager will consider appropriate
remedies to minimize the effect on such fund's liquidity. No fund may invest
more than 15% of its assets in illiquid securities (securities that may not be
sold within seven days at approximately the price used in determining the net
asset value of fund shares).

SHORT SALES

Each fund may engage in short sales if, at the time of the short sale, the fund
owns or has the right to acquire an equal amount of the security being sold
short at no additional cost. These transactions allow a fund to hedge against
price fluctuations by locking in a sale price for securities it does not wish to
sell immediately.

A fund may make a short sale when it wants to sell the security it owns at a
current attractive price, but also wishes to defer recognition of gain or loss
for federal income tax purposes and for purposes of satisfying certain tests
applicable to regulated investment companies under the Internal Revenue Code and
Regulations.

PERFORMANCE ADVERTISING

From time to time, the funds may advertise performance data. Fund performance
may be shown by presenting one or more performance measurements, including
cumulative total return or average annual total return, and yield. Performance
data may be quoted separately for the Investor Class and for the other classes.

14 Information Regarding the Funds American Century Investments

compound return over a stated period of time that would have produced the fund's
cumulative total return over the same period if the fund's performance had
remained constant throughout.

A quotation of yield reflects a fund's income over a stated period of time
expressed as a percentage of the fund's share price.

Yields are calculated according to accounting methods that are standardized in
accordance with SEC rules for all stock and bond funds. Because yield accounting
methods differ from the methods used for other accounting purposes, a fund's
yield may not equal the income paid on its shares or the income reported in the
fund's financial statements.

The funds may also include in advertisements data comparing performance with the
performance of non-related investment media, published editorial comments and
performance rankings compiled by independent organizations (such as Lipper
Analytical Services or Donoghue's Money Fund Report) and publications that
monitor the performance of mutual funds. Performance information may be quoted
numerically or may be presented in a table, graph or other illustration. In
addition, fund performance may be compared to well-known indices of market
performance including the Standard & Poor's (S&P) 500 Index and the Dow Jones
Industrial Average. Fund performance may also be compared, on a relative basis,
to other funds in our fund family. This relative comparison, which may be based
upon historical or expected fund performance, volatility or other fund
characteristics, may be presented numerically, graphically or in text. Fund
performance may also be combined or blended with other funds in our fund family,
and that combined or blended performance may be compared to the same indices to
which individual funds may be compared.

All performance information advertised by the funds is historical in nature and
is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.

Prospectus Information Regarding the Funds 15

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

AMERICAN CENTURY INVESTMENTS

The funds offered by this Prospectus are a part of the American Century
Investments family of mutual funds. Our family provides a full range of
investment opportunities, from the aggressive equity growth funds in our
Twentieth Century Group, to the fixed income funds in our Benham Group, to the
moderate risk and specialty funds in our American Century Group. Please call
1-800-345-2021 for a brochure or prospectuses for the other funds in the
American Century Investments family.

INVESTING IN AMERICAN CENTURY

The following section explains how to invest in American Century funds,
including purchases, redemptions, exchanges and special services. You will find
more detail about doing business with us by referring to the Investor Services
Guide that you will receive when you open an account.

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"EMPLOYER-SPONSORED RETIREMENT PLANS AND INSTITUTIONAL ACCOUNTS," page 22.

HOW TO OPEN AN ACCOUNT

To open an account, you must complete and sign an application, furnishing your
taxpayer identification number. (You must also certify whether you are subject
to withholding for failing to report income to the IRS.) Investments received
without a certified taxpayer identification number will be returned.

The minimum investment is $2,500 [$1,000 for IRA and Uniform Gifts/Transfers to
Minors Acts ("UGMA/UTMA") accounts]. These minimums will be waived if you
establish an automatic investment plan to your account that is the equivalent of
at least $50 per month. See "AUTOMATIC INVESTMENT PLAN," page 17.

The minimum investment requirements may be different for some types of
retirement accounts. Call one of our Investor Services Representatives for
information on our retirement plans, which are available for individual
investors or for those investing through their employers.

PLEASE NOTE: IF YOU REGISTER YOUR ACCOUNT AS BELONGING TO MULTIPLE OWNERS (E.G.,
AS JOINT TENANTS), YOU MUST PROVIDE US WITH SPECIFIC AUTHORIZATION ON YOUR
APPLICATION IN ORDER FOR US TO ACCEPT WRITTEN OR TELEPHONE INSTRUCTIONS FROM A
SINGLE OWNER. OTHERWISE, ALL OWNERS WILL HAVE TO AGREE TO ANY TRANSACTIONS THAT
INVOLVE THE ACCOUNT (WHETHER THE TRANSACTION REQUEST IS IN WRITING OR OVER THE
TELEPHONE).

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S. dollars to
American Century Investments.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or mail
a completed application and provide your bank with the following information:

* RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

* BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

* BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

* REFERENCE FOR BENEFICIARY (RFB):
American Century account number into which you are investing. If more than
one, leave blank and see Bank to Bank Information below.

* ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

16 How to Invest with American Century Investments American Century Investments

* BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):

* Taxpayer identification or Social Security number

* If more than one account, account numbers and amount to be invested in each
account.

* Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA or SARSEP-IRA.

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information on
opening an account by exchanging from another American Century account. See
this page for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one of our
Investors Centers, located at:

4500 Main Street
Kansas City, Missouri 64111

1665 Charleston Road
Mountain View, California 94043

2000 S. Colorado Blvd.
Denver, Colorado 80222

SUBSEQUENT INVESTMENTS

Subsequent investments may be made by an automatic bank, payroll or government
direct deposit (see "AUTOMATIC INVESTMENT PLAN," this page) or by any of the
methods below. The minimum investment requirement for subsequent investments:
$250 for checks submitted without the remittance portion of a previous statement
or confirmation, $50 for all other types of subsequent investments.

BY MAIL

When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (PLEASE BE AWARE THAT THE INVESTMENT MINIMUM FOR
SUBSEQUENT INVESTMENTS IS HIGHER WITHOUT AN INVESTMENT SLIP.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account. You may call an Investor Services Representative or use our
Automated Information Line.

BY ONLINE ACCESS

Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 16 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors Centers.
The locations of our three Investors Centers are listed on this page.

AUTOMATIC INVESTMENT PLAN

You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must be
at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application to
receive more information. If you would like to add a direct deposit to an
existing account, please call one of our Investor Services Representatives.

HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER

As long as you meet any minimum investment requirements, you may exchange your
fund shares to our other funds up to six times per year per account. An exchange
request will be processed the same day it is received, if it is received before
the funds' net asset values are calculated, which is one hour prior to the close
of the New York Stock Exchange for the Benham Target Maturities Trust, and at
the close of the Exchange for all of our other funds.

Prospectus How to Invest with American Century Investments 17

For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an Automatic
Exchange Plan between any two funds in the amount of at least $50 per month. See
our Investor Services Guide for further information about exchanges.

If, in any 90-day period, the total of your exchanges and your redemptions from
any one account exceeds the lesser of $250,000 or 1% of the fund's assets,
further exchanges will be subject to special requirements to comply with our
policy on large redemptions. See "SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS,"
page 19.

BY MAIL

You may direct us in writing to exchange your shares from one American Century
account to another. For additional information, please see our Investor Services
Guide.

BY TELEPHONE

You can make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line--see page 20) if you have
authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to get the appropriate form.

BY ONLINE ACCESS

You can make exchanges online if you have authorized us to accept instructions
over the Internet. You can authorize this by selecting "Full Services" on your
application or by calling us at 1-800-345-2021 to get the appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will be made
at the next net asset value determined after a complete redemption request is
received. For large redemptions, please read "SPECIAL REQUIREMENTS FOR LARGE
REDEMPTIONS," on page 19.

Please note that a request to redeem shares in an IRA or 403(b) plan must be
accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.

BY MAIL

Your written instructions to redeem shares may be made either by a redemption
form, which we will send you upon request, or by a letter to us. Certain
redemptions may require a signature guarantee. Please see "SIGNATURE GUARANTEE,"
page 19.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may redeem your
shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

If you have at least a $10,000 balance in your account, you may redeem shares by
Check-A-Month. A Check-A-Month plan automatically redeems enough shares each
month to provide you with a check in an amount you choose (minimum $50). To set
up a Check-A-Month plan, please call and request our Check-A-Month brochure.

OTHER AUTOMATIC REDEMPTIONS

If you have at least a $10,000 balance in your account, you may elect to make
redemptions automatically by authorizing us to send funds to you or to your
account at a bank or other financial institution. To set up automatic
redemptions, call one of our Investor Services Representatives.

REDEMPTION PROCEEDS

Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up to
15 days or longer to send redemption proceeds (to allow your purchase funds to
clear). No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption proceeds are sent.

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered owner
of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.

18 How to Invest with American Century Investments American Century Investments

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.

Your bank will usually receive wired funds within 48 hours of transmission.
Funds transferred by ACH may be received up to seven days after transmission.
Wired funds are subject to a $10 fee to cover bank wire charges, which is
deducted from redemption proceeds. Once the funds are transmitted, the time of
receipt and the funds' availability are not under our control.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

We have elected to be governed by Rule 18f-1 under the Investment Company Act,
which obligates each fund make certain redemptions in cash. This requirement to
pay redemptions in cash applies to situations where one shareholder redeems,
during any 90-day period, up to the lesser of $250,000 or 1% of the assets of
the fund. Although redemptions in excess of this limitation will also normally
be paid in cash, we reserve the right under unusual circumstances to honor these
redemptions by making payment in whole or in part in readily marketable
securities (a "redemption-in-kind").

If payment is made in securities, the securities will be selected by the fund,
will be valued in the same manner as they are in computing the fund's net asset
value and will be provided without prior notice.

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

Despite the funds' right to redeem fund shares through a redemption-in-kind, we
do not expect to exercise this option unless a fund has an unusually low level
of cash to meet redemptions and/or is experiencing unusually strong demands for
its cash. Such a demand might be caused, for example, by extreme market
conditions that result in an abnormally high level of redemption requests
concentrated in a short period of time. Absent these or similar circumstances,
we expect redemptions in excess of $250,000 to be paid in cash in any fund with
assets of more than $50 million if total redemptions from any one account in any
90-day period do not exceed one-half of 1% of the total assets of the fund.

REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS

Whenever the shares held in an account have a value of less than the required
minimum, a letter will be sent advising you to either bring the value of the
shares held in the account up to the minimum or to establish an automatic
investment that is the equivalent of at least $50 per month. If action is not
taken within 90 days of the letter's date, the shares held in the account will
be redeemed and the proceeds from the redemption will be sent by check to your
address of record. We reserve the right to increase the investment minimums.

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a signature
guarantee. Which transactions will require a signature guarantee will depend on
which service options you elect when you open your account. For example, if you
choose "In Writing Only," a signature guarantee is required when:

* redeeming more than $25,000; or

* establishing or increasing a Check-A-Month or automatic transfer on an
existing account.

You can obtain a signature guarantee from a bank or trust company, credit union,
broker-dealer, securities exchange or association, clearing agency or savings
association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if you
live outside the United States and would like to know how to obtain a signature
guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any transaction, or to
change this policy at any time.

Prospectus How to Invest with American Century Investments 19

SPECIAL SHAREHOLDER SERVICES

We offer several service options to make your account easier to manage. These
are listed on the account application. Please make note of these options and
elect the ones that are appropriate for you. Be aware that the "Full Services"
option offers you the most flexibility. You will find more information about
each of these service options in our Investor Services Guide.

Our special shareholder services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a week, at
1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.

ONLINE ACCOUNT ACCESS

You may contact us 24 hours a day, seven days a week, at www.americancentury.com
to access your fund's daily share price, receive updates on major market indexes
and view historical performance of your fund. If you select "Full Services" on
your application, you can use your personal access code and Social Security
number to view your account balance and account activity, make subsequent
investments from your bank account or exchange shares from one fund to another.

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to buy shares
of a variable-priced fund by exchange from one of our money market funds, or a
price at which to sell shares of a variable-priced fund by exchange to one of
our money market funds. The designated purchase price must be equal to or lower,
or the designated sale price equal to or higher, than the variable-priced fund's
net asset value at the time the order is placed. If the designated price is met
within 90 calendar days, we will execute your exchange order automatically at
that price (or better). Open orders not executed within 90 days will be
canceled.

If the fund you have selected deducts a distribution from its share price, your
order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.

Because of their time-sensitive nature, open order transactions are accepted
only by telephone or in person. These transactions are subject to exchange
limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.

TAX-QUALIFIED RETIREMENT PLANS

Each fund is available for your tax-deferred retirement plan. Call or write us
and request the appropriate forms for:

* Individual Retirement Accounts (IRAs);

* 403(b)plans for employees of public school
systems and non-profit organizations; or

* Profit sharing plans and pension plans for
corporations and other employers.

If your IRA and 403(b) accounts do not total $10,000, each account is subject to
an annual $10 fee, up to a total of $30 per year.

You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.

IMPORTANT POLICIES REGARDING YOUR INVESTMENTS

Every account is subject to policies that could affect your investment. Please
refer to the Investor Services Guide for further information about the policies
discussed below, as well as further detail about the services we offer.

(1) We reserve the right for any reason to suspend the offering of shares for a
period of time, or to reject any specific purchase order (including

20 How to Invest with American Century Investments American Century Investments

purchases by exchange). Additionally, purchases may be refused if, in the
opinion of the manager, they are of a size that would disrupt the
management of the fund.

(3) Shares being acquired must be qualified for sale in your state of
residence.

(4) Transactions requesting a specific price and date, other than open orders,
will be refused. Once you have mailed or otherwise transmitted your
transaction instructions to us, they may not be modified or canceled.

(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require evidence
satisfactory to us of the authority of the individual making the request.

(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include requesting
personal identification from callers, recording telephone calls, and
providing written confirmations of telephone transactions. These procedures
are designed to protect shareholders from unauthorized or fraudulent
instructions. If we do not employ reasonable procedures to confirm the
genuineness of instructions, then we may be liable for losses due to
unauthorized or fraudulent instructions. The company, its transfer agent
and investment advisor will not be responsible for any loss due to
instructions they reasonably believe are genuine.

(7) All signatures should be exactly as the name appears in the registration.
If the owner's name appears in the registration as Mary Elizabeth Jones,
she should sign that way and not as Mary E. Jones.

(8) Unusual stock market conditions have in the past resulted in an increase in
the number of shareholder telephone calls. If you experience difficulty in
reaching us during such periods, you may send your transaction instructions
by mail, express mail or courier service, or you may visit one of our
Investors Centers. You may also use our Automated Information Line if you
have requested and received an access code and are not attempting to redeem
shares.

(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to
cover the penalty the IRS will impose on us for failure to report your
correct taxpayer identification number on information reports.

(10) We will perform special inquiries on shareholder accounts. A research fee
of $15 per hour may be applied.

REPORTS TO SHAREHOLDERS

At the end of each calendar quarter, we will send you a consolidated statement
that summarizes all of your American Century holdings, as well as an individual
statement for each fund you own that reflects all year-to-date activity in your
account. You may request a statement of your account activity at any time.

With the exception of most automatic transactions, each time you invest, redeem,
transfer or exchange shares, we will send you a confirmation of the transaction.
See the Investor Services Guide for more detail.

CAREFULLY REVIEW ALL THE INFORMATION RELATING TO TRANSACTIONS ON YOUR STATEMENTS
AND CONFIRMATIONS TO ENSURE THAT YOUR INSTRUCTIONS WERE ACTED ON PROPERLY.
PLEASE NOTIFY US IMMEDIATELY IN WRITING IF THERE IS AN ERROR. IF YOU FAIL TO
PROVIDE NOTIFICATION OF AN ERROR WITH REASONABLE PROMPTNESS, I.E., WITHIN 30
DAYS OF NON-AUTOMATIC TRANSACTIONS OR WITHIN 30 DAYS OF THE DATE OF YOUR
CONSOLIDATED QUARTERLY STATEMENT, IN THE CASE OF AUTOMATIC TRANSACTIONS, WE WILL
DEEM YOU TO HAVE RATIFIED THE TRANSACTION.

No later than January 31 of each year, we will send you reports that you may use
in completing your U.S. income tax return. See the Investor Services Guide for
more information.

Prospectus How to Invest with American Century Investments 21

Each year, we will send you an annual and a semiannual report relating to your
fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.

EMPLOYER-SPONSORED RETIREMENT PLANS AND INSTITUTIONAL ACCOUNTS

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the
funds, exchange them for shares of other American Century funds, and redeem them
will depend on the terms of your plan.

If you own or are considering purchasing fund shares through a bank,
broker-dealer, insurance company or other financial intermediary, your ability
to purchase, exchange and redeem shares will depend on your agreement with, and
the policies of, such financial intermediary.

You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your plan administrator or financial intermediary.

22 How to Invest with American Century Investments American Century Investments

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net asset
value is determined by calculating the total value of a fund's assets, deducting
total liabilities and dividing the result by the number of shares outstanding.
Net asset value for the funds offered by this Prospectus is determined at the
close of regular trading on each day that the New York Stock Exchange is open.

Investments and requests to redeem or exchange shares will receive the share
price next determined after receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents before the close of business on the
New York Stock Exchange, usually 3 p.m. Central time, are effective on, and will
receive the price determined, that day as of the close of the Exchange.
Investment, redemption and exchange requests received thereafter are effective
on and receive the price determined as of, the close of the Exchange on the next
day the Exchange is open.

Investments are considered received only when payment is received by us. Wired
funds are considered received on the day they are deposited in our bank account
if they are deposited before the close of business on the Exchange.

Investments by telephone pursuant to your prior authorization to us to draw on
your bank account are considered received at the time of your telephone call.

Investment and transaction instructions received by us on any business day by
mail prior to the close of business on the Exchange will receive that day's
price. Investments and instructions received after that time will receive the
price determined on the next business day.

If you invest in fund shares through an employer-sponsored retirement plan or
other financial intermediary, it is the responsibility of your plan recordkeeper
or financial intermediary to transmit your purchase, exchange and redemption
requests to the funds' transfer agent prior to the applicable cut-off time for
receiving orders and to make payment for any purchase transactions in accordance
with the funds' procedures or any contractual arrangements with the funds or the
funds' distributor in order for you to receive that day's price.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be summarized as
follows:

The portfolio securities of each fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.

Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the most recent mean
of the bid and asked prices provided by investment dealers in accordance with
procedures established by the Board of Directors.

The value of an exchange-traded foreign security is determined in its national
currency as of the close of trading on the foreign exchange on which it is
traded or as of the close of business on the New York Stock Exchange, if that is
earlier. That value is then exchanged to dollars at the prevailing foreign
exchange rate.

Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close

Prospectus Additional Information You Should Know 23

of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.

Trading of these securities in foreign markets may not take place on every New
York Stock Exchange business day. In addition, trading may take place in various
foreign markets on Saturdays or on other days when the New York Stock Exchange
is not open and on which a fund's net asset value is not calculated. Therefore,
such calculation does not take place contemporaneously with the determination of
the prices of many of the portfolio securities used in such calculation and the
value of a fund's portfolio may be affected on days when shares of the fund may
not be purchased or redeemed.

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset values of the Investor Class of the funds are published in leading
newspapers daily. The net asset value may also be obtained by calling us or by
accessing our Web site at www.americancentury.com.

DISTRIBUTIONS

In general, distributions from net investment income and net realized securities
gains, if any, are declared and paid once a year, but the funds may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code, in all events in a manner consistent
with the provisions of the Investment Company Act. Distributions from investment
income and from net profits realized on the sale of securities, if any, will be
declared annually on or before December 31.

THE OBJECTIVE OF THESE FUNDS IS CAPITAL APPRECIATION AND NOT THE PRODUCTION OF
DISTRIBUTIONS. YOU SHOULD MEASURE THE SUCCESS OF YOUR INVESTMENT BY THE VALUE OF
YOUR INVESTMENT AT ANY GIVEN TIME AND NOT BY THE DISTRIBUTIONS YOU RECEIVE.

Participants in employer-sponsored retirement or savings plan must reinvest all
distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 59(1)/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date. Please consult our Investor Services Guide for
further information regarding your distribution options.

A distribution on shares of a fund does not increase the value of your shares or
your total return. At any given time the value of your shares includes the
undistributed net gains, if any, realized by the fund on the sale of portfolio
securities, and undistributed dividends and interest received, less fund
expenses.

Because such gains and dividends are included in the value of your shares, when
they are distributed the value of your shares is reduced by the amount of the
distribution. If you buy your shares through a taxable account just before the
distribution, you will pay the full price for your shares, and then receive a
portion of the purchase price back as a taxable distribution. See "TAXES," this
page.

TAXES

Each fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders,
it pays no income tax.

TAX-DEFERRED ACCOUNTS

If fund shares are purchased through tax-deferred accounts, such as a qualified
employer-sponsored retirement or savings plan, income and capital gains
distributions paid by the funds will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.

Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.

24 Additional Information You Should Know American Century Investments

TAXABLE ACCOUNTS

If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income. Distributions from net long-term capital gains are taxable as
long-term capital gains regardless of the length of time you have held the
shares on which such distributions are paid. However, you should note that any
loss realized upon the sale or redemption of shares held for six months or less
will be treated as a long-term capital loss to the extent of any distribution of
long-term capital gain to you with respect to such shares.

Dividends and interest received by a fund on foreign securities may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Foreign countries generally do not impose taxes on capital gains in
respect of investments by non-resident investors. The foreign taxes paid by a
fund will reduce its dividends.

If more than 50% of the value of a fund's total assets at the end of each
quarter of its fiscal year consists of securities of foreign corporations, the
fund may qualify for and make an election with the Internal Revenue Service with
respect to such fiscal year so that fund shareholders may be able to claim a
foreign tax credit in lieu of a deduction for foreign income taxes paid by the
fund. If such an election is made, the foreign taxes paid by the fund will be
treated as income received by you.

If a fund purchases the securities of certain foreign investment funds or trusts
called passive foreign investment companies, capital gains on the sale of such
holdings will be deemed to be ordinary income regardless of how long the fund
holds its investment. The fund may also be subject to corporate income tax and
an interest charge on certain dividends and capital gains earned from these
investments, regardless of whether such income and gains are distributed to
shareholders. In the alternative, the fund may elect to recognize cumulative
gains on such investments as of the last day of its fiscal year and distribute
it to shareholders.

Distributions are taxable to you regardless of whether they are taken in cash or
reinvested, even if the value of your shares is below your cost. If you purchase
shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) will not have increased. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains.

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

If you have not complied with certain provisions of the Internal Revenue Code
and Regulations, we are required by federal law to withhold and remit to the IRS
31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.

Redemption of shares of a fund (including redemption made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss

Prospectus Additional Information You Should Know 25

in an amount equal to the difference between the basis of the shares and the
amount received. Assuming that shareholders hold such shares as a capital asset,
the gain or loss will be a capital gain or loss and will generally be long term
if shareholders have held such shares for a period of more than one year. If a
loss is realized on the redemption of fund shares, the reinvestment in
additional fund shares within 30 days before or after the redemption may be
subject to the "wash sale" rules of the Code, resulting in a postponement of the
recognition of such loss for federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

Under the laws of the State of Maryland, the Board of Directors is responsible
for managing the business and affairs of the funds. Acting pursuant to an
investment management agreement entered into with the funds, American Century
Investment Management, Inc. serves as the investment manager of the funds. Its
principal place of business is American Century Tower, 4500 Main Street, Kansas
City, Missouri 64111. The manager has been providing investment advisory
services to investment companies and institutional clients since it was founded
in 1958.

In June 1995, American Century Companies, Inc. ("ACC"), the parent of the
manager, acquired Benham Management International, Inc. In the acquisition,
Benham Management Corporation ("BMC"), the investment advisor to the Benham
Group of mutual funds, became a wholly owned subsidiary of ACC. Certain
employees of BMC provide investment management services to funds managed by the
manager, while certain employees of the manager provide investment management
services to funds managed by BMC.

The manager supervises and manages the investment portfolios of each fund and
directs the purchase and sale of its investment securities. It utilizes teams of
portfolio managers, assistant portfolio managers and analysts acting together to
manage the assets of the funds. The teams meet regularly to review portfolio
holdings and to discuss purchase and sale activity. The teams adjust holdings in
the funds' portfolios as they deem appropriate in pursuit of the funds'
investment objectives. Individual portfolio manager members of the team may also
adjust portfolio holdings of the funds as necessary between team meetings.

The portfolio manager members of the teams managing the funds described in this
Prospectus and their work experience for the last five years are as follows:

JAMES E. STOWERS III, President and Portfolio Manager, joined American Century
in 1981. He is a member of the teams that manage Select and Ultra.

CHARLES M. DUBOC, Senior Vice President and Portfolio Manager, joined American
Century in August 1985, and served as Fixed Income Portfolio Manager from that
time until April 1993. In April 1993, Mr. Duboc joined American Century's equity
investment efforts. He is a member of the team that manages Select.

CHRISTOPHER K. BOYD, Vice President and Portfolio Manager, joined American
Century in March 1988 as an Investment Analyst, a position he held until
December 1990. At that time he was promoted to Assistant Portfolio Manager, and
then was promoted to Portfolio Manager in December 1992. He is a member of the
team that manages Growth.

GLENN A. FOGLE, Vice President and Portfolio Manager, joined American Century in
September 1990 as an Investment Analyst, a position he held until March 1993. At
that time he was promoted to Portfolio Manager. He is a member of the team that
manages Vista.

NANCY B. PRIAL, Vice President and Portfolio Manager, joined American Century in
February 1994 as a Portfolio Manager. For more than four years prior to joining
American Century, Ms. Prial served as Senior Vice President and Portfolio
Manager at Frontier Capital Management Company, Boston, Massachusetts. She is a
member of the team that manages Heritage.

KEVIN M. LEWIS, Portfolio Manager, joined American Century in October 1995.
Prior to that he served as a Portfolio Manager for Virtus Capital Management,
Richmond, Virginia, from January 1995 to October 1995. Prior to that, he was a
Portfolio Manager for Signet Trust Company, Richmond,

26 Additional Information You Should Know American Century Investments

Virginia. Mr. Lewis is a member of the team that manages Heritage.

JOHN D. SEITZER, Portfolio Manager, joined American Century in June 1993 as an
Investment Analyst, a position he held until July 1996. At that time he was
promoted to Portfolio Manager. Prior to joining American Century, Mr. Seitzer
attended Indiana University from August 1991 to June 1993, where he obtained his
MBA degree. Mr. Seitzer is a member of the team that manages Vista.

JAMES A. STARK, Portfolio Manager, joined American Century in April 1993 as an
Investment Analyst, a position he held until July 1996. At that time, he was
promoted to Portfolio Manager. Prior to joining American Century, Mr. Stark was
an Investment Analyst with Kemper Financial Services from 1989 to 1993. Mr.
Stark is a member of the team that manages Vista.

BRUCE A. WIMBERLY, Portfolio Manager, joined American Century in September 1994
as an Investment Analyst, a position he held until July 1996. At that time he
was promoted to Portfolio Manager. Prior to joining American Century, Mr.
Wimberly attended Kellogg Graduate School of Management, Northwestern University
from August 1992 to August 1994, where he obtained his MBA degree. Prior to that
he served as a Research Analyst for Frontier Capital Management Company, Boston,
Massachusetts. Mr. Wimberly is a member of the team that manages Ultra.

JEAN LEDFORD, Portfolio Manager, joined American Century in January 1997 as a
Portfolio Manager. Prior to joining American Century, Ms. Ledford worked for the
State of Wisconsin Investment Board as an Investment Director from 1994 to 1996
and as an Assistant Investment Director from 1983 to 1994. Ms. Ledford is a
member of the team that manages Select.

The activities of the manager are subject only to directions of the funds' Board
of Directors. The manager pays all the expenses of the funds except brokerage,
taxes, interest, fees and expenses of the non-interested person directors
(including counsel fees) and extraordinary expenses.

For the services provided to the Investor Class of the funds, the manager
receives an annual fee of 1% of the average net assets.

On the first business day of each month, each series of shares pays a management
fee to the manager for the previous month at the rate specified. The fee for the
previous month is calculated by multiplying the applicable fee for such series
by the aggregate average daily closing value of the series' net assets during
the previous month, and further multiplying that product by a fraction, the
numerator of which is the number of days in the previous month and the
denominator of which is 365 (366 in leap years).

CODE OF ETHICS

The funds and the manager have adopted a Code of Ethics that restricts personnel
investing practices by employees of the manager and its affiliates. Among other
provisions, the Code of Ethics requires that employees with access to
information about the purchase or sale of securities in the funds' portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.

TRANSFER AND ADMINISTRATIVE SERVICES

American Century Services Corporation, 4500 Main Street, Kansas City, Missouri
64111, acts as transfer agent and dividend-paying agent for the funds. It
provides facilities, equipment and personnel to the funds, and is paid for such
services by the manager.

Certain recordkeeping and administrative services that would otherwise be
performed by the transfer agent may be performed by an insurance company or
other entity providing similar services for various retirement plans using
shares of the funds as a funding medium, by broker-dealers and financial
advisors for their customers investing in shares of American Century or by
sponsors of multi mutual fund no- or low-transaction fee programs. The manager
or an affiliate may enter into contracts to pay them for such recordkeeping and
administrative services out of its unified management fee.

Prospectus Additional Information You Should Know 27

Although there is no sales charge levied by the funds, transactions in shares of
the funds may be executed by brokers or investment advisors who charge a
transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the funds or the
manager. You should be aware of the fact that these transactions may be made
directly with American Century without incurring such fees.

From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the manager.

The manager and transfer agent are both wholly owned by American Century
Companies, Inc. James E. Stowers Jr., Chairman of the funds' Board of Directors,
controls American Century Companies by virtue of his ownership of a majority of
its common stock.

DISTRIBUTION OF FUND SHARES

The funds' shares are distributed by American Century Investment Services, Inc.
(the "Distributor"), a registered broker-dealer and an affiliate of the funds'
investment manager. The manager pays all expenses for promoting and distributing
the Investor Class of fund shares offered by this Prospectus. The Investor Class
of shares does not pay any commissions or other fees to the Distributor or to
any other broker-dealers or financial intermediaries in connection with the
distribution of fund shares.

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Mutual Funds, Inc., the issuer of the funds, was organized as a
Maryland corporation on July 2, 1990. The corporation commenced operations on
February 28, 1991, the date it merged with Twentieth Century Investors, Inc., a
Delaware corporation which had been in business since October 1958. Pursuant to
the terms of the Agreement and Plan of Merger dated July 27, 1990, the Maryland
corporation was the surviving entity and continued the business of the Delaware
corporation with the same officers and directors, the same shareholders and the
same investment objectives, policies and restrictions.

The principal office of the funds is American Century Tower,
4500 Main Street, P.O. Box 419200, Kansas City, Missouri 64141-6200.
All inquiries may be made by mail to that address, or by telephone to
1-800-345-2021 (international calls: 816-531-5575).

American Century Mutual Funds, Inc. issues 17 series of $.01 par value shares.
Each series is commonly referred to as a fund. The assets belonging to each
series of shares are held separately by the custodian.

American Century offers four classes of each of the funds offered by this
Prospectus: an Investor Class, an Institutional Class, a Service Class, and an
Advisor Class. The shares offered by this Prospectus are Investor Class shares
and have no up-front charges, commissions, or 12b-1 fees.

The other classes of shares are primarily offered to institutional investors or
through institutional distribution channels, such as employer-sponsored
retirement plans or through banks, broker-dealers, insurance companies or other
financial intermediaries. The other classes have different fees, expenses,
and/or minimum investment requirements than the Investor Class. Different fees
and expenses will affect performance. For additional information concerning the
other classes of shares not offered by this Prospectus, call us at
1-800-345-3533 or contact a sales representative or financial intermediary who
offers those classes of shares.

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

28 Additional Information You Should Know American Century Investments

Each share, irrespective of series or class, is entitled to one vote for each
dollar of net asset value applicable to such share on all questions, except for
those matters which must be voted on separately by the series or class of shares
affected. Matters affecting only one series or class are voted upon only by that
series or class.

Shares have non-cumulative voting rights, which means that the holders of more
than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.

Unless required by the Investment Company Act, it will not be necessary for the
funds to hold annual meetings of shareholders. As a result, shareholders may not
vote each year on the election of directors or the appointment of auditors.
However, pursuant to the funds' by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the funds to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.

WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND PROCEDURES
DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL NFORMATION,
WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE SHAREHOLDER
APPROVAL IS EXPRESSLY REQUIRED.

Prospectus Additional Information You Should Know 29

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

PERSON-TO-PERSON ASSISTANCE:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-753-1865

FAX: 816-340-7962

INTERNET: www.americancentury.com

[company logo]

9701
[recycled logo]
SH-BKT-6574 Recycled

PROSPECTUS

[american century logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

TWENTIETH
CENTURY(R)
GROUP

Giftrust

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.

AMERICAN CENTURY INVESTMENTS

BENHAM GROUP(R) AMERICAN CENTURY GROUP TWENTIETH CENTURY GROUP

MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY

Giftrust

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

Giftrust

AMERICAN CENTURY MUTUAL FUNDS, INC.

American Century Mutual Funds, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. One of the funds from our
Twentieth Century Group that invests primarily in equity securities is described
in this Prospectus. Its investment objectives are listed on page 2 of this
Prospectus. The other funds are described in separate prospectuses.

Giftrust is a unique way to give a gift to a child, grandchild or other
individual. You may not invest in the fund. Rather, your gift, which is
irrevocable, will be invested in the fund by the Giftrust Trustee in accordance
with a trust established under a "Giftrust Agreement." The minimum initial gift
requirement for Giftrust is $500.

This Prospectus gives you information about Giftrust that you should know
before making an investment decision. Please read this Prospectus carefully and
retain it for future reference. Additional information is included in the
Statement of Additional Information dated September 3, 1996, and filed with the
Securities and Exchange Commission. It is incorporated into this Prospectus by
reference. To obtain a copy without charge, call or write:

AMERICAN CENTURY INVESTMENTS
4500 Main Street o P.O. Box 419200
Kansas City, Missouri 64141-6200 o 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-753-1865
Internet: www.americancentury.com

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

Prospectus 1

INVESTMENT OBJECTIVE OF THE FUND

AMERICAN CENTURY-TWENTIETH CENTURY GIFTRUST

Giftrust seeks capital growth. It pursues its investment objective by
investing primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation.

There is no assurance that the fund will achieve its investment objective.

NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR FOR THE FUND, AND YOU SHOULD NOT RELY ON ANY
OTHER INFORMATION OR REPRESENTATION.

2 Investment Objective American Century Investments

TABLE OF CONTENTS

Transaction and Operating Expense Table.......................4
Financial Highlights..........................................5

INFORMATION REGARDING THE FUNDS

A Unique Gift.................................................6
Investment Policies of the Fund...............................6
Investment Approach........................................6
Other Investment Practices, Their Characteristics
and Risks..................................................7
Foreign Securities.........................................7
Forward Currency Exchange Contracts........................7
Portfolio Turnover.........................................8
Repurchase Agreements......................................8
Derivative Securities......................................8
Portfolio Lending..........................................9
When-Issued Securities.....................................9
Rule 144A Securities.......................................9
Short Sales................................................10
Performance Advertising.......................................10

HOW TO ESTABLISH A GIFTRUST ACCOUNT

American Century Investments..................................11
Purchase of Fund Shares.......................................11
By Mail..................................................11
By Telephone.............................................11
By Wire..................................................11
Automatic Investments....................................11
Additional Information About Gifts.......................12
Special Shareholder Services..................................12
Online Account Access....................................12
Exchange of Fund Shares.......................................12
How to Redeem Shares..........................................12
By Mail .................................................12
By Telephone.............................................13
By Check-A-Month.........................................13
Signature Guarantee........................................13
Redemption Proceeds...........................................13
By Mail..................................................13
By Wire and ACH..........................................13
Additional Information About Redemptions...................14
Telephone Services............................................14
Investors Line.............................................14
Automated Information Line.................................14
How to Change the Address of Record...........................14
Reports to Shareholders.......................................14
Form 1099-DIV............................................15
Form 1099-B..............................................15

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price...................................................16
When Share Price Is Determined.............................16
How Share Price Is Determined..............................16
Where to Find Information About Share Price................17
Distributions.................................................17
Taxes.........................................................17
Management....................................................18
Investment Management......................................18
Code of Ethics.............................................19
Transfer and Administrative Services.......................19
Distribution of Fund Shares................................19
Further Information About American Century....................19

Prospectus Table of Contents 3

TRANSACTION AND OPERATING EXPENSE TABLE

Giftrust

SHAREHOLDER TRANSACTION EXPENSES(1):

Maximum Sales Load Imposed on Purchases........................... none
Maximum Sales Load Imposed on Reinvested Dividends................ none
Deferred Sales Load............................................... none
Redemption Fee(1)................................................. none
Exchange Fee...................................................... none

ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF NET ASSETS)

Management Fees.................................................. 1.00%
12b-1 Fees....................................................... none
Other Expenses(3)................................................ 0.00%
Total Fund Operating Expenses.................................... 1.00%

EXAMPLE

A $1,000 investment in Giftrust would bear the
expenses set forth to the right, assuming
a 5% annual return and redemption at the
end of each time period. It should be noted 1 year $10
that, in most instances, a gift made in the 3 years 32
fund must be made in trust for a minimum 5 years 55
term of ten years: 10 years 122

(1) A $100 administrative fee will be charged against each Giftrust account
established after March 31, 1996 to help cover the costs incurred as a
result of the Giftrust reaching maturity. See "Investment Policies of the
Fund," page 6.

(2) Redemption proceeds sent by wire are subject to a $10 processing fee.

(3) Other expenses, which include the fees and expenses (including legal
counsel fees) of those directors who are not "interested persons" as
defined in the Investment Company Act, were 0.0014 of 1% of average net
assets for the most recent fiscal year. Also, a $10 fee will be charged
against each Giftrust account for which an annual tax return is filed. See
"Taxes," page 17.

The purpose of the table is to help you understand the various costs and
expenses that an investment in the fund will bear directly or indirectly. The
example set forth above assumes reinvestment of all dividends and distributions
and uses a 5% annual rate of return as required by Securities and Exchange
Commission regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS

GIFTRUST

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The annual report
contains additional performance information and will be made available upon
request and without charge. The information presented is for a share outstanding
throughout the years ended October 31, except as noted.
<TABLE>

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $20.50 $19.23 $13.57 $12.94 $7.25 $9.94 $6.84 $6.67 $8.19 $5.75
Income from Investment Operations
Net Investment (Loss) (.16)(1) (.10) (.09) (.08) (.06) (.05) (.04) (.01) (.04) (.03)
Net Realized and Unrealized Gains
(Losses) on Investment Transactions 6.37 3.28 7.18 1.41 5.77 (1.72) 3.35 1.04 (.23) 2.65
Total from Investment Operations 6.21 3.18 7.09 1.33 5.71 (1.77) 3.31 1.03 (.27) 2.62
Distributions
From Net Realized Gains on
Investment Transactions (1.085) (1.911) (1.425) (.697) (.025) (.924) (.206) (.856) (1.250) (.179)
In Excess of Net Realized Gains
on Investment Transactions -- -- (.007) -- -- -- -- -- -- --
Total Distributions (1.085) (1.911) (1.432) (.697) (.025) (.924) (.206) (.856) (1.250) (.179)
Net Asset Value, End of Period $25.63 $20.50 $19.23 $13.57 $12.94 $7.25 $9.94 $6.84 $6.67 $8.19
Total Return 32.52% 18.75% 55.84% 10.32% 79.04% (19.77%) 49.81% 16.28% (4.00%) 46.67%

Ratios/Supplemental Data

Ratio of Expenses
to Average Net Assets .98% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of Net Investment (Loss) to
Average Net Assets (.7%) (.7%) (.7%) (.7%) (.6%) (.6%) (.5%) (.1%) (.5%) (.4%)
Portfolio Turnover Rate 105% 115% 143% 134% 143% 137% 160% 157% 130% 123%
Average Commission Paid per
Investment Security Traded $.026 --(2) --(2) --(2) --(2) --(2) --(2) --(2) --(2) --(2)
Net Assets, End
of Period (in thousands) $561,112 $265,601 $153,997 $77,518 $54,963 $25,296 $22,541 $13,167 $9,560 $7,127

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

(2) Not computed for period indicated.
</TABLE>

Prospectus Financial Highlights 5

INFORMATION REGARDING THE FUND

A UNIQUE GIFT

A Giftrust is a unique way to give a gift to a child or any individual. You
cannot establish or make investments in a Giftrust for yourself or your spouse,
nor can a Giftrust be established that designates anyone other than an
individual (such as a corporation, partnership or other profit or nonprofit
organization) as a beneficiary. The minimum initial gift in Giftrust is $500.

The shares in a Giftrust are held in trust by an independent trustee until
the maturity date you specify. The duration of the trust may be as long as you
wish, but must be at least 10 years from the time you make the first gift in the
Giftrust or until the recipient reaches the age of majority, whichever is later.
The recipient will then receive the shares in the account. The Giftrust is
irrevocable. Before the maturity date you specify, neither you nor the
beneficiary may amend the terms of the trust in any way.

After the maturity of the Giftrust, the beneficiary may continue to own the
Giftrust shares but, except for reinvestment of distributions, may not make
additional Giftrust investments.

Each Giftrust account for which a tax return is filed will be charged a $10
fee to help off-set a portion of the cost of preparing such return. See "Taxes,"
page 17. Additionally, each maturing Giftrust account established after March
31, 1996 will be charged a $100 administrative fee to help cover the costs
incurred by the Trustee as a result of the Giftrust reaching maturity.

The tax laws applicable to trusts in general are quite complex. You should
consider consulting your tax advisor or attorney before opening a Giftrust
account. For information on Giftrusts and taxes, see "Taxes," page 17.

INVESTMENT POLICIES OF THE FUND

The fund has adopted certain investment restrictions that are set forth in
the Statement of Additional Information. Those restrictions, as well as the
investment objective of the fund identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The fund has implemented additional investment policies
and practices to guide its activities in the pursuit of its investment
objective. These policies and practices, which are described throughout this
Prospectus, are not designated as fundamental policies and may be changed
without shareholder approval.

INVESTMENT APPROACH

Giftrust seeks capital growth by investing in securities, primarily common
stocks, that meet certain fundamental and technical standards of selection
(relating primarily to earnings and revenues acceleration) and have, in the
opinion of the fund's manager, better-than-average potential for appreciation.
So long as a sufficient number of such securities are available, the fund
intends to stay fully invested in these securities regardless of the movement of
stock prices generally. In most circumstances, the fund's actual level of cash
and cash equivalents will fluctuate between 0% and 10% of total assets with 90%
to 100% of its assets committed to equity and equity equivalent investments. The
fund may purchase securities only of companies that have a record of at least
three years continuous operation.

The size of companies in which a fund invests tends to give a fund its own
characteristics of volatility and risk. These differences come about because
developments such as new or improved products or methods, which would be
relatively insignificant to a large company, may have a substantial impact on
the earnings and revenues of a small company and create a greater demand and a
higher value for its shares. However, a new product failure which could readily
be absorbed by a large company can cause a rapid decline in the value of the
shares of a smaller company. Hence, it could be expected that Giftrust will be
relatively more volatile than most of our other growth funds since it tends to
invest in smaller companies.

6 Information Regarding the Fund American Century Investments

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.

FOREIGN SECURITIES

The fund may invest an unlimited amount of its assets in the securities of
foreign issuers, primarily from developed markets, when these securities meet
its standards of selection. The fund may make such investments either directly
in foreign securities, or by purchasing Depositary Receipts ("DRs") for foreign
securities. DRs are securities listed on exchanges or quoted in the
over-the-counter market in one country but represent the shares of issuers
domiciled in other countries. DRs may be sponsored or unsponsored. Direct
investments in foreign securities may be made either on foreign securities
exchanges or in the over-the-counter markets.

The fund may invest in common stocks, convertible securities, preferred
stocks, bonds, notes and other debt securities of foreign issuers, and debt
securities of foreign governments and their agencies. The fund will limit its
purchase of debt securities to investment grade obligations.

Investments in foreign securities may present certain risks, including
those resulting from fluctuations in currency exchange rates, future political
and economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.

FORWARD CURRENCY EXCHANGE CONTRACTS

Some of the foreign securities held by the fund may be denominated in
foreign currencies. Other securities, such as DRs, may be denominated in U.S.
dollars, but have a value that is dependent on the performance of a foreign
security, as valued in the currency of its home country. As a result, the value
of the fund's portfolio may be affected by changes in the exchange rates between
foreign currencies and the U.S. dollar, as well as by changes in the market
values of the securities themselves. The performance of foreign currencies
relative to the U.S. dollar may be a factor in the overall performance of the
fund.

To protect against adverse movements in exchange rates between currencies,
the fund may, for hedging purposes only, enter into forward currency exchange
contracts. A forward currency exchange contract obligates the fund to purchase
or sell a specific currency at a future date at a specific price.

The fund may elect to enter into a forward currency exchange contract with
respect to a specific purchase or sale of a security, or with respect to the
fund's portfolio positions generally.

By entering into a forward currency exchange contract with respect to the
specific purchase or sale of a security denominated in a foreign currency, the
fund can "lock in" an exchange rate between the trade and settlement dates for
that purchase or sale. This practice is sometimes referred to as "transaction
hedging." The fund may enter into transaction hedging contracts with respect to
all or a substantial portion of its foreign securities trades.

When the manager believes that a particular currency may decline in value
compared to the U.S. dollar, the fund may enter into forward currency exchange
contracts to sell the value of some or all of the fund's portfolio securities
either denominated in, or whose value is tied to, that currency. This practice
is sometimes referred to as "portfolio hedging." The fund may not enter into a
portfolio hedging transaction where it would be obligated to deliver an amount
of foreign currency in excess of the aggregate value of its portfolio securities
or other assets denominated in, or whose value is tied to, that currency.

The fund will make use of portfolio hedging to the extent deemed
appropriate by the manager. However, it is anticipated that the fund will enter
into portfolio hedges much less frequently than transaction hedges.

If the fund enters into a forward currency exchange contract, the fund,
when required, will instruct its custodian bank to segregate cash or liquid
high-grade securities in a separate account in an amount sufficient to cover its
obligation under the contract. Those assets will be valued at market daily, and
if the value of the segregated securities declines, additional cash or
securities will be added so that the value of the account is not less than the
amount of the

Prospectus Information Regarding the Fund 7

fund's commitment. At any given time, no more than 10% of the fund's assets will
be committed to a segregated account in connection with portfolio hedging
transactions.

Predicting the relative future values of currencies is very difficult, and
there is no assurance that any attempt to protect the fund against adverse
currency movements through the use of forward currency exchange contracts will
be successful. In addition, the use of forward currency exchange contracts tends
to limit the potential gains that might result from a positive change in the
relationships between the foreign currency and the U.S. dollar.

PORTFOLIO TURNOVER

The portfolio turnover rate of the fund is shown in the Financial
Highlights table on page 5 of this Prospectus.

Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to the fund's objectives.
The manager believes that the rate of portfolio turnover is irrelevant when it
determines a change is in order to achieve those objectives and accordingly, the
annual portfolio turnover rate cannot be anticipated.

The portfolio turnover of the fund may be higher than other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the fund
pays directly. Portfolio turnover may also affect the character of capital
gains, if any, realized and distributed by a fund since short-term capital gains
are taxable as ordinary income.

REPURCHASE AGREEMENTS

The fund may invest in repurchase agreements when such transactions present
an attractive short-term return on cash that is not otherwise committed to the
purchase of securities pursuant to the investment policies of the fund.

Since the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

The fund will limit repurchase agreement transactions to securities issued
by the United States government, its agencies and instrumentalities, and will
enter into such transactions with those banks and securities dealers who are
deemed creditworthy pursuant to criteria adopted by the fund's Board of
Directors.

The fund will invest no more than 15% of its assets in repurchase
agreements maturing in more than seven days.

DERIVATIVE SECURITIES

The fund may invest in securities that are commonly referred to as
"derivative" securities. Generally, a derivative is a financial arrangement, the
value of which is based on, or "derived" from, a traditional security, asset, or
market index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.

8 Information Regarding the Fund American Century Investments

The fund may not invest in a derivative security unless the reference index
or the instrument to which it relates is an eligible investment for the fund.
For example, a security whose underlying value is linked to the price of oil
would not be a permissible investment since the fund may not invest in oil and
gas leases or futures.

The return on a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.

There are a range of risks associated with derivative investments,
including:

o the risk that the underlying security, interest rate, market index or
other financial asset will not move in the direction the portfolio
manager anticipates;

o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the
exchange, either of which may make it difficult or impossible to close
out a position when desired;

o the risk that adverse price movements in an instrument can result in a
loss substantially greater than a fund's initial investment; and

o the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the Board of Directors as necessary. In addition, the
Board will review the manager's policy for investments in derivative securities
annually.

PORTFOLIO LENDING

In order to realize additional income, the fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including the
right to call the loan to enable the fund to vote the securities. Such loans may
not exceed one-third of the fund's net assets taken at market. Interest on
loaned securities may not exceed 10% of the annual gross income of the fund
(without offset for realized capital gains). The portfolio lending policy
described in this paragraph is a fundamental policy that may be changed only by
a vote of fund shareholders.

WHEN-ISSUED SECURITIES

The fund may sometimes purchase new issues of securities on a when-issued
basis without limit when, in the opinion of the manager, such purchases will
further the investment objectives of the fund. The price of when-issued
securities is established at the time commitment to purchase is made. Delivery
of and payment for these securities typically occur 15 to 45 days after the
commitment to purchase. Market rates of interest on debt securities at the time
of delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of such security may decline prior to delivery,
which could result in a loss to the fund. A separate account for the fund
consisting of cash or high-quality liquid debt securities in an amount at least
equal to the when-issued commitments will be established and maintained with the
custodian. No income will accrue to the fund prior to delivery.

RULE 144A SECURITIES

The fund may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the fund's
criteria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional investors rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.

Prospectus Information Regarding the Fund 9

Board of Directors to determine, such determination to be based upon a
consideration of the readily available trading markets and the review of any
contractual restrictions. Accordingly, the Board of Directors is responsible for
developing and establishing the guidelines and procedures for determining the
liquidity of Rule 144A securities. As allowed by Rule 144A, the Board of
Directors of the fund has delegated the day-to-day function of determining the
liquidity of Rule 144A securities to the manager. The Board retains the
responsibility to monitor the implementation of the guidelines and procedures it
has adopted.

Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and the fund may, from time to time, hold a Rule 144A
security that is illiquid. In such an event, the fund's manager will consider
appropriate remedies to minimize the effect on the fund's liquidity. The fund
may not invest more than 15% of its assets in illiquid securities (securities
that may not be sold within seven days at approximately the price used in
determining the net asset value of fund shares).

SHORT SALES

The fund may engage in short sales if, at the time of the short sale, the
fund owns or has the right to acquire an equal amount of the security being sold
short at no additional cost. These transactions allow the fund to hedge against
price fluctuations by locking in a sale price for securities it does not wish to
sell immediately.

The fund may make a short sale when it wants to sell the security it owns
at a current attractive price, but also wishes to defer recognition of gain or
loss for federal income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the Internal Revenue
Code.

PERFORMANCE ADVERTISING

Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.

The fund may also include in advertisements data comparing performance with
the performance of non-related investment media, published editorial comments
and performance rankings compiled by independent organizations (such as Lipper
Analytical Services or Donoghue's Money Fund Report) and publications that
monitor the performance of mutual funds. Performance information may be quoted
numerically or may be presented in a table, graph or other illustration. In
addition, fund performance may be compared to well-known indices of market
performance including the Standard & Poor's (S&P) 500 Index and the Dow Jones
Industrial Average. Fund performance may also be compared, on a relative basis,
to other funds in our fund family. This relative comparison, which may be based
upon historical or expected fund performance, volatility or other fund
characteristics, may be presented numerically, graphically or in text. Fund
performance may also be combined or blended with other funds in our family, and
that combined or blended performance may be compared to the same indices to
which the fund may be compared.

All performance information advertised by the fund is historical in nature
and is not intended to represent or guarantee future results.

10 Information Regarding the Fund American Century Investments

HOW TO ESTABLISH A GIFTRUST ACCOUNT

AMERICAN CENTURY INVESTMENTS

The fund offered by this Prospectus is a part of the American Century
Investments family of mutual funds. Our family provides a full range of
investment opportunities, from the aggressive equity growth funds in our
Twentieth Century Group, to the fixed income funds in our Benham Group, to the
moderate risk and specialty funds in our American Century Group. Please call
1-800-345-2021 for a brochure or prospectuses for the other funds in the
American Century Investments family.

PURCHASE OF FUND SHARES

The minimum initial gift to a Giftrust account is $500. Subsequent gifts to
purchase additional shares must be in an amount of $250 or more.

Once a Giftrust has matured, no future investments (other than
reinvestments of distributions) may be made. You may make gifts in the following
ways:

BY MAIL

Send your completed Giftrust application and check or money order payable
in U.S. dollars to American Century Investments.

ADDITIONAL GIFTS. When making additional gifts by mail, please enclose your
check with the return remittance portion of the confirmation of your previous
gift, if available. If the investment slip is not available, indicate on your
check or a separate piece of paper your name, address and the beneficiary's name
and account number.

Orders to purchase shares are effective on the day we receive the purchase
check or money order. See "When Share Price is Determined," page 16.

BY TELEPHONE

Once the Giftrust account is open, additional gifts may be made by
telephone. Please call American Century for further details.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:

o Receiving bank and routing number:
Commerce Bank, N.A. (101000019)

o Beneficiary (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

o Beneficiary account number (BNF ACCT):
2804918

o Reference for Beneficiary (RFB):
American Century account number into which you are investing. If more than
one, leave blank and see Bank to Bank Information below.

o Originator to Beneficiary (OBI):
Name and address of owner of account into which you are investing.

o Bank to Bank Information
(BBI or Free Form Text):

o Taxpayer identification or Social Security number

o If more than one account, account numbers and amount to be invested in
each account.

Wired funds are considered received on the day they are deposited in our
account if they are deposited before the close of business on the New York Stock
Exchange, usually 3 p.m. Central time. See "When Share Price Is Determined,"
page 16.

AUTOMATIC INVESTMENTS

Once a Giftrust account is open, you may make additional gifts to the
Giftrust account automatically by authorizing us to draw on your bank account.

You may change the date or amount of your automatic gift anytime by letter
or telephone call to us at least five business days before the change is to
become effective.

Prospectus How To Establish A Giftrust Account 11

ADDITIONAL INFORMATION ABOUT GIFTS

WE CANNOT ACCEPT GIFTS TO A GIFTRUST ACCOUNT SPECIFYING A CERTAIN PRICE,
DATE OR NUMBER OF SHARES AND WILL RETURN THESE REQUESTS.

Once you have mailed or otherwise transmitted your gift instruction to us,
it may not be modified or cancelled.

The fund reserves the right to suspend the offering of shares for a period
of time, and the fund reserves the right to reject any specific gift
instruction. Additionally, gift instructions and requests may be refused if, in
the opinion of the manager, they are of a size that would disrupt the management
of the fund.

SPECIAL SHAREHOLDER SERVICES

As the grantor of a Giftrust, you may establish one or more special
services designed to provide an easy way to do business with us. By electing
these services on your application or by completing the appropriate forms, you
may authorize:

o Investments by phone

o Automatic investments

Once a Giftrust matures, the beneficiary may authorize:

o Exchanges or redemptions by phone

o Redemptions in writing without a signature guarantee

With regard to the service which enables the beneficiary of a matured
Giftrust to exchange and redeem by phone or in writing, and with respect to
redemptions, without a signature guarantee, the fund, its transfer agent and
investment advisor will not be responsible for any loss for instructions that
they reasonably believe are genuine. We intend to employ reasonable procedures
to confirm that instructions received by us, in fact, are genuine. Such
procedures will include requiring personal information to verify the identity of
callers, providing written confirmations of telephone transactions, and
recording telephone calls. If we do not employ reasonable procedures to confirm
the genuineness of instructions, then we may be liable for losses due to
unauthorized or fraudulent instructions.

ONLINE ACCOUNT ACCESS

You may contact us 24 hours a day, seven days a week, at
www.americancentury.com to access daily share prices, receive updates on major
market indexes and view historical performance. If you select "Full Services" on
your application, the grantor and beneficiary can use a personal access code and
account number to view account balances and account activity.

EXCHANGE OF FUND SHARES

The beneficiary of a matured Giftrust may exchange his/her shares for
shares of any of the other funds in our family of funds, subject to any
applicable minimum investment requirements of the funds into which the
beneficiary wishes to exchange. Please call 1-800-345-2021 for a prospectus and
additional information about the other funds in our family of funds.

Exchanges from a matured Giftrust account are limited to six times in any
one calendar year. In addition, the shares being exchanged and the shares of
each fund being acquired must have a current value of at least $100 and
otherwise meet the minimum investment requirement, if any, of the fund being
acquired.

No exchanges out of a Giftrust account may be made prior to the maturity of
the Giftrust account.

Exchanges may be requested by phone or online access (if such services have
been authorized) or by mail. Once an exchange request is mailed or otherwise
transmitted to us, it is irrevocable and may not be modified or cancelled.

HOW TO REDEEM SHARES

The fund will buy back ("redeem") shares of a matured Giftrust at any time
at the net asset value next determined after receipt of a redemption request
from the beneficiary in good order. Prior to the maturity of a Giftrust,
redemptions are allowed only by the Trustee of the Giftrust, who is authorized
by the Giftrust Agreement to make redemptions for the purpose of paying
applicable fees, expenses and taxes of the Giftrust account.

BY MAIL

The written instructions of a matured Giftrust beneficiary to redeem shares
may be in any one of the following forms:

o A redemption form, available from us

o A letter to us

12 How To Establish A Giftrust Account American Century Investments

Once mailed to us, the redemption request is irrevocable and may not be
modified or cancelled.

If the beneficiary has authorized redemptions without signature guarantees,
no signature guarantee is required. If this special service has not been
elected, signatures must be guaranteed. See "Signature Guarantee," this page.

The signature should be exactly as the name appears in the registration. If
the matured Giftrust's beneficiary's name appears in the registration as Mary
Elizabeth Jones, she should sign that way and not as Mary E. Jones.

Before writing, see "Additional Information About Redemptions," page 14.

BY TELEPHONE

The beneficiary of a matured Giftrust may redeem shares by telephone if
that service has been authorized by the beneficiary. Once made, a telephone
request may not be modified or cancelled.

All calls received before the close of the New York Stock Exchange, usually
3 p.m. Central time, will receive that day's closing price.

Before calling, read "Additional Information About Redemptions," page 14.

BY CHECK-A-MONTH

Our Check-A-Month plan automatically redeems enough shares each month to
provide the beneficiary of a matured Giftrust having an account value of $10,000
or more with a check in an amount the beneficiary chooses (minimum $50).
Interested beneficiaries should call us for our Check-A-Month brochure.

SIGNATURE GUARANTEE

When a signature guarantee is required, the signature must be guaranteed by
a domestic bank or trust company, credit union, broker, dealer, national
securities exchange, registered securities association, clearing agency or
savings association as defined by federal law. The institution providing the
guarantee must use a signature guarantee ink stamp or medallion which states
"Signature(s) Guaranteed" and be signed in the name of the guarantor by an
authorized person with that person's title and the date. We may reject a
signature guarantee if the guarantor is not a member of or participant in a
signature guarantee program.

Shareholders living abroad may acknowledge their signatures before a U.S.
consular officer. Military personnel in foreign countries may acknowledge their
signatures before officers authorized to take acknowledgements (e.g., legal
officers and adjutants).

We may waive the signature guarantee on a redemption of $25,000 or less if
we are able to verify the signature of the beneficiary of a matured Giftrust
from account records. We reserve the right to amend or discontinue this waiver
policy at any time and, with regard to a particular redemption transaction, to
require a signature guarantee at our discretion.

REDEMPTION PROCEEDS

Redemption proceeds may be sent to the beneficiary of a matured Giftrust:

BY MAIL

If a redemption check is mailed, it is usually mailed on the second
business day after receipt of a redemption request, but not later than seven
days afterwards.

Except as noted below, all checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record.

In certain instances a redemption check can be made payable to someone
other than the registered owner of the shares and/or mailed to an address other
than the address of record. Please call us for information about this special
service. See "Telephone Services," page 14.

BY WIRE AND ACH

The beneficiary of a matured Giftrust may authorize us to transmit
redemption proceeds by wire or by the automated bank clearinghouse (ACH). These
services will be effective 15 days after we receive the authorization.

Proceeds from the redemption of shares will normally be transmitted on the
first business day, but not later than the seventh day, following the date of
redemption.

The destination bank usually will receive wired funds the day they are
transmitted or the next day. Funds transferred by ACH will ordinarily be
received within one to seven days after transmission. Once the

Prospectus How To Establish A Giftrust Account 13

funds are transmitted, the time of receipt and the availability of the funds are
not within our control. Wired funds are subject to a charge of $10 to cover bank
wire charges, which is deducted from redemption proceeds.

ADDITIONAL INFORMATION ABOUT REDEMPTIONS

If the beneficiary of a matured Giftrust experiences difficulty in making a
telephone redemption during periods of drastic economic or market changes, the
redemption request may be made by regular or express mail. It will be
implemented at the net asset value next determined after the request has been
received, in good order, by us.

We reserve the right to revise or terminate the telephone redemption
privilege at any time.

REDEMPTIONS SPECIFYING A CERTAIN DATE OR PRICE CANNOT BE ACCEPTED AND WILL
BE RETURNED.

Until a Giftrust matures, only the Trustee, as the legal owner of the
shares, may redeem them. The ability of the beneficiary to compel the Trustee to
redeem the shares is subject to the terms of the Giftrust.

TELEPHONE SERVICES

INVESTORS LINE

The grantor of a Giftrust or the beneficiary of the Giftrust, if of legal
age (or if not of legal age, the beneficiary's parents) may reach an Investor
Services Representative by calling us at 1-800-345-2021 from 7 a.m. to 7 p.m.
Central time Monday through Friday. You may request information about our funds
and a current prospectus, speak with an Investor Services Representative about
his/her account, or get answers to any questions about the funds and the
services we offer.

UNUSUAL STOCK MARKET CONDITIONS HAVE IN THE PAST RESULTED IN AN INCREASE IN
THE NUMBER OF SHAREHOLDER TELEPHONE CALLS. THOSE WHO EXPERIENCE DIFFICULTY IN
REACHING US DURING SUCH PERIODS, SHOULD CONSIDER SENDING TRANSACTION
INSTRUCTIONS BY MAIL, EXPRESS MAIL OR COURIER SERVICE, OR USING OUR AUTOMATED
INFORMATION LINE, IF THE CALLER HAS REQUESTED AND RECEIVED AN ACCESS CODE AND IS
NOT ATTEMPTING TO REDEEM SHARES.

AUTOMATED INFORMATION LINE

American Century's 24-hour Automated Information Line allows you to access
hourly market quotes, fund prices and total returns by calling 1-800-345-8765.
The beneficiary of a matured Giftrust may also obtain an access code that will
allow him/her to use the Automated Information Line to make exchange
transactions and obtain information about share balance, account value and the
most recent transaction. REDEMPTION TRANSACTIONS CANNOT BE MADE ON THE AUTOMATED
INFORMATION LINE. Please call us at 1-800-345-2021 for more information on how
to obtain an access code for our Automated Information Line.

HOW TO CHANGE THE ADDRESS OF RECORD

The grantor of a Giftrust or the beneficiary of the Giftrust, if of legal
age (or if not of legal age, the beneficiary's parents) may notify us of changes
in the address of record for the Giftrust account either by writing us or
calling our Investors Line. Because the address of record impacts every piece of
information we send to you, you are urged to notify us promptly of any change of
address.

REPORTS TO SHAREHOLDERS

At the end of each quarter, we will send to the address of record for the
Giftrust account a statement with the complete year-to-date information on
activity in the account. The grantor, or the beneficiary, if of legal age (or if
not of legal age, the beneficiary's parents) may at any time also request a
statement of account activity to be sent to them.

With the exception of the automatic transactions noted below, each time an
investment, redemption or exchange of shares is made, we will send to the
address of record for the Giftrust account a confirmation of the transaction.
Automatic investment purchases and exchanges made in an automatic exchange plan
will be confirmed on the next quarterly statement. Please carefully review all
information in the confirmation or consolidated statement relating to
transactions to ensure that instructions have been acted on properly. Please
notify us in writing if there is an error. If you fail to provide notification
of an

14 How To Establish A Giftrust Account American Century Investments

error with reasonable promptness (i.e., within 30 days of non-automatic
transactions or within 30 days of the date of the quarterly statement, in the
case of the automatic transactions noted above) we will deem the transaction to
be ratified.

No later than January 31 of each year, we will send to the address of
record for the Giftrust account, when applicable, the following reports, which
may be used in completing U.S. income tax returns:

FORM 1099-DIV

Reports taxable distributions during the preceding year. (If the
beneficiary does not receive taxable distributions in the previous year, he or
she will not receive a 1099-DIV.)

FORM 1099-B

Reports proceeds paid on redemptions during the preceding year.

In December of each year, we will send to the address of record for the
Giftrust account an annual report that includes audited financial statements for
the fiscal year ending the preceding October 31 and a list of securities in the
Giftrust portfolio on that date. In June of each year, we will send a semiannual
report that includes unaudited financial statements for the six months ending
the preceding April 30, as well as a list of securities in its portfolio on that
date. Both the annual and semiannual reports are incorporated herein by
reference.

We usually prepare and mail to the address of record a new prospectus dated
March 1 of each year.

Prospectus How To Establish A Giftrust Account 15

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of Giftrust shares is also referred to as their net asset value.
Net asset value is determined by calculating the total value of the fund's
assets, deducting total liabilities and dividing the result by the number of
shares outstanding. Net asset value for Giftrust is determined at the close of
regular trading on each day that the New York Stock Exchange is open.

Gifts and requests to redeem or exchange shares will receive the share
price next determined after receipt by us of the gift, redemption or exchange
request. For example, gifts and requests to redeem or exchange shares received
by us or our agent before the close of business on the New York Stock Exchange,
usually 3 p.m. Central time, are effective on, and will receive the price
determined, that day as of the close of the Exchange. Gifts, redemption and
exchange requests received thereafter are effective on, and receive the price
determined as of the close of the Exchange on, the next day the Exchange is
open.

Investments are considered received from the Trustee only when the payment
representing gifts by a grantor are received by us. Wired funds are considered
received on the day they are deposited in our bank account if they are deposited
before the close of business on the Exchange.

Gifts by telephone pursuant to an authorization for us to draw on a bank
account are considered received at the time of the telephone call.

Gifts and transaction instructions received by us on any business day by
mail prior to the close of business on the Exchange will receive that day's
price. Gifts and instructions received after that time will receive the price
determined on the next business day.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be summarized
as follows:

The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.

Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.

The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of business on the New York Stock Exchange if that
is earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.

Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.

16 Additional Information You Should Know American Century Investments

Therefore, such calculation does not take place contemporaneously with the
determination of the prices of many of the portfolio securities used in such
calculation and the value of the fund's portfolio may be affected on days when
shares of the fund may not be purchased or redeemed.

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset values of our funds are published in leading newspapers
daily. Net asset values may also be obtained by calling us or by accessing our
Web site at www.americancentury.com.

DISTRIBUTIONS

In general, distributions from net investment income and net realized
securities gains, if any, are declared and paid annually on or before December
31, but the fund may make distributions on a more frequent basis to comply with
the distribution requirements of the Internal Revenue Code, in all events in a
manner consistent with the provisions of the Investment Company Act.

Distributions on shares of Giftrust accounts will not be paid in cash and
will be reinvested.

A distribution on shares of the fund does not increase the value of shares
or total return. At any given time the value of shares includes the
undistributed net gains, if any, realized by the fund on the sale of portfolio
securities, and undistributed dividends and interest received, less fund
expenses.

Because such gains and dividends are included in the value of shares, when
they are distributed the value of shares is reduced by the amount of the
distribution. If shares are bought just before the distribution, the full price
will be paid for the shares, and then a portion of the purchase price will be
distributed as a taxable distribution. See "Taxes," this page.

TAXES

The fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders
it pays no income tax.

Distributions of net investment income and net short-term capital gains are
taxable as ordinary income. Distributions from net long-term capital gains are
taxable as long-term capital gains.

Dividends and interest received by the fund on foreign securities may give
rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Foreign countries generally do not impose taxes on capital
gains in respect of investments by non-resident investors. The foreign taxes
paid by the fund will reduce its dividends.

If more than 50% of the value of the fund's total assets at the end of each
quarter of its fiscal year consists of securities of foreign corporations, the
fund may qualify for and make an election with the Internal Revenue Service with
respect to such fiscal year so that fund shareholders may be able to claim a
foreign tax credit in lieu of a deduction for foreign income taxes paid by the
fund. If such an election is made, the foreign taxes paid by the fund will be
treated as income received by shareholders.

If the fund purchases the securities of certain foreign investment funds or
trusts called passive foreign investment companies, capital gains on the sale of
such holdings will be deemed to be ordinary income regardless of how long the
fund holds its investment. The fund may also be subject to corporate income tax
and an interest charge on certain dividends and capital gains earned from these
investments, regardless of whether such income and gains are distributed to
shareholders. In the alternative, the fund may elect to recognize cumulative
gains on such investments as of the last day of its fiscal year and distribute
it to shareholders.

Distributions are taxable, even if the value of the shares is below their
cost. If shares are purchased shortly before a distribution, income taxes must
be paid on the distribution, even though the value of the investment (plus cash
received, if any) will not have increased. In addition, the share price at the
time shares are purchased may include unrealized gains in the securities held in
the investment portfolio of the fund. If these portfolio securities are
subsequently sold and the gains are realized, they will, to the extent not
offset by capital losses, be paid as a distribution of capital gains and will be
taxable as short-term or long-term capital gains.

In January of the year following the distribution, we will send, when
applicable, a Form 1099-DIV notifying the beneficiary of a matured Giftrust of
the status of distributions for federal income tax purposes.

Prospectus Additional Information You Should Know 17

Distributions may also be subject to state and local taxes, even if all or
a substantial part of such distributions are derived from interest on U.S.
government obligations which, if received directly, would be exempt from state
income tax. However, most but not all states allow this tax exemption to pass
through to fund shareholders when a fund pays distributions to its shareholders.

If the beneficiary of a matured Giftrust has not complied with certain
provisions of the Internal Revenue Code and Regulations, we are required by
federal law to withhold and remit to the IRS 31% of reportable payments (which
may include dividends, capital gains distributions and redemptions). Those
regulations require the beneficiary of a matured Giftrust to certify that the
Social Security number or tax identification number provided is correct and that
he/she is not subject to 31% withholding for previous under-reporting to the
IRS. The beneficiary of a matured Giftrust will be asked to make the appropriate
certification upon maturity of the Giftrust.

Redemption of Giftrust shares (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders have held
such shares for a period of more than one year.

Because it is a gift of a future interest, an investment in a Giftrust does
not qualify for the annual gift tax exclusion of $10,000. If you give a
Giftrust, you must file a United States Gift Tax Return. If you make additional
investments in subsequent years, a Gift Tax Return must be filed for each year's
gift. No gift tax is payable until your cumulative lifetime gifts exceed the
exemption equivalent of $600,000. Each gift is applied against the exemption
equivalent that would otherwise be available in the future.

The income of a Giftrust account is exempt from federal income tax until it
exceeds $100. The Trustee of the Giftrust files federal income tax returns and
pays the income tax out of the assets of the trust. A $10 fee will be charged
against a Giftrust account in each year that the Trustee files a tax return on
behalf of such account. The distribution to the beneficiary at the maturity of
the Giftrust may be subject to the throwback rules under the Internal Revenue
Code. The throwback rules may create additional tax liability for a beneficiary
who is age 21 or older at the time the Giftrust matures. More than one trust for
the same beneficiary may be subject to the provisions of the Internal Revenue
Code with respect to multiple trusts.

The tax laws applicable to trusts in general are quite complex. You should
consider consulting your tax advisor or attorney before opening a Giftrust
account.

MANAGEMENT

INVESTMENT MANAGEMENT

Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the fund. Acting pursuant
to an investment management agreement entered into with the fund, American
Century Investment Management, Inc. serves as the investment manager of the
fund. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since it was
founded in 1958.

The manager supervises and manages the fund's investment portfolios and
directs the purchase and sale of its investment securities. It utilizes a team
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the fund. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. The team adjusts holdings in
the fund's portfolios as it deems appropriate in pursuit of the fund's
investment objectives. Individual portfolio manager members of the team may also
adjust portfolio holdings of the fund as necessary between team meetings.

The portfolio manager members of the team managing Giftrust and their work
experience for the last five years are as follows:

GLENN A. FOGLE, Vice President and Portfolio Manager, joined American
Century in September

18 Additional Information You Should Know American Century Investments

1990 as an Investment Analyst, a position he held until March 1993. At that time
he was promoted to Portfolio Manager.

JOHN D. SEITZER, Portfolio Manager, joined American Century in June 1993
as an Investment Analyst, a position he held until July 1996. At that time he
was promoted to Portfolio Manager. Prior to joining American Century, Mr.
Seitzer attended Indiana University from August 1991 to June 1993, where he
obtained his MBA degree. Mr. Seitzer also is a member of the team that manages
Vista.

The activities of the manager are subject only to directions of the fund's
Board of Directors. The manager pays all the expenses of the fund except
brokerage, taxes, interest, fees and expenses of the non-interested person
directors (including counsel fees) and extraordinary expenses.

For the services provided to the fund, the manager receives an annual fee
of 1% of the average net assets of the fund.

On the first business day of each month, the fund pays a management fee to
the manager for the previous month at the rate specified. The fee for the
previous month is calculated by multiplying the applicable fee for such series
by the aggregate average daily closing value of the series' net assets during
the previous month, and further multiplying that product by a fraction, the
numerator of which is the number of days in the previous month and the
denominator of which is 365 (366 in leap years).

CODE OF ETHICS

The fund and the manager have adopted a Code of Ethics that restricts
personal investing practices by employees of the manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the fund's portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.

TRANSFER AND ADMINISTRATIVE SERVICES

American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri 64111, acts as transfer agent and dividend-paying agent for the fund.
It provides facilities, equipment and personnel to the fund, and is paid for
such services by the manager.

The manager and the transfer agent are both wholly owned by American
Century Companies, Inc. James E. Stowers Jr., Chairman of the fund's Board of
Directors, controls American Century Companies by virtue of his ownership of a
majority of its common stock.

DISTRIBUTION OF FUND SHARES

The fund's shares are distributed by American Century Investment Services,
Inc., a registered broker-dealer and an affiliate of the fund's investment
manager. The manager pays all expenses for promoting and distributing the fund
shares offered by this Prospectus.

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Mutual Funds, Inc., the issuer of the fund, was organized
as a Maryland corporation on July 2, 1990. The corporation commenced operations
on February 28, 1991, the date it merged with Twentieth Century Investors, Inc.,
a Delaware corporation which had been in business since October 1958. Pursuant
to the terms of the Agreement and Plan of Merger dated July 27, 1990, the
Maryland corporation was the surviving entity and continued the business of the
Delaware corporation with the same officers and directors, the same shareholders
and the same investment objectives, policies and restrictions.

The principal office of the fund is American Century Tower, 4500 Main
Street, P.O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may
be made by mail to that address, or by phone to 1-800-345-2021 (international
calls: 816-531-5575).

Prospectus Additional Information You Should Know 19

American Century Mutual Funds issues 17 series of $.01 par value shares.
Each series is commonly referred to as a fund. The assets belonging to each
series of shares are held separately by the custodian.

Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable to such share on all questions, except
for those matters which must be voted on separately by the series or class of
shares affected. Matters affecting only one series or class are voted upon only
by that series or class.

Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.

Unless required by the Investment Company Act, it will not be necessary for
the fund to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request a special meeting of
shareholders. We will assist in the communication with other shareholders.

WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.

20 Additional Information You Should Know American Century Investments

NOTES

Prospectus Notes 21

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

Person-to-person assistance:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865

Fax: 816-340-7962

Internet: www.americancentury.com

9609 [recycled logo]
SH-BKT-6559 Recycled

[american century logo]

PROSPECTUS

[company logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

AMERICAN
CENTURY(R)
GROUP

Balanced

INVESTOR CLASS

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.

AMERICAN CENTURY INVESTMENTS

BENHAM GROUP(R)

MONEY MARKET FUNDS
GOVERNMENT BOND FUNDS
DIVERSIFIED BOND FUNDS
MUNICIPAL BOND FUNDS

AMERICAN CENTURY GROUP

ASSET ALLOCATION &
BALANCED FUNDS
CONSERVATIVE EQUITY FUNDS
SPECIALTY FUNDS

Balanced

TWENTIETH CENTURY(R) GROUP

GROWTH FUNDS
INTERNATIONAL FUNDS

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

Balanced
INVESTOR CLASS

AMERICAN CENTURY MUTUAL FUNDS, INC.

American Century Mutual Funds, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. One of the funds that seeks
capital growth and current income is described in this Prospectus. Its
investment objective is listed on page 2 of this Prospectus. The other funds are
described in separate prospectuses.

Through its Investor Class of shares, American Century offers investors a
full line of no-load funds, investments that have no sales charges or
commissions.

This Prospectus gives you information about the fund that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated September 3, 1996, and filed with the Securities and Exchange
Commission. It is incorporated into this Prospectus by reference.
To obtain a copy without charge, call or write:

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

Prospectus 1

INVESTMENT OBJECTIVE OF THE FUND

AMERICAN CENTURY BALANCED FUND

The Balanced fund seeks capital growth and current income. It is
management's intention to maintain approximately 60% of the fund's assets in
common stocks that are considered by management to have better-than-average
prospects for appreciation and the remainder in bonds and other fixed income
securities.

There is no assurance that the fund will achieve its investment objective.

NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.

2 Investment Objective American Century Investments

TABLE OF CONTENTS

Transaction and Operating Expense Table ............................4
Financial Highlights ...............................................5

INFORMATION REGARDING THE FUND

Investment Policies of the Fund ....................................6
Investment Approach .............................................6
Equity Investments ..............................................6
Fixed Income Investments ........................................6
Other Investment Practices, Their Characteristics and Risks ........7
Foreign Securities ..............................................7
Forward Currency Exchange Contracts .............................7
Portfolio Turnover ..............................................8
Repurchase Agreements ...........................................8
Derivative Securities ...........................................9
Portfolio Lending ...............................................9
When-Issued Securities .........................................10
Rule 144A Securities ...........................................10
Short Sales ....................................................10
Performance Advertising ...........................................10

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

American Century Investments ......................................12
Investing in American Century .....................................12
How to Open an Account ............................................12
By Mail ......................................................12
By Wire ......................................................12
By Exchange ..................................................13
In Person ....................................................13
Subsequent Investments .........................................13
By Mail ......................................................13
By Telephone .................................................13
By Online Access .............................................13
By Wire ......................................................13
In Person ....................................................13
Automatic Investment Plan ......................................13
How to Exchange from One Account to Another .......................13
By Mail ......................................................14
By Telephone .................................................14
By Online Access .............................................14
How to Redeem Shares ..............................................14
By Mail ......................................................14
By Telephone .................................................14
By Check-A-Month .............................................14
Other Automatic Redemptions ..................................14
Redemption Proceeds ............................................14
By Check .....................................................14
By Wire and ACH ..............................................14
Special Requirements for Large Redemptions .....................15
Redemption of Shares in Low-Balance Accounts ...................15
Signature Guarantee ...............................................15
Special Shareholder Services ......................................15
Automated Information Line ...................................15
Online Account Access ........................................16
Open Order Service ...........................................16
Tax-Qualified Retirement Plans ...............................16
Important Policies Regarding Your Investments .....................16
Reports to Shareholders ...........................................17
Employer-Sponsored Retirement Plans and Institutional Accounts ....18

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price .......................................................19
When Share Price Is Determined .................................19
How Share Price Is Determined ..................................19
Where to Find Information About Share Price ....................20
Distributions .....................................................20
Taxes .............................................................20
Tax-Deferred Accounts ..........................................20
Taxable Accounts ...............................................20
Management ........................................................22
Investment Management ..........................................22
Code of Ethics .................................................22
Transfer and Administrative Services ...........................23
Distribution of Fund Shares .......................................23
Further Information About American Century ........................23

NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.

Prospectus Table of Contents 3

TRANSACTION AND OPERATING EXPENSE TABLE

Balanced
SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales Load Imposed on Purchases ....................... none
Maximum Sales Load Imposed on Reinvested Dividends ............ none
Deferred Sales Load ........................................... none
Redemption Fee(1) ............................................. none
Exchange Fee .................................................. none

ANNUAL FUND OPERATING EXPENSES (as a percentage of net assets):

Management Fees ............................................... 1.00%
12b-1 Fees .................................................... none
Other Expenses(2) ............................................. 0.00%
Total Fund Operating Expenses ................................. 1.00%

EXAMPLE:

You would pay the following expenses on a 1 year $ 10
$1,000 investment, assuming a 5% annual return and 3 years 32
redemption at the end of each time period: 5 years 55
10 years 122

(1) Redemption proceeds sent by wire are subject to a $10 processing fee.

(2) Other expenses, which include the fees and expenses (including legal counsel
fees) of those directors who are not "interested persons" as defined in the
Investment Company Act, were 0.0014 of 1% of average net assets for the most
recent fiscal year.

The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of Balanced offered by this
Prospectus. The example set forth above assumes reinvestment of all dividends
and distributions and uses a 5% annual rate of return as required by Securities
and Exchange Commission regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The shares offered by this Prospectus are Investor Class shares and have no
up-front or deferred sales charges, commissions, or 12b-1 fees. The fund offers
three other classes of shares, primarily to institutional investors, that have
different fee structures than the Investor Class, resulting in different
performance for the other classes. For additional information about the various
classes, see "Further Information About American Century," page 23.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS
BALANCED

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The annual report
contains additional performance information and will be made available upon
request and without charge. The information presented is for a share outstanding
throughout the years ended October 31, except as noted.
<TABLE>

1995 1994 1993 1992 1991 1990 1989 1988(1)
---- ---- ---- ---- ---- ---- ---- ------
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $15.94 $16.52 $14.89 $15.11 $10.89 $11.84 $10.13 $10.22

Income from Investment Operations

Net Investment Income ........................... .48(2) .42 .38 .33 .38 .41 .37 .01

Net Realized and Unrealized Gain (Loss)
on Investment Transactions ................... 2.03 (.58) 1.62 (.23) 4.22 (.62) 1.71 (.10)

Total from Investment Operations ................ 2.51 (.16) 2.00 .10 4.60 (.21) 2.08 (.09)

Distributions

From Net Investment Income ...................... (.475) (.416) (.375) (.322) (.384) (.417) (.372) --

From Net Realized Gains
on Investment Transactions ................... (.274) -- -- -- -- (.320) -- --

Total Distributions ............................. (.749) (.416) (.375) (.322) (.384) (.737) (.372) --

Net Asset Value, End of Period ....................... $17.70 $15.94 $16.52 $14.89 $15.11 $10.89 $11.84 $10.13

Total Return(3) ................................. 16.36% (.93%) 13.64% .63% 42.92% (2.10%) 20.94% (.88%)

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average
Net Assets ................................... .98% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%(4)

Ratio of Net Investment

Income to Average Net Assets ................. 2.9% 2.7% 2.4% 2.4% 3.1% 3.8% 4.2% 4.4%(4)

Portfolio Turnover Rate ......................... 85% 94% 95% 100% 116% 104% 171% 99%(4)

Average Commission Paid per
Investment Security Traded ................... $.039 --(5) --(5) --(5) --(5) --(5) --(5) --(5)

Net Assets, End of Period (in millions) ......... $816 $704 $706 $654 $255 $66 $30 $3
</TABLE>

(1) October 20, 1988 (inception) through October 31, 1988.

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

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

(4) Annualized.

(5) Not computed for period indicated.

Prospectus Financial Highlights 5

INFORMATION REGARDING THE FUND

INVESTMENT POLICIES OF THE FUND

INVESTMENT APPROACH

The manager intends to invest approximately 60% of the fund's assets in
equity securities, while the remainder will be invested in bonds and other fixed
income securities. A description of the investment style for each class of
investment follows.

EQUITY INVESTMENTS

With the equity portion of the Balanced portfolio, the manager seeks
capital growth by investing in securities, primarily common stocks, that meet
certain fundamental and technical standards of selection (relating primarily to
earnings and revenue acceleration) and have, in the opinion of the manager,
better-than-average potential for appreciation. So long as a sufficient number
of such securities are available, the manager intends to keep the equity portion
of Balanced fully invested in these securities regardless of the movement of
stock prices generally. The fund may purchase securities only of companies that
have a record of at least three years continuous operation.

The manager selects, for the equity portion of the portfolio, securities of
companies whose earnings and revenue trends meet management's standards of
selection. The size of the companies in which a fund invests tends to give it
its own characteristics of volatility and risk. These differences come about
because developments such as new or improved products or methods, which would be
relatively insignificant to a large company, may have a substantial impact on
the earnings and revenues of a small company and create a greater demand and a
higher value for its shares. However, a new product failure which could readily
be absorbed by a large company can cause a rapid decline in the value of the
shares of a smaller company. Hence, it could be expected that the volatility of
the fund will be impacted by the size of companies in which it invests.

FIXED INCOME INVESTMENTS

The manager intends to maintain approximately 40% of the fund's assets in
fixed income securities with a minimum of 25% of that amount in fixed income
senior securities. The fixed income securities in the fund will be chosen based
on their level of income production and price stability. The fund may invest in
a diversified portfolio of debt and other fixed-rate securities payable in
United States currency. These may include obligations of the United States
government, its agencies and instrumentalities; corporate securities (bonds,
notes, preferreds and convertible issues), and sovereign government, municipal,
mortgage-backed and other asset-backed securities.

There are no maturity restrictions on the fixed income securities in which
the fund invests. Under normal market conditions the weighted average portfolio
maturity for the fixed income portfolio will be in the three- to 10-year range.
The manager will actively manage the portfolio, adjusting the weighted average
portfolio maturity in response to expected changes in interest rates. During
periods of rising interest rates, a shorter weighted average maturity may be
adopted in order to reduce the effect of bond price declines on the fund's net
asset value. When interest rates are falling and bond prices rising, a longer
weighted average portfolio maturity may be adopted.

It is the manager's intention to invest the fund's fixed income holdings in
high-grade securities. At least 80% of fixed income assets will be invested in
securities which at the time of purchase are rated

6 Information Regarding the Fund American Century Investments

within the three highest categories by a nationally recognized statistical
rating organization [at least A by Moody's Investors Service, Inc. (Moody's) or
Standard & Poor's Corp. (S&P)].

The remaining portion of the fixed income assets may be invested in issues
in the fourth highest category (Baa by Moody's or BBB by S&P), or, if not rated,
are of equivalent investment quality as determined by the manager and which, in
the opinion of the manager, can contribute meaningfully to the fund's results
without compromising its objectives. Such issues might include a lower-rated
issue where research suggests the likelihood of a rating increase; or a
convertible issue of a company deemed attractive by the equity management team.
According to Moody's, bonds rated Baa are medium-grade and possess some
speculative characteristics. A BBB rating by S&P indicates S&P's belief that a
security exhibits a satisfactory degree of safety and capacity for repayment,
but is more vulnerable to adverse economic conditions or changing circumstances.
See "An Explanation of Fixed Income Securities Ratings" in the Statement of
Additional Information.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.

FOREIGN SECURITIES

Investments in foreign securities may present certain risks, including
those resulting from fluctuations in currency exchange rates, future political
and economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.

FORWARD CURRENCY EXCHANGE CONTRACTS

The fund may elect to enter into a forward currency exchange contract with
respect to a specific purchase or sale of a security, or with respect to the
fund's portfolio positions generally.

Prospectus Information Regarding the Fund 7

PORTFOLIO TURNOVER

The portfolio turnover rate of the fund is shown in the Financial
Highlights table on page 5 of this Prospectus.

The portfolio turnover of the fund may be higher than other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the fund
pays directly. Portfolio turnover may also affect the character of capital
gains, if any, realized and distributed by the fund since short-term capital
gains are taxable as ordinary income.

REPURCHASE AGREEMENTS

Since the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

The fund will limit repurchase agreement transactions to securities issued
by the U.S. government, its agencies and instrumentalities, and will enter into
such transactions with those banks and securities dealers who are deemed
creditworthy pursuant to criteria adopted by the fund's Board of Directors.

The fund will invest no more than 15% of its assets in repurchase
agreements maturing in more than seven days.

8 Information Regarding the Fund American Century Investments

DERIVATIVE SECURITIES

To the extent permitted by its investment objectives and policies, the fund
may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.

The return on a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.

There are a range of risks associated with derivative investments,
including:

o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the portfolio manager
anticipates;

o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;

o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and

o the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the Board of Directors as necessary. In addition, the
board will review the manager's policy for investments in derivative securities
annually.

PORTFOLIO LENDING

Prospectus Information Regarding the Fund 9

WHEN-ISSUED SECURITIES

RULE 144A SECURITIES

With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors of the fund has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the manager.
The Board retains the responsibility to monitor the implementation of the
guidelines and procedures it has adopted.

SHORT SALES

PERFORMANCE ADVERTISING

From time to time, the fund may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return, average annual total return and yield.
Performance data may be quoted separately for the Investor Class and the other
classes.

A quotation of yield reflects a fund's income over a stated period of time
expressed as a percentage of the fund's share price.

10 Information Regarding the Fund American Century Investments

Yield is calculated by adding over a 30-day (or one-month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of fund shares
outstanding during the period, and expressing the result as a percentage of the
fund's share price on the last day of the 30-day (or one-month) period. The
percentage is then annualized. Capital gains and losses are not included in the
calculation.

Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules for all stock and bond funds. Because yield
accounting methods differ from the methods used for other accounting purposes,
the fund's yield may not equal the income paid on your shares or the income
reported in the fund's financial statements.

The fund may also include in advertisements data comparing performance with
the performance of non-related investment media, published editorial comments
and performance rankings compiled by independent organizations (such as Lipper
Analytical Services or Donoghue's Money Fund Report) and publications that
monitor the performance of mutual funds. Performance information may be quoted
numerically or may be presented in a table, graph or other illustration. In
addition, fund performance may be compared to well-known indices of market
performance including the Standard & Poor's (S&P) 500 Index and the Dow Jones
Industrial Average. Fund performance may also be compared, on a relative basis,
to other funds in our fund family. This relative comparison, which may be based
upon historical or expected fund performance, volatility or other fund
characteristics, may be presented numerically, graphically or in text. Fund
performance may also be combined or blended with other funds in our fund family,
and that combined or blended performance may be compared to the same indices to
which individual funds may be compared.

All performance information advertised by the fund is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.

Prospectus Information Regarding the Fund 11

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

AMERICAN CENTURY INVESTMENTS

INVESTING IN AMERICAN CENTURY

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 18.

HOW TO OPEN AN ACCOUNT

To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.

The minimum investment is $2,500 [$1,000 for IRA and Uniform
Gifts/Transfers to Minors Acts ("UGMA/UTMA") accounts]. These minimums will be
waived if you establish an automatic investment plan to your account that is the
equivalent of at least $50 per month. See "Automatic Investment Plan," page 13.

Please note: If you register your account as belonging to multiple owners
(e.g., as joint tenants), you must provide us with specific authorization on
your application in order for us to accept written or telephone instructions
from a single owner. Otherwise, all owners will have to agree to any
transactions that involve the account (whether the transaction request is in
writing or over the telephone).

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:

o RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

o BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

o REFERENCE FOR BENEFICIARY (RFB): American Century account number into which
you are investing. If more than one, leave blank and see Bank to Bank
Information below.

o ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

o BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):

o Taxpayer identification or Social Security number.

12 How to Invest with American Century Investments American Century Investments

o If more than one account, account numbers and amount to be invested in
each account.

o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA or SARSEP-IRA.

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:

4500 Main Street
Kansas City, Missouri 64111

1665 Charleston Road
Mountain View, California 94043

2000 S. Colorado Blvd.
Denver, Colorado 80222

SUBSEQUENT INVESTMENTS

Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see "Automatic Investment Plan," this page) or by any
of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the remittance portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.

BY MAIL

When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.

BY ONLINE ACCESS

Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 12 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.

AUTOMATIC INVESTMENT PLAN

HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER

As long as you meet any minimum investment requirements, you may exchange
your fund shares to our other funds up to six times per year per account. An
exchange request will be processed the same day it is received, if it is
received before the funds' net asset values are calculated, which is one hour
prior to the close of the New York Stock Exchange for the Benham Target
Maturities Trust, and at the close of the Exchange for all of our other funds.

Prospectus How to Invest with American Century Investments 13

If, in any 90-day period, the total of your exchanges and your redemptions
from any one account exceeds the lesser of $250,000 or 1% of the fund's assets,
further exchanges will be subject to special requirements to comply with our
policy on large redemptions. See "Special Requirements for Large Redemptions,"
page 15.

BY MAIL

You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.

BY TELEPHONE

You can make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line -- see page 15) if you
have authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to get the appropriate form.

BY ONLINE ACCESS

You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received. (For large redemptions, please read "Special Requirements for Large
Redemptions," page 15.)

Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.

BY MAIL

Your written instructions to redeem shares may be made either by a
redemption form, which we will send you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 15.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

If you have at least a $10,000 balance in your account, you may redeem
shares by Check-A-Month. A Check-A-Month plan automatically redeems enough
shares each month to provide you with a check in an amount you choose (minimum
$50). To set up a Check-A-Month plan or request a brochure, please call an
Investor Services Representative.

OTHER AUTOMATIC REDEMPTIONS

If you have at least a $10,000 balance in your account, you may elect to
make redemptions automatically by authorizing us to send funds to you or to your
account at a bank or other financial institution. To set up automatic
redemptions, call one of our Investor Services Representatives.

REDEMPTION PROCEEDS

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.

14 How to Invest with American Century Investments American Century Investments

proceeds. Once the funds are transmitted, the time of receipt and the funds'
availability are not under our control.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

We have elected to be governed by Rule18f-1 under the Investment Company
Act, which obligates the fund make certain redemptions in cash. This requirement
to pay redemptions in cash applies to situations where one shareholder redeems,
during any 90-day period, up to the lesser of $250,000 or 1% of the assets of
the fund. Although redemptions in excess of this limitation will also normally
be paid in cash, we reserve the right under unusual circumstances to honor these
redemptions by making payment in whole or in part in readily marketable
securities (a "redemption-in-kind").

If payment is made in securities, the securities will be selected by the
fund, will be valued in the same manner as they are in computing the fund's net
asset value and will be provided without prior notice.

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

Despite the fund's right to redeem fund shares through a
redemption-in-kind, we do not expect to exercise this option unless the fund has
an unusually low level of cash to meet redemptions and/or is experiencing
unusually strong demands for its cash. Such a demand might be caused, for
example, by extreme market conditions that result in an abnormally high level of
redemption requests concentrated in a short period of time. Absent these or
similar circumstances, we expect redemptions in excess of $250,000 to be paid in
cash in any fund with assets of more than $50 million if total redemptions from
any one account in any 90-day period do not exceed one-half of 1% of the total
assets of the fund.

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you to either bring the value
of the shares held in the account up to the minimum or to establish an automatic
investment that is the equivalent of at least $50 per month. If action is not
taken within 90 days of the letter's date, the shares held in the account will
be redeemed and the proceeds from the redemption will be sent by check to your
address of record. We reserve the right to increase the investment minimums.

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee would be
required when:

o redeeming more than $25,000; or

o establishing or increasing a Check-A-Month or automatic transfer on an
existing account.

You can obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.

SPECIAL SHAREHOLDER SERVICES

We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.

Our special shareholder services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a
week, at 1-800-345-8765. By calling

Prospectus How to Invest with American Century Investments 15

the Automated Information Line, you may listen to fund prices, yields and total
return figures. You may also use the Automated Information Line to make
investments into your accounts (if we have your bank information on file) and
obtain your share balance, value and most recent transactions. If you have
authorized us to accept telephone instructions, you also may exchange shares
from one fund to another via the Automated Information Line. Redemption
instructions cannot be given via the Automated Information Line.

ONLINE ACCOUNT ACCESS

You may contact us 24 hours a day, seven days a week, at
www.americancentury.com to access your funds' daily share prices, receive
updates on major market indexes and view historical performance of your funds.
If you select "Full Services" on your application, you can use your personal
access code and Social Security number to view your account balances and account
activity, make subsequent investments from your bank account or exchange shares
from one fund to another.

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.

If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.

Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.

TAX-QUALIFIED RETIREMENT PLANS

The fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:

o Individual Retirement Accounts (IRAs);

o 403(b)plans for employees of public school systems and non-profit
organizations; or

o Profit sharing plans and pension plans for corporations and other
employers.

If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.

You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.

IMPORTANT POLICIES REGARDING YOUR INVESTMENTS

Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.

(1) We reserve the right for any reason to suspend the offering of shares
for a period of time, or to reject any specific purchase order
(including purchases by exchange). Additionally, purchases may be
refused if, in the opinion of the manager, they are of a size that
would disrupt the management of the fund.

(3) Shares being acquired must be qualified for sale in your state of
residence.

16 How to Invest with American Century Investments American Century Investments

(4) Transactions requesting a specific price and date, other than open
orders, will be refused. Once you have mailed or otherwise transmitted
your transaction instructions to us, they may not be modified or
canceled.

(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require
evidence satisfactory to us of the authority of the individual making
the request.

(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include
requesting personal identification from callers, recording telephone
calls, and providing written confirmations of telephone transactions.
These procedures are designed to protect shareholders from
unauthorized or fraudulent instructions. If we do not employ
reasonable procedures to confirm the genuineness of instructions, then
we may be liable for losses due to unauthorized or fraudulent
instructions. The company, its transfer agent and investment advisor
will not be responsible for any loss due to instructions they
reasonably believe are genuine.

(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary
Elizabeth Jones, she should sign that way and not as Mary E. Jones.

(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you
experience difficulty in reaching us during such periods, you may send
your transaction instructions by mail, express mail or courier
service, or you may visit one of our Investors Centers. You may also
use our Automated Information Line if you have requested and received
an access code and are not attempting to redeem shares.

(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 per hour may be applied.

REPORTS TO SHAREHOLDERS

At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all year-to-date
activity in your account. You may request a statement of your account activity
at any time.

With the exception of most automatic transactions, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transaction. See the Investor Services Guide for more detail.

Carefully review all the information relating to transactions on your
statements and confirmations to ensure that your instructions were acted on
properly. Please notify us immediately in writing if there is an error. If you
fail to provide notification of an error with reasonable promptness, i.e.,
within 30 days of non-automatic transactions or within 30 days of the date of
your consolidated quarterly statement, in the case of automatic transactions, we
will deem you to have ratified the transaction.

No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.

Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.

Prospectus How to Invest with American Century Investments 17

EMPLOYER SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the fund,
exchange them for shares of other American Century funds, and redeem them will
depend on the terms of your plan.

18 How to Invest with American Century Investments American Century Investments

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of the fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. Net asset value for Balanced is determined at the close of regular
trading on each day that the New York Stock Exchange is open.

Investments and requests to redeem or exchange shares will receive the
share price next determined after receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents before the close of business on the
New York Stock Exchange, usually 3 p.m. Central time, are effective on, and will
receive the price determined, that day as of the close of the Exchange.
Investment, redemption and exchange requests received thereafter are effective
on, and receive the price determined as of, the close of the Exchange on, the
next day the Exchange is open.

Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the close of business on the Exchange.

Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.

Investment and transaction instructions received by us on any business day
by mail prior to the close of business on the Exchange, will receive that day's
price. Investments and instructions received after that time will receive the
price determined on the next business day.

If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the fund's transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the fund's procedures or any contractual arrangements with the
fund or the fund's distributor in order for you to receive that day's price.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be summarized
as follows:

Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.

The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of business on the New York Stock Exchange, if that
is earlier. That value is then exchanged to dollars at the prevailing foreign
exchange rate.

Prospectus Additional Information You Should Know 19

asset value per share was determined that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the board of directors.

Trading of these securities in foreign markets may not take place on every
New York Stock Exchange business day. In addition, trading may take place in
various foreign markets on Saturdays or on other days when the New York Stock
Exchange is not open and on which the fund's net asset value is not calculated.
Therefore, such calculation does not take place contemporaneously with the
determination of the prices of many of the portfolio securities used in such
calculation and the value of the fund's portfolio may be affected on days when
shares of the fund may not be purchased or redeemed.

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset value of the Investor Class of the fund is published in
leading newspapers daily. The net asset value of the fund may also be obtained
by calling us or by accessing our Web site at www.americancentury.com.

DISTRIBUTIONS

Distributions from net investment income are declared and paid quarterly.
Distributions from net realized securities gains, if any, are declared and paid
once a year, but the fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code and
Regulations, in all events in a manner consistent with the provisions of the
Investment Company Act.

Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 59 1/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date. Please consult our Investor Services Guide for
further information regarding your distribution options.

A distribution on shares of the fund does not increase the value of your
shares or your total return. At any given time the value of your shares includes
the undistributed net gains, if any, realized by the fund on the sale of
portfolio securities, and undistributed dividends and interest received, less
fund expenses.

Because such gains and dividends are included in the value of your shares,
when they are distributed, the value of your shares is reduced by the amount of
the distribution. If you buy your share through a taxable account just before
the distribution, you will pay the full price for your shares, and then receive
a portion of the purchase price back as a taxable distribution.
See "Taxes," this page.

TAXES

The fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders
it pays no income tax.

TAX-DEFERRED ACCOUNTS

If fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the funds will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.

TAXABLE ACCOUNTS

20 Additional Information You Should Know American Century Investments

be treated as a long-term capital loss to the extent of any distribution of
long-term capital gain to you with respect to such shares.

Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) will not have increased. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains.

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

If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, we are required by federal law to withhold and remit to
the IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.

Redemption of shares of the fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders have held
such shares for a period of more than one year.If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Code, resulting in a postponement of the recognition of such loss for
federal income tax purposes.

Prospectus Additional Information You Should Know 21

MANAGEMENT

INVESTMENT MANAGEMENT

Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the fund. Acting pursuant
to an investment advisory agreement entered into with the fund, American Century
Investment Management, Inc. serves as the investment manager of the fund. Its
principal place of business is American Century Tower, 4500 Main Street, Kansas
City, Missouri 64111. The manager has been providing investment management
services to investment companies and institutional clients since it was founded
in 1958.

The manager supervises and manages the investment portfolio of the fund and
directs the purchase and sale of its investment securities. It utilizes a team
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the fund. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. The team adjusts holdings in
the portfolio as it deems appropriate in pursuit of the fund's investment
objectives. Individual portfolio manager members of the team may also adjust
portfolio holdings of the fund as necessary between team meetings.

The portfolio manager members of the team managing Balanced and their work
experience for the last five years are as follows:

JAMES E. STOWERS III, President and Portfolio Manager, joined American
Century in 1981. He is a member of the team that manages the equity portion of
Balanced.

BRUCE A. WIMBERLY, Portfolio Manager, joined American Century in September
1994 as an Investment Analyst, a position he held until July 1996. At that time
he was promoted to Portfolio Manager. Prior to joining American Century, Mr.
Wimberly attended Kellogg Graduate School of Management, Northwestern University
from August 1992 to August 1994, where he obtained his MBA degree. Prior to that
he served as a Research Analyst for Frontier Capital Management Company, Boston,
Massachusetts. Mr. Wimberly is a member of the team that manages the equity
portion of Balanced.

NORMAN E. HOOPS, Senior Vice President and Fixed Income Portfolio
Manager, joined American Century as Vice President and Portfolio Manager in
November 1989. In April 1993, he became Senior Vice President. He is a member
of the team that manages the fixed income portion of Balanced.

JEFFREY L. HOUSTON, Portfolio Manager, has worked for American Century
since November 1990. He is a member of the team that manages the fixed income
portion of Balanced.

For the services provided to the Investor Class of the fund, the manager
receives an annual fee of 1% of the average net assets.

CODE OF ETHICS

22 Additional Information You Should Know American Century Investments

With respect to Portfolio Managers and other investment personnel, the Code of
Ethics prohibits acquisition of securities in an initial public offering, as
well as profits derived from the purchase and sale of the same security within
60 calendar days. These provisions are designed to ensure that the interests of
fund shareholders come before the interests of the people who manage those
funds.

TRANSFER AND ADMINISTRATIVE SERVICES

Certain recordkeeping and administrative services that would otherwise be
performed by the transfer agent may be performed by an insurance company or
other entity providing similar services for various retirement plans using
shares of the fund as a funding medium, by broker-dealers and financial advisors
for their customers investing in shares of American Century or by sponsors of
multi mutual fund no- or low-transaction fee programs. The manager or an
affiliate may enter into contracts to pay them for such recordkeeping and
administrative services out of its unified management fee.

Although there is no sales charge levied by the fund, transactions in
shares of the fund may be executed by brokers or investment advisors who charge
a transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the fund or the
investment manager. You should be aware of the fact that these transactions may
be made directly with American Century without incurring such fees.

From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the manager.

The manager and transfer agent are both wholly owned by American Century
Companies, Inc. James E. Stowers Jr., Chairman of the fund's Board of Directors,
controls American Century Companies by virtue of his ownership of a majority of
its common stock.

DISTRIBUTION OF FUND SHARES

The fund's shares are distributed by American Century Investment Services,
Inc. (the "Distributor"), a registered broker-dealer and an affiliate of the
fund's investment manager. The manager pays all expenses for promoting and
distributing the Investor Class of fund shares offered by this Prospectus. The
Investor Class of shares does not pay any commissions or other fees to the
Distributor or to any other broker-dealers or financial intermediaries in
connection with the distribution of fund shares.

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Mutual Funds, Inc., the issuer of the funds, was organized
as a Maryland corporation on July 2, 1990. The corporation commenced operations
on February 28, 1991, the date it merged with Twentieth Century Investors, Inc.,
a Delaware corporation which had been in business since October 1958. Pursuant
to the terms of the Agreement and Plan of Merger dated July 27, 1990, the
Maryland corporation was the surviving entity and continued the business of the
Delaware corporation with the same officers and directors, the same shareholders
and the same investment objectives, policies and restrictions.

American Century Mutual Funds, Inc. issues 17 series of $.01 par value
shares. Each series is commonly referred to as a fund. The assets belonging to
each series of shares are held separately by the custodian.

American Century offers four classes of Balanced: an Investor Class, an
Institutional Class, a Service Class, and an Advisor Class. The shares offered
by this Prospectus are Investor Class shares and have no up-front charges,
commissions, or 12b-1 fees.

Prospectus Additional Information You Should Know 23

The other classes of shares are primarily offered to institutional
investors or through institutional distribution channels, such as
employer-sponsored retirement plans or through banks, broker-dealers, insurance
companies or other financial intermediaries. The other classes have different
fees, expenses, and/or minimum investment requirements than the Investor Class.
Different fees and expenses will affect performance. For additional information
concerning the other classes of shares not offered by this Prospectus, call us
at 1-800-345-3533 or contact a sales representative or financial intermediary
who offers those classes of shares.

Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable to such share on all questions, except
for those matters which must be voted on separately by the series or class of
shares affected. Matters affecting only one series or class are voted upon only
by that series or class.

Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.

Unless required by the Investment Company Act, it will not be necessary for
the fund to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.

24 Additional Information You Should Know American Century Investments

NOTES

Prospectus Notes 25

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

Person-to-person assistance:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865

Fax: 816-340-7962

Internet: www.americancentury.com

[company logo]

9701
SH-BKT-6566

[recycled logo]
Recycled

[back cover]

PROSPECTUS

[american century logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

BENHAM
GROUP(R)

Cash Reserve

INVESTOR CLASS

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering stocks,
bonds, money markets, specialty investments and blended portfolios. To help you
find the funds that may meet your investment needs, American Century funds have
been divided into three groups based on investment style and objectives. These
groups, which appear below, are designed to help simplify your fund decisions.

AMERICAN CENTURY INVESTMENTS

BENHAM GROUP AMERICAN CENTURY TWENTIETH CENTURY(R)
GROUP GROUP

MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS

Cash Reserve

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

CASH RESERVE
INVESTOR CLASS

AMERICAN CENTURY MUTUAL FUNDS, INC.

American Century Mutual Funds, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. One of the money market funds
from our Benham Group is described in this Prospectus. Its investment objective
is listed on page 2 of this Prospectus. The other funds are described in
separate prospectuses.

Through its Investor Class of shares, American Century offers investors a
full line of no-load funds, investments that have no sales charges or
commissions.

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

Prospectus 1

INVESTMENT OBJECTIVE OF THE FUND

AMERICAN CENTURY-BENHAM CASH RESERVE FUND

Cash Reserve is a money market fund which seeks to obtain maximum current
income consistent with the preservation of principal and maintenance of
liquidity. The fund intends to pursue its investment objective by investing
substantially all of its assets in a portfolio of money market instruments and
maintaining a weighted average maturity of not more than 90 days.

Investments in the fund are not insured or guaranteed by the U.S.
government or any other agency. There is no assurance that the fund will be able
to maintain a $1.00 share price.

There is no assurance that the fund will achieve its investment objective.

NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.

2 Investment Objective American Century Investments

TABLE OF CONTENTS

Transaction and Operating Expense Table.......................4
Financial Highlights..........................................5

INFORMATION REGARDING THE FUND

Investment Policies of the Fund...............................6
Cash Reserve...............................................6
Other Investment Practices, Their
Characteristics and Risks..................................6
Repurchase Agreements......................................6
Derivative Securities......................................7
Portfolio Lending..........................................7
Foreign Securities.........................................8
When-Issued Securities.....................................8
Rule 144A Securities.......................................8
Performance Advertising.......................................8

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

American Century Investments..................................10
Investing in American Century.................................10
How to Open an Account........................................10
By Mail .................................................10
By Wire..................................................10
By Exchange..............................................11
In Person................................................11
Subsequent Investments.....................................11
By Mail .................................................11
By Telephone.............................................11
By Online Access.........................................11
By Wire..................................................11
In Person................................................11
Automatic Investment Plan..................................11
How to Exchange from One Account to Another...................11
By Mail..................................................11
By Telephone.............................................12
By Online Access.........................................12
How to Redeem Shares..........................................12
By Mail .................................................12
By Telephone.............................................12
By Check-A-Month.........................................12
Other Automatic Redemptions..............................12
Redemption Proceeds........................................12
By Check ................................................12
By Wire and ACH..........................................12
Redemption of Shares in Low-Balance Accounts...............12
Signature Guarantee...........................................13
Special Shareholder Services..................................13
Automated Information Line...............................13
CheckWriting.............................................13
Online Account Access....................................13
Open Order Service.......................................14
Tax-Qualified Retirement Plans...........................14
Important Policies Regarding Your Investments.................14
Reports to Shareholders.......................................15
Employer-Sponsored Retirement Plans and
Institutional Accounts.....................................15

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price...................................................16
When Share Price Is Determined.............................16
How Share Price Is Determined..............................16
Where to Find Yield Information............................16
Distributions.................................................16
Taxes.........................................................17
Tax-Deferred Accounts......................................17
Taxable Accounts...........................................17
Management....................................................17
Investment Management......................................17
Code of Ethics.............................................18
Transfer and Administrative Services.......................18
Distribution of Fund Shares...................................19
Further Information About American Century....................19

Prospectus Table of Contents 3

TRANSACTION AND OPERATING EXPENSE TABLE

Cash
Reserve

SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases........................ none
Maximum Sales Load Imposed on Reinvested Dividends............. none
Deferred Sales Load............................................ none
Redemption Fee(1).............................................. none
Exchange Fee................................................... none

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS):
Management Fees................................................ 0.70%
12b-1 Fees..................................................... none
Other Expenses(2).............................................. 0.00%
Total Fund Operating Expenses.................................. 0.70%

EXAMPLE:
You would pay the following expenses on a 1 year $ 7
$1,000 investment, assuming a 5% annual return 3 years 22
and redemption at the end of each time period: 5 years 39
10 years 87

(1) Redemption proceeds sent by wire are subject to a $10 processing charge.

(2) Other expenses, which include the fees and expenses (including legal
counsel fees) of those directors who are not "interested persons" as
defined in the Investment Company Act, were 0.0014 of 1% of average net
assets for the most recent fiscal year.

The purpose of the table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of Cash Reserve offered by
this Prospectus. The example set forth above assumes reinvestment of all
dividends and distributions and uses a 5% annual rate of return as required by
Securities and Exchange Commission regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The shares offered by this Prospectus are Investor Class shares and have no
up-front or deferred sales charges, commissions, or 12b-1 fees. The fund offers
two other classes of shares, primarily to institutional investors, that have
different fee structures than the Investor Class, resulting in different
performance for the other classes. For additional information about the various
classes, see "Further Information About American Century," page 19.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS
CASH RESERVE(1)

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The annual report
contains additional performance information and will be made available upon
request and without charge. The information presented is for a share outstanding
throughout the years ended October 31, except as noted.
<TABLE>

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net Asset Value,
Beginning of Period ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment
Operations
Net Investment Income ...... .05(2) .03 .02 .04 .06 .07 .08 .07 .06 .06
Net Realized and
Unrealized Gains
on Investment Transactions -- -- -- -- -- -- -- -- -- .001
Total from
Investment Operations .... .05 .03 .02 .04 .06 .07 .08 .07 .06 .06
Distributions
From Net Investment Income . (.052) (.032) (.023) (.037) (.058) (.074) (.083) (.065) (.056) (.062)
From Net Realized Gains
on Investment Transactions -- -- -- -- -- -- -- -- -- (.001)
Total Distributions ........ (.052) (.032) (.023) (.037) (.058) (.074) (.083) (.065) (.056) (.063)
Net Asset Value,
End of Period ................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return(3) ............ 5.38% 3.21% 2.30% 3.74% 5.95% 7.67% 8.66% 6.73% 5.75% 6.46%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ....... .70% .80% 1.00% .98%(4) .97%(4) 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of Net Investment
Income to Average
Net Assets .................... 5.27% 3.18% 2.30% 3.62% 5.75% 7.40% 8.35% 6.52% 5.80% 5.83%
Net Assets, End of
Period (in thousands) ..... $1,469,546 $1,298,982 $1,256,012 $1,487,961 $1,236,309 $953,687 $639,115 $488,781 $447,917 $134,958
</TABLE>
(1) The data presented has been restated to give effect to a 100 shares for 1
stock split in the form of a stock dividend that occurred on November 13,
1993.

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

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

(4) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

Prospectus Financial Highlights 5

INFORMATION REGARDING THE FUND

INVESTMENT POLICIES OF THE FUND

The fund has adopted certain investment restrictions that are set forth in
the Statement of Additional Information. Those restrictions, as well as the
investment objective of the fund identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The fund has implemented additional investment policies
and practices to guide its activities in the pursuit of its respective
investment objectives. These policies and practices, which are described
throughout this Prospectus, are not designated as fundamental policies and may
be changed without shareholder approval.

For an explanation of the securities ratings referred to in the following
discussion, see "An Explanation of Fixed Income Securities Ratings" in the
Statement of Additional Information.

CASH RESERVE

Cash Reserve, which seeks to obtain a level of current income consistent
with preservation of capital and maintenance of liquidity, requires a minimum
investment of $2,500 ($1,000 for IRAs). Cash Reserve is designed for investors
who want income and no fluctuation in their principal.

Cash Reserve expects, but cannot guarantee, that it will maintain a
constant share price of $1.00. The fund follows industry-standard guidelines on
the quality and maturity of its investments, purchasing only securities having
remaining maturities of not more than 13 months and by maintaining a weighted
average portfolio maturity of not more than 90 days.

Cash Reserve invests substantially all of its assets in a diversified
portfolio of U.S. dollar denominated high quality money market instruments,
consisting of:

(1) Securities issued or guaranteed by the U.S. government and its
agencies and instrumentalities

(2) Commercial Paper

(3) Certificates of Deposit and Euro Dollar Certificates of Deposit

(4) Bankers' Acceptances

(5) Short-term notes, bonds, debentures, or other debt instruments

(6) Repurchase agreements

These classes of securities may be held in any proportion, and such
proportion may vary as market conditions change.

All portfolio holdings are limited to those which at the time of purchase
have a short-term rating of A-1 by Standard & Poor's Corporation ("S&P") or P-1
by Moody's Investors Services ("Moody's"), or if they have no short-term rating
are issued or guaranteed by an entity having a long-term rating of at least AA
by S&P or Aa by Moody's.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS AND RISKS

For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.

REPURCHASE AGREEMENTS

6 Information Regarding the Fund American Century Investments

seeks relief under the bankruptcy laws, the disposition of the collateral may be
delayed or limited. To the extent the value of the security decreases, the fund
could experience a loss.

The fund may invest in repurchase agreements with respect to any security
in which the fund is authorized to invest, even if the remaining maturity of the
underlying security would make that security ineligible for purchase by such
fund. The fund will not invest more than 10% of its assets in repurchase
agreements maturing in more than seven days.

DERIVATIVE SECURITIES

To the extent permitted by its investment objectives and policies, the fund
may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.

The fund may not invest in a derivative security unless the reference index
or the instrument to which it relates is an eligible investment for the fund.

The return on a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.

There are a range of risks associated with derivative investments,
including:

o the risk that the underlying security, interest rate, market index or
other financial asset will not move in the direction the portfolio
manager anticipates;

o the risk that adverse price movements in an instrument can result in a
loss substantially greater than a fund's initial investment; and

o the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the Board of Directors as necessary. In addition, the
Board will review the manager's policy for investments in derivative securities
annually.

PORTFOLIO LENDING

In order to realize additional income, the fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including, if
applicable, the right to call the loan to enable the fund to vote the
securities. Such loans may not exceed one-third of the fund's net assets taken
at market. Interest on loaned

Prospectus Information Regarding the Fund 7

securities may not exceed 10% of the annual gross income of the fund (without
offset for realized capital gains). The portfolio lending policy described in
this paragraph is a fundamental policy that may be changed only by a vote of
fund shareholders.

FOREIGN SECURITIES

The fund may invest an unlimited amount of its assets in the securities of
foreign issuers, including foreign governments, when these securities meet its
standards of selection. Securities of foreign issuers may trade in the U.S. or
foreign securities markets. The fund will limit its purchase of debt securities
to U.S. dollar denominated obligations. Such securities will be primarily from
developed markets.

Investments in foreign securities may present certain risks, including
those resulting from future political and economic developments, reduced
availability of public information concerning issuers, and the fact that foreign
issuers are not generally subject to uniform accounting, auditing and financial
reporting standards or to other regulatory practices and requirements comparable
to those applicable to domestic issuers.

WHEN-ISSUED SECURITIES

The fund may sometimes purchase new issues of securities on a when-issued
basis without the limit when, in the opinion of the manager, such purchases will
further the investment objectives of the fund. The price of when-issued
securities is established at the time commitment to purchase is made. Delivery
of and payment for these securities typically occurs 15 to 45 days after the
commitment to purchase. Market rates of interest on debt securities at the time
of delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of each security may decline prior to delivery,
which could result in a loss to the fund. A separate account for the fund
consisting of cash or high-quality liquid debt securities in an amount at least
equal to the when-issued commitments will be established and maintained with the
custodian. No income will accrue to the fund prior to delivery.

RULE 144A SECURITIES

With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors of the fund has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the manager.
The Board retains the responsibility to monitor the implementation of the
guidelines and procedures it has adopted.

Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and the fund may, from time to time, hold a Rule 144A
security that is illiquid. In such an event, the manager will consider
appropriate remedies to minimize the effect on the fund's liquidity. The fund
may not invest more than 10% of its assets, in illiquid securities (securities
that may not be sold within seven days at approximately the price used in
determining the net asset value of fund shares).

PERFORMANCE ADVERTISING

From time to time, the fund may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return, yield and
effective yield. Performance data may be quoted separately for the Investor
Class and for the other classes offered by the funds.

Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,

8 Information Regarding the Fund American Century Investments

over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.

A quotation of yield reflects a fund's income over a stated period of time
expressed as a percentage of the fund's share price. In the case of Cash
Reserve, yield is calculated by measuring the income generated by an investment
in the fund over a seven-day period (net of fund expenses). This income is then
"annualized." That is, the amount of income generated by the investment over the
seven-day period is assumed to be generated over each similar period each week
throughout a full year and is shown as a percentage of the investment. The
"effective yield" is calculated in a similar manner but, when annualized, the
income earned by the investment is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of the
assumed reinvestment.

Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules for all stock and bond funds. Because yield
accounting methods differ from the methods used for other accounting purposes,
the fund's yield may not equal the income paid on your shares or the income
reported in the fund's financial statements.

The fund may also include in advertisements data comparing performance with
the performance of non-related investment media, published editorial comments
and performance rankings compiled by independent organizations (such as Lipper
Analytical Services or Donoghue's Money Fund Report) and publications that
monitor the performance of mutual funds. Performance information may be quoted
numerically or may be presented in a table, graph or other illustration. In
addition, fund performance may be compared to well-known indices of market
performance including the Donoghue's Money Fund Average and the Bank Rate
Monitor National Index of 21/2-year CD rates. Fund performance may also be
compared, on a relative basis, to other funds in our fund family. This relative
comparison, which may be based upon historical or expected fund performance,
volatility or other fund characteristics, may be presented numerically,
graphically or in text. Fund performance may also be combined or blended with
other funds in our fund family, and that combined or blended performance may be
compared to the same indices to which individual funds may be compared.

All performance information advertised by the fund is historical in nature
and is not intended to represent or guarantee future results.

Prospectus Information Regarding the Fund 9

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

AMERICAN CENTURY INVESTMENTS

INVESTING IN AMERICAN CENTURY

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as information contained
in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 15.

HOW TO OPEN AN ACCOUNT

To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.

The minimum investment is $2,500 ($1,000 for IRA accounts).

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:

o Receiving bank and routing number:
Commerce Bank, N.A. (101000019)

o Beneficiary (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

o Beneficiary account number (BNF ACCT):
2804918

o Reference for Beneficiary (RFB):
American Century account number into which you are investing. If more
than one, leave blank and see Bank to Bank Information below.

o Originator to Beneficiary (OBI):
Name and address of owner of account into which you are investing.

o Bank to Bank Information (BBI or Free Form Text):

o Taxpayer identification or Social Security number.

o If more than one account, account numbers and amount to be
invested in each account.

o Current tax year, previous tax year or rollover designation if an
IRA. Specify whether IRA, SEP-IRA or SARSEP-IRA.

10 How to Invest with American Century Investments American Century Investments

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:

4500 Main Street
Kansas City, Missouri 64111

1665 Charleston Road
Mountain View, California 94043

2000 S. Colorado Blvd.
Denver, Colorado 80222

SUBSEQUENT INVESTMENTS

Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see "Automatic Investment Plan," on this page) or by
any of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the remittance portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.

BY MAIL

When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.

BY ONLINE ACCESS

Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 10 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.

AUTOMATIC INVESTMENT PLAN

HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER

As long as you meet any minimum investment requirements, you may exchange
your Cash Reserve fund shares to our other funds. An exchange request will be
processed the same day it is received if it is received before the funds' net
asset values are calculated, which is one hour prior to the close of the New
York Stock Exchange for the Benham Target Maturities Trust, and at the close of
the Exchange for all of our other funds.

BY MAIL

You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.

Prospectus How to Invest with American Century Investments 11

BY TELEPHONE

You may make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line--see page 13) if you have
authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to receive the appropriate form.

BY ONLINE ACCESS

You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a completed redemption request
is received.

Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.

BY MAIL

Your written instructions to redeem shares may be made either by a
redemption form, which we will send you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 13.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

You may redeem shares by Check-A-Month. A Check-A-Month plan automatically
redeems enough shares each month to provide you with a check in an amount you
choose (minimum $50). To set up a Check-A-Month plan, please call and request
our Check-A-Month brochure.

OTHER AUTOMATIC REDEMPTIONS

You may elect to make redemptions automatically by authorizing us to send
funds to you or your account at a bank or other financial institution. To set up
automatic redemptions, call one of our Investor Services Representatives.

REDEMPTION PROCEEDS

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.

REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS

Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you of the necessity of
bringing the value of the shares held in the account up to the minimum. If
action is not taken within 90 days of the letter's date, the shares held in the
account will be redeemed and the proceeds from the redemption will be sent by
check to your address of record. We reserve the right to increase the investment
minimums.

12 How to Invest with American Century Investments American Century Investments

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee will be required
when:

o Redeeming more than $25,000

o Establishing or increasing a Check-A-Month or automatic transfer on an
existing account

You may obtain a signature guarantee from a bank or trust company, credit
union, broker, dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.

SPECIAL SHAREHOLDER SERVICES

We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.

Our special shareholder services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.

CHECKWRITING

We offer CheckWriting as a service option for your Cash Reserve account.
CheckWriting allows you to redeem shares in your account by writing a draft
("check") against your account balance. (Shares held in certificate form may not
be redeemed by check.) There is no limit on the number of checks you can write,
but each one must be for at least $100.

When you write a check, you will continue to receive dividends on all
shares until your check is presented for payment to our clearing bank. If you
redeem all shares in your account by check, any accrued distributions on the
redeemed shares will be paid to you in cash on the next monthly distribution
date.

If you want to add CheckWriting to an existing account that offers
CheckWriting, contact us by phone or mail for an appropriate form. For a new
account, you may elect CheckWriting on your purchase application by choosing the
Full Services option. CheckWriting is not available for any account held in an
IRA or 403(b) plan.

CheckWriting redemptions may only be made on checks provided by us.
Currently, there is no charge for checks or for the CheckWriting service.

We will return checks drawn on insufficient funds or on funds from
investments made by any means other than by wire within the previous 15 days.
Neither the company nor our clearing bank will be liable for any loss or
expenses associated with returned checks. Your account may be assessed a $15
service charge for checks drawn on insufficient funds.

A stop payment may be ordered on a check written against your account. We
will use reasonable efforts to stop a payment, but we cannot guarantee that we
will be able to do so. If we are successful in fulfilling a stop-payment order,
your account may be assessed a $15 fee.

ONLINE ACCOUNT ACCESS

You may contact us 24 hours a day, seven days a week at
www.americancentury.com to access your funds' daily share prices, receive
updates on major market indexes and view historical performance of your funds.
If you select "Full Services" on your application, you can use your personal
access code and Social Security number to view your account balances and account
activity, make subsequent investments

Prospectus How to Invest with American Century Investments 13

from your bank account or exchange shares from one fund to another.

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.

If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.

Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.

TAX-QUALIFIED RETIREMENT PLANS

The fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:

o Individual Retirement Accounts (IRAs)

o 403(b) plans for employees of public school systems and non-profit
organizations

o Profit sharing plans and pension plans for corporations and other
employers

If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.

You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.

IMPORTANT POLICIES REGARDING YOUR INVESTMENTS

Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.

(3) Shares being acquired must be qualified for sale in your state of
residence.

(4) Transactions requesting a specific price and date, other than open
orders, will be refused. Once you have mailed or otherwise transmitted
your transaction instructions to us, they may not be modified or
canceled.

(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require
evidence satisfactory to us of the authority of the individual making
the request.

(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include
requesting personal identification from callers, recording telephone
calls, and providing written confirmations of telephone transactions.
These procedures are designed to protect shareholders from
unauthorized or fraudulent instructions. If we do not employ
reasonable procedures to confirm the genuineness of instructions, then
we may be liable for losses due to unauthorized or fraudulent
instructions. The company, its transfer agent and investment

14 How to Invest with American Century Investments American Century Investments

advisor will not be responsible for any loss due to instructions they
reasonably believe are genuine.

(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary
Elizabeth Jones, she should sign that way and not as Mary E. Jones.

(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you
experience difficulty in reaching us during such periods, you may send
your transaction instructions by mail, express mail or courier
service, or you may visit one of our Investors Centers. You may also
use our Automated Information Line if you have requested and received
an access code and are not attempting to redeem shares.

(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 per hour may be applied.

REPORTS TO SHAREHOLDERS

At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all year-to-date
activity in your account. You may request a statement of your account activity
at any time.

With the exception of most automatic transactions and CheckWriting
activity, each time you invest, redeem, transfer or exchange shares, we will
send you a confirmation of the transaction. CheckWriting activity will be
confirmed monthly. See the Investor Services Guide for more detail.

No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.

Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.

EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS

Prospectus How to Invest with American Century Investments 15

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of the fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. Net asset value for Cash Reserve is determined at the close of
regular trading on each day that the New York Stock Exchange is open.

Investments and requests to redeem shares will receive the share price next
determined after we receive your investment, redemption or exchange request. For
example, investments and requests to redeem or exchange shares received by us or
one of our agents before the close of business on the New York Stock Exchange,
usually 3 p.m. Central time, are effective on, and will receive the price
determined, that day as of the close of the Exchange. Investment, redemption and
exchange requests received thereafter are effective on, and receive the price
determined as of the close of the Exchange on, the next day the Exchange is
open.

Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the close of business on the Exchange.

Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.

Investment and transaction instructions received by us on any business day
by mail prior to the close of business on the Exchange will receive that day's
price. Investments and instructions received after that time will receive the
price determined on the next business day.

If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the fund's transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the fund's procedures or any contractual arrangement with the
fund or the fund's distributor in order for you to receive that day's price.

HOW SHARE PRICE IS DETERMINED

The securities held by the fund are valued on the basis of amortized cost.
This method involves initially valuing a security at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium paid at
the time of the purchase, rather than determining the security's market value
from day to day.

WHERE TO FIND YIELD INFORMATION

The yield of the Investor Class of Cash Reserve is published weekly in
leading financial publications and daily in many local newspapers. Yield
information may also be obtained by calling us or by accessing our Web site at
www.americancentury.com.

DISTRIBUTIONS

At the close of each day, including Saturdays, Sundays and holidays, net
income plus net realized gains on portfolio securities is determined and
declared as a distribution. The distribution will be paid monthly on the last
Friday of each month, except for year-end distributions which will be made on
the last business day of the year.

You will begin to participate in the distributions the day AFTER your
purchase is effective. See "When Share Price is Determined," above. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed (other than by CheckWriting), the
distribution on the redeemed shares will be included with your redemption
proceeds.

Cash Reserve does not expect to realize any long-term capital gains, and
accordingly, does not expect to pay any capital gains distributions.

Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For

16 Additional Information You Should Know American Century Investments

shareholders investing through taxable accounts, distributions will be
reinvested unless you elect to receive them in cash. Distributions of less than
$10 generally will be reinvested. Distributions made shortly after a purchase by
check or ACH may be held up to 15 days. You may elect to have distributions on
shares held in Individual Retirement Accounts and 403(b) plans paid in cash only
if you are at least 591/2 years old or permanently and totally disabled.
Distribution checks normally are mailed within seven days after the record date.
Please consult our Investor Services Guide for further information regarding
your distribution options.

TAXES

The fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders,
it pays no income taxes.

TAX-DEFERRED ACCOUNTS

If fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.

TAXABLE ACCOUNTS

Distributions are taxable to you regardless of whether they are taken in
cash or reinvested.

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

If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, we are required by federal law to withhold and remit to
the IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.

MANAGEMENT

INVESTMENT MANAGEMENT

Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the fund. Acting pursuant
to an investment management agreement entered into with the fund, American
Century Investment Management, Inc., serves as the investment manager of the
fund. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri, 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since 1958.

Prospectus Additional Information You Should Know 17

The portfolio manager members of the teams managing the fund and their work
experience for the last five years are as follows:

ROBERT V. GAHAGAN, Vice President and Portfolio Manager, has worked for
American Century since May 1983. He became a Portfolio Manager in December
1991. Prior to that he served as Assistant Portfolio Manager.

AMY O'DONNELL, Portfolio Manager, joined Benham in 1988, becoming a member
of its portfolio department in 1988. In 1992 she assumed her current position as
a Portfolio Manager of three other Benham funds.

For the services provided to the fund, the manager receives an annual fee
of 0.70% of the average net assets of Cash Reserve.

On the first business day of each month, the fund pays a management fee to
the manager for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for the fund by
the aggregate average daily closing value of the fund's net assets during the
previous month by a fraction, the numerator of which is the number of days in
the previous month and the denominator of which is 365 (366 in leap years).

CODE OF ETHICS

The fund and the manager have adopted a Code of Ethics, which restricts
personal investing practices by employees of the manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the fund's portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.

TRANSFER AND ADMINISTRATIVE SERVICES

American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri, 64111, acts as transfer and dividend-paying agent for the fund. It
provides facilities, equipment and personnel to the fund and is paid for such
services by the manager.

Certain recordkeeping and administrative services that would otherwise be
performed by the transfer agent may be performed by an insurance company or
other entity providing similar services for various retirement plans using
shares of the fund as a funding medium, by broker-dealers and financial advisors
for their customers investing in shares of American Century or by sponsors of
multi mutual fund no- or low-transaction fee programs. The manager or an
affiliate may enter into contracts to pay them for such recordkeeping and
administrative services out of its unified management fee.

18 Additional Information You Should Know American Century Investments

From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the manager.

The manager and the transfer agent are both wholly owned by American
Century Companies, Inc. James E. Stowers Jr., Chairman of the Board of Directors
of the fund, controls American Century Companies by virtue of his ownership of a
majority of its common stock.

DISTRIBUTION OF FUND SHARES

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Mutual Funds, Inc. issues 17 series of $.01 par value
shares. Each series is commonly referred to as a fund. The assets belonging to
each series of shares are held separately by the custodian.

American Century offers three classes of Cash Reserve: an Investor Class, a
Service Class, and an Advisor Class. The shares offered by this Prospectus are
Investor Class shares and have no up-front charges, commissions, or 12b-1 fees.

The other classes of shares are primarily offered to institutional
investors or through institutional distribution channels, such as
employer-sponsored retirement plans or through banks, broker-dealers, insurance
companies or other financial intermediaries. The other classes have different
fees, expenses, and/or minimum investment requirements than the Investor Class.
Different fees and expenses will affect performance. For additional information
concerning the other classes of shares not offered by this Prospectus, call us
at 1-800-345-3533 or contact a sales representative or financial intermediary
who offers those classes of shares.

Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class, and (d) each class
may have different exchange privileges.

Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable to such share on all questions, except
those matters which must be voted on separately by the series or class of shares
affected. Matters affecting

Prospectus Additional Information You Should Know 19

only one series or class are voted upon only by that series or class.

Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.

Unless required by the Investment Company Act, it will not be necessary for
the fund to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.

20 Additional Information You Should Know American Century Investments

NOTES

Prospectus Notes 21

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

Person-to-person assistance:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865

Fax: 816-340-7962

Internet: www.americancentury.com

9609 [recycled logo]
SH-BKT-6565 Recycled

[American Century logo]

PROSPECTUS

[american century logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

BENHAM
GROUP(R)

Short-Term Government Fund
Intermediate-Term Government Fund

INVESTOR CLASS

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.

AMERICAN CENTURY INVESTMENTS

BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY(R) GROUP

MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS

Short-Term
Government Fund

Intermediate-Term
Government Fund

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

Short-Term Government Fund
Intermediate-Term Government Fund

INVESTOR CLASS

AMERICAN CENTURY MUTUAL FUNDS, INC.

American Century Mutual Funds, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. Two of the funds from our Benham
Group that invest primarily in debt instruments of the U.S. government and its
agencies are described in this Prospectus. Their investment objectives are
listed on page 2 of this Prospectus. The other funds are described in separate
prospectuses.

Through its Investor Class, American Century offers investors a full line
of no-load funds, investments that have no sales charges or commissions.

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

Prospectus 1

INVESTMENT OBJECTIVES OF THE FUNDS

AMERICAN CENTURY--BENHAM
SHORT-TERM GOVERNMENT FUND

The Short-Term Government Fund seeks a competitive level of income. The
fund intends to pursue its investment objective by investing in securities of
the U.S. government and its agencies and maintaining a weighted average maturity
of three years or less.

AMERICAN CENTURY--BENHAM
INTERMEDIATE-TERM GOVERNMENT FUND

The Intermediate-Term Government Fund seeks a competitive level of income.
The fund intends to pursue its investment objective by investing in securities
of the U.S. government and its agencies and maintaining a weighted average
maturity of three to 10 years.

There is no assurance that the funds will achieve their respective
investment objectives.

2 Investment Objectives American Century Investments

TABLE OF CONTENTS

Transaction and Operating Expense Table ..............................4
Financial Highlights .................................................5

INFORMATION REGARDING THE FUNDS

Investment Policies of the Funds .....................................7
Short-Term Government Fund and
Intermediate-Term Government Fund .................................7
Fundamentals of Fixed Income Investing ...............................8
Other Investment Practices, Their Characteristics and Risks ..........9
Portfolio Turnover ................................................9
Repurchase Agreements .............................................9
Derivative Securities .............................................9
Portfolio Lending ................................................10
When-Issued Securities ...........................................10
Performance Advertising .............................................11

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

American Century Investments ........................................12
Investing in American Century .......................................12
How to Open an Account ..............................................12
By Mail ........................................................12
By Wire ........................................................12
By Exchange ....................................................13
In Person ......................................................13
Subsequent Investments ...........................................13
By Mail ........................................................13
By Telephone ...................................................13
By Online Access ...............................................13
By Wire ........................................................13
In Person ......................................................13
Automatic Investment Plan ........................................13
How to Exchange from One Account to Another .........................13
By Mail ........................................................14
By Telephone ...................................................14
By Online Access ...............................................14
How to Redeem Shares ................................................14
By Mail ........................................................14
By Telephone ...................................................14
By Check-A-Month ...............................................14
Other Automatic Redemptions ....................................14
Redemption Proceeds ..............................................14
By Check .......................................................14
By Wire and ACH ................................................14
Redemption of Shares in Low-Balance Accounts .....................14
Signature Guarantee .................................................15
Special Shareholder Services ........................................15
Automated Information Line .....................................15
Online Account Access ..........................................15
Open Order Service .............................................15
Tax-Qualified Retirement Plans .................................16
Important Policies Regarding Your Investments .......................16
Reports to Shareholders .............................................16
Employer-Sponsored Retirement Plans and Institutional Accounts ......17

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price .........................................................18
When Share Price Is Determined ...................................18
How Share Price Is Determined ....................................18
Where to Find Information About Share Price ......................18
Distributions .......................................................18
Taxes ...............................................................19
Tax-Deferred Accounts ............................................19
Taxable Accounts .................................................19
Management ..........................................................20
Investment Management ............................................20
Code of Ethics ...................................................21
Transfer and Administrative Services .............................21
Distribution of Fund Shares .........................................21
Further Information About American Century ..........................21

Prospectus Table of Contents 3

<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE

Intermediate-Term Short-Term
Government Fund Government Fund

SHAREHOLDER TRANSACTION EXPENSES:

<S> <C> <C>
Maximum Sales Load Imposed on Purchases ...................... none none
Maximum Sales Load Imposed on Reinvested Dividends ........... none none
Deferred Sales Load .......................................... none none
Redemption Fee(1) ............................................ none none
Exchange Fee ................................................. none none

ANNUAL FUND OPERATING EXPENSES (as a percentage of net assets):

Management Fees .............................................. 0.75% 0.70%
12b-1 Fees ................................................... none none
Other Expenses(2) ............................................ 0.00% 0.00%
Total Fund Operating Expenses ................................ 0.75% 0.70%

EXAMPLE:

You would pay the following expenses on a 1 year $8 $7
$1,000 investment, assuming a 5% annual return and 3 years 24 22
redemption at the end of each time period: 5 years 42 39
10 years 93 87
</TABLE>
(1) Redemption proceeds sent by wire are subject to a $10 processing charge.

(2) Other expenses, the fees and expenses (including legal counsel fees) of
those directors who are not "interested persons" as defined in the
Investment Company Act, were 0.0014 of 1% of average net assets for the
most recent fiscal year.

The purpose of the table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of the funds offered by
this Prospectus. The example set forth above assumes reinvestment of all
dividends and distributions and uses a 5% annual rate of return as required by
Securities and Exchange Commission regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The shares offered by this Prospectus are Investor Class shares. The funds
offer two other classes of shares, one of which is primarily made available to
retail investors and one that is primarily made available to institutional
investors. The other classes have different fee structures than the Investor
Class, resulting in different performance for those classes. For additional
information about the various classes, see "Further Information About American
Century," page 21.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS
SHORT-TERM GOVERNMENT FUND

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants.
Their report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The semiannual and
annual reports contain additional performance information and will be made
available upon request and without charge. The information presented is for a
share outstanding throughout the years ended October 31, except as noted.
<TABLE>

1995 1994 1993(1) 1992(1) 1991(1) 1990(1) 1989(1) 1988(1) 1987(1) 1986(1)

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period ............... $9.27 $9.67 $9.61 $9.41 $9.08 $9.32 $9.42 $9.55 $10.16 $9.95
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment Operations

Net Investment Income .......... .52 .40 .36 .44 .63 .79 .84 .81 .79 .87

Net Realized and Unrealized
Gain (Loss) on
Investment Transactions ........ .24 (.40) (.06) .20 .33 (.24) (.10) (.13) (.49) .27
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Income from
Investment Operations .......... .76 -- .42 .64 .96 .55 .74 .68 .30 1.14
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Distributions

From Net Investment Income ..... (.519) (.402) (.36) (.441) (.635) (.789) (.843) (.816) (.792) (.871)

From Net Realized Gains
on Investment Transactions ..... -- -- -- -- -- -- -- -- (.122) (.056)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions ............ (.519) (.402) (.36) (.441) (.635) (.789) (.843) (.816) (.914) (.927)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period .... $9.51 $9.27 $9.67 $9.61 $9.41 $9.08 $9.32 $9.41 $9.55 $10.16
======= ======= ======= =======- ======= ======= ======= ======= ======= =======
Total Return(2) ................ 8.42% .07% 4.45% 6.85% 10.99% 6.28% 8.36% 7.44% 3.14% 11.89%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets .......... .70% .81% 1.00% .99%(3) .99%(3) 1.00% 1.00% 1.00% 1.00% 1.01%

Ratio of Net Investment Income
to Average Net Assets .......... 5.53% 4.17% 3.73% 4.62% 6.88% 8.64% 9.10% 8.60% 8.10% 8.54%

Portfolio Turnover Rate ........ 128% 470% 413% 391% 779% 620% 567% 578% 468% 464%

Net Assets, End
of Period (in thousands) .......$391,331 $396,753 $511,981 $569,430 $534,515 $455,536 $443,475 $440,380 $335,601 $254,714
</TABLE>

(1) The data presented has been restated to give effect to a 10 shares for 1
stock split in the form of a stock dividend that occurred on November 13,
1993.

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

(3) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

Prospectus Financial Highlights 5

FINANCIAL HIGHLIGHTS
INTERMEDIATE-TERM GOVERNMENT FUND

1995 1994(1)

PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ................................... $9.55 $10.00
-------- --------
Income from Investment Operations

Net Investment Income ............................................... .58 .34

Net Realized and Unrealized Gain (Loss) on Investment Transactions .. .49 (.45)
-------- --------
Total Income (Loss) from Investment Operations ...................... 1.07 (.11)
-------- --------
Distributions

From Net Investment Income .......................................... (.583) (.343)
-------- --------
Total Distributions ................................................. (.583) (.343)
-------- --------
Net Asset Value, End of Period ......................................... $10.04 $9.55
======== ========
Total Return(2) ..................................................... 11.58% (1.01%)

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average Net Assets ................... .74% .75%(3)

Ratio of Net Investment Income to Average Net Assets ................ 5.99% 5.43%(3)

Portfolio Turnover Rate ............................................. 137% 205%(3)

Net Assets, End of Period (in thousands) ............................ $21,981 $6,280
</TABLE>
(1) March 1, 1994 (inception) through October 31, 1994.

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

Total returns for less than one year are not annualized.

(3) Annualized.

6 Financial Highlights American Century Investments

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS

The funds have adopted certain investment restrictions that are set forth
in the Statement of Additional Information. Those restrictions, as well as the
investment objectives of the funds identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The funds have implemented additional investment policies
and practices to guide their activities in the pursuit of their respective
investment objectives. These policies and practices, which are described
throughout this Prospectus, are not designated as fundamental policies and may
be changed without shareholder approval.

For an explanation of the securities ratings referred to in the following
discussion, see "An Explanation of Fixed Income Securities Ratings" in the
Statement of Additional Information.

SHORT-TERM GOVERNMENT FUND AND
INTERMEDIATE-TERM GOVERNMENT FUND

These funds seek to provide a competitive level of income and limited price
volatility by investing in securities of the U.S. government and its agencies,
securities that are considered to be of the highest credit quality.

The two funds differ in the weighted average maturities of their portfolios
and accordingly, in their degree of risk and level of income. Generally, the
longer the weighted average maturity of a fund's portfolio, the higher the yield
and the greater the price volatility.

The Short-Term Government Fund will maintain a weighted average portfolio
maturity of three years or less. The fund is designed for investors who can
accept some fluctuation in principal in order to earn a higher level of current
income than is generally available from money market securities, but who do not
want as much price volatility as is inherent in longer-term securities.

The Intermediate-Term Government Fund will maintain a weighted average
portfolio maturity of three to 10 years. The fund is designed for investors
seeking a higher level of current income than is generally available from
shorter-term government securities and who are willing to accept a greater
degree of price fluctuation.

The market value of the securities in which the Short-Term Government
Fund and Intermediate-Term Government Fund invest will fluctuate, and
accordingly, the value of your shares will vary from day to day. See
"Fundamentals of Fixed Income Investing," page 8.

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

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

The market value of mortgage-related securities, even those in which the
underlying pool of mortgage loans is guaranteed as to the payment of principal
and interest by the U.S. government, is not insured. When interest rates rise,
the market value of those securities may decrease in the same manner as other
debt, but when interest rates decline, their market

Prospectus Information Regarding the Funds 7

value may not increase as much as other debt instruments because of the
prepayment feature inherent in the underlying mortgages. If such securities are
purchased at a premium, the fund will suffer a loss if the obligation is
prepaid. Prepayments will be reinvested at prevailing rates, which may be less
than the rate paid by the prepaid obligation.

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

FUNDAMENTALS OF FIXED INCOME INVESTING

HISTORICAL YIELDS
[line graph - graph data]

30-YEAR 20-YEAR 3-MONTH
TREASURY TAX-EXEMPT TREASURY
BONDS BONDS BILLS

1/91 8.19% 7.14% 6.38%
2/91 8.20 7.00 6.26
3/91 8.25 6.84 5.93
4/91 8.18 6.67 5.69
5/91 8.26 6.65 5.69
6/91 8.4 6.72 5.69
7/91 8.34 6.61 5.68
8/91 8.06 6.6 5.48
9/91 7.81 6.43 5.25
10/91 7.91 6.4 4.97
11/91 7.94 6.5 4.46
12/91 7.4 6.25 3.96
1/92 7.76 6.33 3.94
2/92 7.79 6.35 4.02
3/92 7.96 6.4 4.14
4/92 8.04 6.43 3.77
5/92 7.84 6.25 3.77
6/92 7.78 6.13 3.65
7/92 7.46 5.78 3.24
8/92 7.41 6.01 3.22
9/92 7.38 6.04 2.74
10/92 7.62 6.34 3.01
11/92 7.6 6.08 3.34
12/92 7.4 6.04 3.14
1/93 7.2 5.9 2.97
2/93 6.9 5.45 3
3/93 6.92 5.61 2.96
4/93 6.93 5.52 2.96
5/93 6.98 5.54 3.11
6/93 6.67 5.32 3.08
7/93 6.56 5.38 3.1
8/93 6.09 5.15 3.07
9/93 6.02 4.99 2.98
10/93 5.97 5 3.1
11/93 6.3 5.24 3.2
12/93 6.35 5.1 3.06
1/94 6.24 4.97 3.03
2/94 6.66 5.26 3.43
3/94 7.09 5.87 3.55
4/94 7.31 6.04 3.95
5/94 7.43 5.99 4.24
6/94 7.61 6.05 4.22
7/94 7.39 5.91 4.36
8/94 7.45 5.96 4.66
9/94 7.82 6.17 4.77
10/94 7.97 6.36 5.15
11/94 8 6.64 5.71
12/94 7.88 6.45 5.69
1/95 7.7 6.12 6
2/95 7.44 5.78 5.94
3/95 7.43 5.77 5.87
4/95 7.34 5.81 5.86
5/95 6.65 5.55 5.8
6/95 6.62 5.77 5.57
7/95 6.85 5.77 5.58
8/95 6.65 5.73 5.45
9/95 6.5 5.67 5.41
10/95 6.33 5.49 5.51
11/95 6.13 5.31 5.49
12/95 5.95 5.18 5.08

BOND PRICE VOLATILITY

For a given change in interest rates, longer maturity bonds experience a
greater change in price, as shown below:

Price of a 7% Price of same
coupon bond bond if its Percent
Years to now trading yield increases change
Maturity to yield 7% to 8% in price

1 year $100.00 $99.06 -0.94%
3 years 100.00 97.38 -2.62%
10 years 100.00 93.20 -6.80%
30 years 100.00 88.69 -11.31%

YEARS TO MATURITY
[bar graph - graph data]

SHORT-TERM GOVERNMENT FUND
Likely Maturities of Individual Holdings 0-8 years
Expected Weighted Average Portfolio Maturity Range 6 mos.-5 years

INTERMEDIATE-TERM GOVERNMENT FUND
Likely Maturities of Individual Holdings 0-20 years
Expected Weighted Average Portfolio Maturity Range 3-10 years

Over time, the level of interest rates available in the marketplace
changes. As prevailing rates fall, the prices of bonds and other securities that
trade on a yield basis rise. On the other hand, when prevailing interest rates
rise, bond prices fall.

Generally, the longer the maturity of a debt security, the higher its yield
and the greater its price volatility. Conversely, the shorter the maturity, the
lower the yield but the greater the price stability.

These factors operating in the marketplace have a similar impact on bond
portfolios. A change in the level of interest rates causes the net asset value
per share of any bond fund, except money market funds, to change. If sustained
over time, it would also have the impact of raising or lowering the yield of the
fund.

In addition to the risk arising from fluctuating interest rate levels, debt
securities are subject to credit risk. When a security is purchased, its
anticipated yield is dependent on the timely payment by the borrower of each
interest and principal installment. Credit analysis and resultant bond ratings
take into account the relative likelihood that such timely payment will occur.
As a result, lower-rated bonds tend to sell at higher yield levels than
top-rated bonds of similar maturity.

8 Information Regarding the Funds American Century Investments

AUTHORIZED QUALITY RANGES
A-1 A-2 A-3
P-1 P-2 P-3
MIG-1 MIG-2 MIG-3
SP-1 SP-2 SP-3
AAA AA A BBB BB B CCC CC C D
-----------------------------------------------------
Short-Term
Government Fund x x x x
Intermediate-Term
Government Fund x x x x

In addition, as economic, political and business developments unfold,
lower-quality bonds, which possess lower levels of protection with regard to
timely payment, usually exhibit more price fluctuation than do higher-quality
bonds of like maturity.

The investment practices of our fixed income funds take into account these
relationships. The portfolio maturity of each fund has implications for the
degree of price volatility and the yield level to be expected from each.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.

PORTFOLIO TURNOVER

The portfolio turnover rates of the funds are shown in the Financial
Highlights table on pages 5-6 of this Prospectus.

The portfolio turnover of each fund may be higher than other mutual funds
with similar investment objectives. A high turnover rate involves
correspondingly higher transaction costs that are borne directly by a fund.
Portfolio turnover may also affect the character of capital gains, if any,
realized and distributed by a fund since short-term capital gains are taxable as
ordinary income.

REPURCHASE AGREEMENTS

Each fund may invest in repurchase agreements when such transactions
present an attractive short-term return on cash that is not otherwise committed
to the purchase of securities pursuant to the investment policies of that fund.

Since the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

The funds will limit repurchase agreement transactions to securities issued
by the U.S. government, its agencies and instrumentalities, and will enter into
such transactions with those banks and securities dealers who are deemed
creditworthy pursuant to criteria adopted by the funds' Board of Directors.

Each of the funds may invest in repurchase agreements with respect to any
security in which that fund is authorized to invest, even if the remaining
maturity of the underlying security would make that security ineligible for
purchase by such fund. No fund will invest more than 15% of its assets in
repurchase agreements maturing in more than seven days.

DERIVATIVE SECURITIES

To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities

Prospectus Information Regarding the Funds 9

whose value or performance is linked to other equity securities (such as
depositary receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.

No fund may invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the fund. For
example, a bond whose interest rate is indexed to the return on two-year
treasury securities would be a permissible investment (assuming it otherwise
meets the other requirements for the funds), while a security whose underlying
value is linked to the price of oil would not be a permissible investment since
the funds may not invest in oil and gas leases or futures.

The return on a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.

There are a range of risks associated with derivative investments,
including:

o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the portfolio manager
anticipates;

o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;

o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and

o the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the Board of Directors as necessary. In addition, the
board will review the manager's policy for investments in derivative securities
annually.

PORTFOLIO LENDING

In order to realize additional income, each fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including, if
applicable, the right to call the loan to enable the fund to vote the
securities. Such loans may not exceed one-third of the fund's net assets taken
at market. Interest on loaned securities may not exceed 10% of the annual gross
income of the fund (without offset for realized capital gains). The portfolio
lending policy described in this paragraph is a fundamental policy that may be
changed only by a vote of fund shareholders.

WHEN-ISSUED SECURITIES

10 Information Regarding the Funds American Century Investments

could result in a loss to the fund. A separate account for each fund consisting
of cash or high-quality liquid debt securities in an amount at least equal to
the when-issued commitments will be established and maintained with the
custodian. No income will accrue to the fund prior to delivery.

PERFORMANCE ADVERTISING

From time to time, funds may advertise performance data. Fund performance
may be shown by presenting one or more performance measurements, including
cumulative total return or average annual total return and yield. Performance
data may be quoted separately for the Investor Class and for the other classes.

A quotation of yield reflects a fund's income over a stated period
expressed as a percentage of the fund's share price. Yield is calculated by
adding over a 30-day (or one-month) period all interest and dividend income (net
of fund expenses) calculated on each day's market values, dividing this sum by
the average number of fund shares outstanding during the period, and expressing
the result as a percentage of the fund's share price on the last day of the
30-day (or one-month) period. The percentage is then annualized. Capital gains
and losses are not included in the calculation.

Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules for all stock and bond funds. Because yield
accounting methods differ from the methods used for other accounting purposes, a
fund's yield may not equal the income paid on your shares or the income reported
in a fund's financial statements.

The funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services or Donoghue's Money Fund Report) and publications
that monitor the performance of mutual funds. Performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
In addition, fund performance may be compared to well-known indices of market
performance including the Donoghue's Money Fund Average and the Bank Rate
Monitor National Index of 2 1/2-year CD rates. Fund performance may also be
compared, on a relative basis, to other funds in our fund family. This relative
comparison, which may be based upon historical or expected fund performance,
volatility or other fund characteristics, may be presented numerically,
graphically or in text. Fund performance may also be combined or blended with
other funds in our fund family, and that combined or blended performance may be
compared to the same indices to which individual funds may be compared.

All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.

Prospectus Information Regarding the Funds 11

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

AMERICAN CENTURY INVESTMENTS

INVESTING IN AMERICAN CENTURY

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-sponsored Retirement Plans and Institutional Accounts," page 17.

HOW TO OPEN AN ACCOUNT

To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.

The minimum investment is $2,500 ($1,000 for IRA accounts).

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:

o RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

o BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

o REFERENCE FOR BENEFICIARY (RFB):
American Century account number into which you are investing. If more than
one, leave blank and see Bank to Bank Information below.

o ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

o BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):

o Taxpayer identification or Social Security number.

o If more than one account, account numbers and amount to be invested in
each account.

12 How to Invest with American Century Investments American Century Investments

o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA or SARSEP-IRA.

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:

4500 Main Street
Kansas City, Missouri 64111

1665 Charleston Road
Mountain View, California 94043

2000 S. Colorado Blvd.
Denver, Colorado 80222

SUBSEQUENT INVESTMENTS

BY MAIL

When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.

BY ONLINE ACCESS

Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 12 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.

AUTOMATIC INVESTMENT PLAN

HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER

As long as you meet any minimum investment requirements, you may exchange
your fund shares to our other funds up to six times per year per account. An
exchange request will be processed the same day it is received, if it is
received before the funds' net asset values are calculated, which is one hour
prior to the close of the New York Stock Exchange for the American Century
Target Maturities Trust, and at the close of the Exchange for all of our other
funds. See "When Share is Determined", page 18.

Prospectus How to Invest with American Century Investments 13

BY MAIL

You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.

BY TELEPHONE

BY ONLINE ACCESS

You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received.

Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.

BY MAIL

Your written instructions to redeem shares may be made either by a
redemption form, which we will send you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 15.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

If you have at least a $10,000 balance in your account, you may redeem
shares by Check-A-Month. A Check-A-Month plan automatically redeems enough
shares each month to provide you with a check for an amount you choose (minimum
$50). To set up a Check-A-Month plan, please call and request our Check-A-Month
brochure.

OTHER AUTOMATIC REDEMPTIONS

If you have at least a $10,000 balance in your account, you may elect to
make redemptions automatically by authorizing us to send funds directly to your
account at a bank or other financial institution. To set up automatic
redemptions, call one of our Investor Services Representatives.

REDEMPTION PROCEEDS

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.

Your bank will usually receive wired funds within 48 hours of transmission.
Electronically transferred funds may be received up to seven days after
transmission. Wired funds are subject to a $10 fee to cover bank wire charges,
which is deducted from redemption proceeds. Once the funds are transmitted, the
time of receipt and the funds' availability are not under our control.

REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS

Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you of the necessity to bring
the value

14 How to Invest with American Century Investments American Century Investments

of the shares held in the account up to the minimum. If action is not taken
within 90 days of the letter's date, the shares held in the account will be
redeemed and the proceeds from the redemption will be sent by check to your
address of record. We reserve the right to increase the investment minimums.

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee would be
required when:

o redeeming more than $25,000;

o establishing or increasing a Check-A-Month or automatic transfer on an
existing account.

You can obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.

SPECIAL SHAREHOLDER SERVICES

We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.

Our special shareholder services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.

ONLINE ACCOUNT ACCESS

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.

If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.

Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.

Prospectus How to Invest with American Century Investments 15

TAX-QUALIFIED RETIREMENT PLANS

Each fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:

o Individual Retirement Accounts (IRAs);

o 403(b) plans for employees of public school systems and non-profit
organizations;

o profit sharing plans and pension plans for corporations and other
employers.

If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.

You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.

IMPORTANT POLICIES REGARDING YOUR INVESTMENTS

Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.

(1) We reserve the right for any reason to suspend the offering of shares for a
period of time, or to reject any specific purchase order (including
purchases by exchange). Additionally, purchases may be refused if, in the
opinion of the manager, they are of a size that would disrupt the
management of the fund.

(3) Shares being acquired must be qualified for sale in your state of
residence.

(10)We will perform special inquiries on shareholder accounts. A research fee of
$15 per hour may be applied.

REPORTS TO SHAREHOLDERS

16 How to Invest with American Century Investments American Century Investments

all year-to-date activity in your account. You may request a statement of your
account activity at any time.

With the exception of most automatic transactions, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transaction. See the Investor Services Guide for more detail.

No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.

Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.

EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS

Prospectus How to Invest with American Century Investments 17

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds, except the American Century Target
Maturities Trust, net asset value is determined at the close of regular trading
on each day that the New York Stock Exchange is open, usually 3 p.m. Central
time. Net asset value for the Target Maturities is determined one hour prior to
the close of the Exchange.

Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or one of our agents before the net asset value
of the fund is determined, are effective on, and will receive the price
determined, that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined on, the next day
the Exchange is open.

Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the net asset value is determined.

Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.

If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the funds' transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the funds' procedures or any contractual arrangement with the
funds or the funds' distributor in order for you to receive that day's price.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be summarized
as follows:

The portfolio securities of each fund, except as otherwise noted, are
valued through valuations obtained from a commercial pricing service or at the
most recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.

When market quotations are not readily available, securities and other
assets are valued at fair value as determined in accordance with procedures
adopted by the Board of Directors.

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset values of the Investor Class of the funds are published in
leading newspapers daily. Net asset values also may be obtained by calling us or
by accessing our Web site at www.americancentury.com.

DISTRIBUTIONS

At the close of each day, including Saturdays, Sundays and holidays, net
income is determined and declared as a distribution. The distribution will be
paid monthly on the last Friday of each month, except for year-end
distributions, which will be paid on the last business day of the month.

You will begin to participate in the distributions the day after your
purchase is effective. See "When Share Price is Determined," this page. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.

18 Additional Information You Should Know American Century Investments

Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the funds may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code and Regulations, in all events in a manner consistent with the
provisions of the Investment Company Act.

TAXES

Each fund has elected to be taxed under Subchapter M of the Internal
Revenue Code, which means that to the extent its income is distributed to
shareholders, it pays no income taxes.

TAX-DEFERRED ACCOUNTS

If fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the funds will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.

TAXABLE ACCOUNTS

If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income of the
fixed income funds do not qualify for the 70% dividends-received deduction for
corporations since they are derived from interest income. Distributions from net
long-term capital gains are taxable as long-term capital gains, regardless of
the length of time the shares on which such distributions are paid have been
held by the shareholder. However, you should note that any loss realized upon
the sale or redemption of shares held for six months or less will be treated as
a long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to such shares.

Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) will not have increased. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains.

In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes. The funds will advise
shareholders of the percentage, if any, of the dividends not exempt from federal
income tax.

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

Prospectus Additional Information You Should Know 19

dividends, capital gains distributions and redemptions). Those regulations
require you to certify that the Social Security number or tax identification
number you provide is correct and that you are not subject to 31% withholding
for previous under-reporting to the IRS. You will be asked to make the
appropriate certification on your application. Payments reported by us that omit
your Social Security number or tax identification number will subject us to a
penalty of $50, which will be charged against your account if you fail to
provide the certification by the time the report is filed, and is not
refundable.

Redemption of shares of a fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
The Code, resulting in a postponement of the recognition of such loss for
federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the funds. Acting pursuant
to an investment management agreement entered into with the funds, American
Century Investment Management, Inc. serves as the investment manager of the
funds. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri, 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since 1958.

The manager supervises and manages the investment portfolios of each fund
and directs the purchase and sale of their investment securities. It utilizes a
team of portfolio managers, assistant portfolio managers and analysts acting
together to manage the assets of the funds. The team meets regularly to review
portfolio holdings and to discuss purchase and sale activity. The team adjusts
holdings in the funds' portfolios and the funds' asset mix as it deems
appropriate in pursuit of the funds' investment objectives. Individual portfolio
manager members of the team may also adjust portfolio holdings of the funds or
of sectors of the funds as necessary between team meetings.

The portfolio manager members of the teams managing the funds described in
this prospectus and their work experience for the last five years are as
follows:

C. CASEY COLTON, Portfolio Manager, joined BMC in 1990 as a Municipal
Analyst. He was promoted to his current position in 1995. Mr. Colton is a
Chartered Financial Analyst (CFA). He is a member of the team that manages the
Intermediate-Term Government Fund.

ROBERT V. GAHAGAN, Vice President and Portfolio Manager, has worked for
American Century since May 1983. He became a Portfolio Manager in December 1991.
Prior to that he served as Assistant Portfolio Manager. He is a member of the
team that manages the Short-Term Government Fund.

NEWLIN RANKIN, Portfolio Manager, joined BMC in 1994. He has been primarily
responsible for the day-to-day operations of the Benham ARM Fund since January
1995 and is a member of the team that manages the Short-Term Government Fund.
Prior to joining BMC, Mr. Rankin was an Assistant Vice-President at Wells Fargo
Bank from 1991 to 1993.

The activities of the manager are subject only to directions of the funds'
Board of Directors. The manager pays all the expenses of the funds except
brokerage, taxes, interest, fees and expenses of the

20 Additional Information You Should Know American Century Investments

non-interested person directors (including counsel fees) and extraordinary
expenses.

For the services provided to the Investor Class of the funds, the manager
receives an annual fee at the following rates:

o 0.70 of 1% of the average net assets of Short-Term Government; and

o 0.75 of 1% of the average net assets of Intermediate-Term Government.

On the first business day of each month, each fund pays a management fee to
the manager for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for such fund by
the aggregate average daily closing value of each fund's net assets during the
previous month by a fraction, the numerator of which is the number of days in
the previous month and the denominator of which is 365 (366 in leap years).

CODE OF ETHICS

The funds and the manager have adopted a Code of Ethics that restricts
personal investing practices by employees of the manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the funds' portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.

TRANSFER AND ADMINISTRATIVE SERVICES

American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri, 64111, acts as transfer agent and dividend paying agent for the funds.
It provides facilities, equipment and personnel to the funds, and is paid for
such services by the manager.

Although there is no sales charge levied by the funds, transactions in
shares of the funds may be executed by brokers or investment advisors who charge
a transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the funds or the
investment manager. You should be aware of the fact that these transactions may
be made directly with American Century without incurring such fees.

From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the manager.

DISTRIBUTION OF FUND SHARES

The funds' shares are distributed by American Century Investment Services,
Inc. (the "Distributor"), a registered broker-dealer and an affiliate of the
funds' investment manager. The manager pays all expenses for promoting and
distributing the Investor Class of fund shares offered by this Prospectus. The
Investor Class of shares does not pay any commissions or other fees to the
Distributor or to any other broker-dealers or financial intermediaries in
connection with the distribution of fund shares.

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Mutual Funds, Inc., the issuer of the funds, was
organized as a Maryland corpora-

Prospectus Additional Information You Should Know 21

tion on July 2, 1990. The corporation commenced operations on February 28, 1991,
the date it merged with Twentieth Century Investors, Inc., a Delaware
corporation which had been in business since October 1958. Pursuant to the terms
of the Agreement and Plan of Merger dated July 27, 1990, the Maryland
corporation was the surviving entity and continued the business of the Delaware
corporation with the same officers and directors, the same shareholders and the
same investment objectives, policies and restrictions.

The principal office of the funds is American Century Tower, 4500 Main
Street, P.O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may
be made by mail to that address, or by phone to 1-800-345-2021 (international
calls: 816-531-5575).

American Century Mutual Funds, Inc. issues 17 series of $.01 par value
shares. Each series is commonly referred to as a fund. The assets belonging to
each series of shares are held separately by the custodian.

American Century offers three classes of each of the funds offered by this
Prospectus: an Investor Class, a Service Class, and an Advisor Class. The shares
offered by this Prospectus are Investor Class shares and have no up-front
charges, commissions, or 12b-1 fees.

The other classes of shares are primarily made available to institutional
investors or through institutional distribution channels, such as
employer-sponsored retirement plans or through banks, broker-dealers, insurance
companies or other financial intermediaries. The other classes have different
fees, expenses, and/or minimum investment requirements than the Investor Class.
Different fees and expenses will affect performance. For additional information
concerning the other classes of shares not offered by this Prospectus, call us
at 1-800-345-3533 or contact a sales representative or financial intermediary
who offers those classes of shares.

Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class and (d) each class
may have different exchange privileges.

Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.

Unless required by the Investment Company Act, it will not be necessary for
the funds to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the funds' by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the funds to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.

22 Additional Information You Should Know American Century Investments

NOTES

Prospectus Notes 23

NOTES

24 Notes American Century Investments

NOTES

Prospectus Notes 25

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

Person-to-person assistance:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865

Fax: 816-340-7962

Internet: www.americancentury.com

[american century logo]

9701
SH-BKT-6577

[recycled logo]
Recycled

PROSPECTUS

[american century logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

BENHAM
GROUP(R)

Limited-Term Bond
Intermediate-Term Bond
Benham Bond

INVESTOR CLASS

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering
bonds, stocks, specialty investments and blended portfolios. To make it easier
to identify funds that meet your needs, all American Century funds have been
collected into one of three groups based on investment style and objectives.
These groups, which appear below, are designed to simplify your fund decisions.

AMERICAN CENTURY INVESTMENTS

BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY(R) GROUP

MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS

Limited-Term Bond
Intermediate-Term Bond
Benham Bond

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

Limited-Term Bond
Intermediate-Term Bond o Benham Bond

INVESTOR CLASS

AMERICAN CENTURY MUTUAL FUNDS, INC.

American Century Mutual Funds, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. Three of the funds from our
Benham Group that invest primarily in fixed income or debt instruments are
described in this Prospectus. Their investment objectives are listed on page 2
of this Prospectus. The other funds are described in separate prospectuses.

Through its Investor Class of shares, American Century offers investors a
full line of no-load funds, investments that have no sales charges or
commissions.

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

Prospectus 1

INVESTMENT OBJECTIVES OF THE FUNDS

AMERICAN CENTURY - BENHAM
LIMITED-TERM BOND FUND

The Limited-Term Bond Fund seeks income. The fund intends to pursue its
investment objective by investing in bonds and other debt obligations and
maintaining a weighted average maturity of five years or less.

AMERICAN CENTURY - BENHAM
INTERMEDIATE-TERM BOND FUND

The Intermediate-Term Bond Fund seeks a competitive level of income. The
fund intends to pursue its investment objective by investing in bonds and other
debt obligations and maintaining a weighted average maturity of three to 10
years.

AMERICAN CENTURY - BENHAM BOND FUND

The Benham Bond Fund seeks a high level of income. The fund intends to
pursue its investment objective by investing in bonds and other debt obligations
and maintaining a weighted average maturity of 10 years or greater. Effective
March 1, 1997, the fund's policy regarding portfolio weighted average will
change. As of that date, there will be no weighted average portfolio maturity
requirement for the funds, although it is expected that the fund will invest
primarily in intermediate and long-term bonds. You should consider this
impending policy change prior to making an investment in the fund.

There is no assurance that the funds will achieve their respective investment
objectives.

2 Investment Objectives American Century Investments

TABLE OF CONTENTS

Transaction and Operating Expense Table.......................4
Financial Highlights..........................................5

INFORMATION REGARDING THE FUNDS

Investment Policies of the Funds..............................8
Limited-Term Bond, Intermediate-Term Bond
and Benham Bond.........................................8
Fundamentals of Fixed Income Investing........................10
Other Investment Practices, Their
Characteristics and Risks..................................10
Portfolio Turnover.........................................10
Repurchase Agreements......................................11
Derivative Securities......................................11
Portfolio Lending..........................................12
Foreign Securities.........................................12
When-Issued Securities.....................................12
Rule 144A Securities.......................................12
Interest Rate Futures Contracts and
Options Thereon.........................................13
Performance Advertising....................................14

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

American Century Investments..................................15
Investing In American Century.................................15
How to Open an Account........................................15
By Mail .................................................15
By Wire..................................................15
By Exchange..............................................16
In Person................................................16
Subsequent Investments.....................................16
By Mail .................................................16
By Telephone.............................................16
By Online Access.........................................16
By Wire..................................................16
In Person................................................16
Automatic Investment Plan..................................16
How to Exchange from One Account to Another...................16
By Mail..................................................16
By Telephone.............................................17
By Online Access.........................................17
How to Redeem Shares..........................................17
By Mail .................................................17
By Telephone.............................................17
By Check-A-Month.........................................17
Other Automatic Redemptions..............................17
Redemption Proceeds........................................17
By Check ................................................17
By Wire and ACH..........................................17
Redemption of Shares in Low-Balance Accounts...............17
Signature Guarantee...........................................18
Special Shareholder Services..................................18
Automated Information Line.................................18
Online Account Access......................................18
Open Order Service.........................................18
Tax-Qualified Retirement Plans.............................19
Important Policies Regarding Your Investments.................19
Reports to Shareholders.......................................19
Employer-Sponsored Retirement Plans
and Institutional Accounts.................................20

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price...................................................21
When Share Price Is Determined.............................21
How Share Price Is Determined..............................21
Where to Find Information About Share Price................22
Distributions.................................................22
Taxes.........................................................22
Tax-Deferred Accounts......................................22
Taxable Accounts...........................................22
Management....................................................23
Investment Management......................................23
Code of Ethics.............................................24
Transfer and Administrative Services.......................24
Distribution of Fund Shares...................................25
Further Information About American Century....................25

Prospectus Table of Contents 3

<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE

Long-Term Intermediate-Term Benham
Bond Bond Bond

SHAREHOLDER TRANSACTION EXPENSES:

<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases..................... none none none
Maximum Sales Load Imposed on Reinvested Dividends.......... none none none
Deferred Sales Load......................................... none none none
Redemption Fee(1)........................................... none none none
Exchange Fee................................................ none none none

ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF NET ASSETS)

Management Fees............................................. 0.80% 0.75% 0.70%
12b-1 Fees.................................................. none none none
Other Expenses(2).......................................... 0.00% 0.00% 0.00%
Total Fund Operating Expenses.............................. 0.80% 0.75% 0.70%

EXAMPLE

You would pay the following expenses on a 1 year $ 8 $ 8 $ 7
$1,000 investment, assuming a 5% annual return and 3 years $26 $24 22
redemption at the end of each time period: 5 years $44 $42 39
10 years $99 $93 87
</TABLE>
(1) Redemption proceeds sent by wire are subject to a $10 processing charge.

(2) Other expenses, which include the fees and expenses (including legal
counsel fees) of those directors who are not "interested persons" as
defined in the Investment Company Act, were 0.0014 of 1% of average net
assets for the most recent fiscal year.

The purpose of the table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of the American Century
funds offered by this Prospectus. The example set forth above assumes
reinvestment of all dividends and distributions and uses a 5% annual rate of
return as required by Securities and Exchange Commission regulations.

Neither the 5% rate of return nor the expenses shown above should be
considered indications of past or future returns and expenses. Actual returns
and expenses may be greater or less than those shown.

The shares offered by this Prospectus are Investor Class shares and have no
up-front or deferred sales charges, commissions, or 12b-1 fees. The funds offer
two other classes of shares to investors, primarily to institutional investors,
that have different fee structures than the Investor Class, resulting in
different performance for the other classes. For additional information about
the various classes, see "Further Information About American Century," page 25.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS
LIMITED-TERM BOND
The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The annual report
contains additional performance information and will be made available upon
request and without charge. The information presented is for a share outstanding
throughout the years ended October 31, except as noted.

1995 1994(1)

PER-SHARE DATA

Net Asset Value, Beginning of Period ...................... $9.68 $10.00
Income from Investment Operations
Net Investment Income .................................. .56(2) .31
Net Realized and Unrealized Gains (Losses) on
Investment Transactions ................................ .28 (.32)
Total from Investment Operations ....................... .84 (.01)
Distributions
From Net Investment Income ............................. (.557) (.312)
From Net Realized Gains on Investment Transactions ..... -- --
In Excess of Net Realized Gains ........................ -- --
Total Distributions .................................... (.557) (.312)
Net Asset Value, End of Period ............................ $9.96 $9.68
Total Return(3) ........................................ 8.89% (.08%)

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average Net Assets .69% .70%(4)
Ratio of Net Investment Income to Average Net Assets 5.70% 4.79%(4)
Portfolio Turnover Rate 116% 48%
Net Assets, End of Period (in thousands) $7,193 $4,375

(1) March 1, 1994 (inception) through October 31, 1994.

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

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

(4) Annualized.

Prospectus Financial Highlights 5

FINANCIAL HIGHLIGHTS
INTERMEDIATE-TERM BOND

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The annual report
contains additional performance information and will be made available upon
request and without charge. The information presented is for a share outstanding
throughout the years ended October 31, except as noted.

1995 1994(1)

PER-SHARE DATA

Net Asset Value, Beginning of Period ..................... $9.53 $10.00
Income from Investment Operations
Net Investment Income ................................. .59(2) .34
Net Realized and Unrealized Gains (Losses) on
Investment Transactions ............................... .54 (.47)
Total from Investment Operations ...................... 1.13 (.13)
Distributions
From Net Investment Income ............................ (.587) (.337)
From Net Realized Gains on Investment Transactions .... -- --
In Excess of Net Realized Gains ....................... -- --
Total Distributions ................................... (.587) (.337)
Net Asset Value, End of Period ........................... $10.07 $9.53
Total Return(3) ....................................... 12.19% (1.24%)

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average Net Assets .74% .75%(4)
Ratio of Net Investment Income to Average Net Assets 6.05% 5.23%(4)
Portfolio Turnover Rate 133% 48%
Net Assets, End of Period (in thousands) $12,827 $4,262

(1) March 1, 1994 (inception) through October 31, 1994.

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

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

(4) Annualized.

6 Financial Highlights American Century Investments

FINANCIAL HIGHLIGHTS
BENHAM BOND(1)

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The annual report
contains additional performance information and will be made available upon
request and without charge. The information presented is for a share outstanding
throughout the years ended October 31, except as noted.
<TABLE>

1995 1994 1993 1992 1991 1990 1989 1988 1987(2)

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .. $8.91 $10.21 $9.92 $9.56 $8.90 $9.54 $9.18 $8.96 $10.00
Income from Investment Operations
Net Investment Income .............. .61(3) .58 .66 .63 .75 .80 .82 .84 .48
Net Realized and Unrealized Gains
(Losses) on Investment Transactions .87 (1.12) 1.88 .35 .66 (.64) .36 .23 (1.05)
Total from Investment Operations ... 1.48 (.54) 2.54 .98 1.41 .16 1.18 1.07 (.57)
Distributions
From Net Investment Income ......... (.611) (.576) (.662) (.622) (.746) (.796) (.819) (.836) (.475)
From Net Realized Gains on
Investment Transactions ............ -- (.186) (1.587) -- -- (.006) -- -- --
In Excess of Net Realized Gains .... -- -- -- -- -- -- -- -- --
Total Distributions ................ (.611) (.762) (2.249) (.622) (.746) (.802) (.819) (.836) (.475)
Net Asset Value, End of Period ........ $9.78 $8.91 $10.21 $9.92 $9.56 $8.90 $9.54 $9.19 $8.96
Total Return(4) .................... 17.16% (5.47%) 11.81% 10.40% 16.44% 1.93% 13.51% 12.31% (8.63%)

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .............. .78% .88% 1.00% .98%(5) .96(5) 1.00% 1.00% 1.00% 1.00%(6)
Ratio of Net Investment Income
to Average Net Assets .............. 6.53% 6.07% 6.54% 6.30% 8.06% 8.81% 8.83% 9.15% 8.10%(6)
Portfolio Turnover Rate ............ 105% 78% 113% 186% 219% 98% 216% 280% 146%(6)
Net Assets, End of
Period (in thousands) .............. $149,223 $121,012 $172,120 $154,031 $114,342 $77,270 $62,302 $25,788 $9,403
</TABLE>
(1) The data presented has been restated to give effect to a 10 shares for 1
stock split in the form of a stock dividend that occurred on November 13,
1993.

(2) March 2, 1987 (inception) through October 31, 1987.

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

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

(5) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

(6) Annualized.

Prospectus Financial Highlights 7

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS

The funds have adopted certain investment restrictions that are set forth
in the Statement of Additional Information. Those restrictions, as well as the
investment objectives of the funds identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The funds have implemented additional investment policies
and practices to guide their activities in the pursuit of their respective
investment objectives. These policies and practices, which are described
throughout this Prospectus, are not designated as fundamental policies and may
be changed without shareholder approval.

For an explanation of the securities ratings referred to in the following
discussion, see "An Explanation of Fixed Income Securities Ratings" in the
Statement of Additional Information.

LIMITED-TERM BOND, INTERMEDIATE-TERM BOND AND BENHAM BOND

These funds, which seek to provide investors with income through
investments in bonds and other debt instruments, require a minimum investment of
$2,500 ($1,000 for IRAs).

The three funds differ in the weighted average maturities of their
portfolios and accordingly in their degree of risk and level of income.
Generally, the longer the weighted average maturity, the higher the yield and
the greater the price volatility.

Limited-Term Bond will invest primarily in investment grade corporate
securities and other debt instruments and will maintain, under normal market
conditions, a weighted average maturity of five years or less. The fund is
designed for investors seeking a competitive level of current income with
limited price volatility.

Intermediate-Term Bond will invest primarily in investment grade corporate
securities and other debt instruments and will maintain, under normal market
conditions, a weighted average maturity of three to 10 years. The fund is
designed for investors seeking a higher level of current income than is
generally available from shorter-term corporate and government securities and
who are willing to accept a greater degree of price fluctuation.

Benham Bond will invest primarily in investment grade corporate bonds and
other debt instruments and until March 1, 1997, will maintain, under normal
market conditions, a weighted average portfolio maturity of 10 years or greater.
Effective March 1, 1997, the fund's policy regarding portfolio weighted average
maturity will change. As of that date, there will be no weighted average
portfolio maturity requirement, although it is expected that the fund will
primarily invest in intermediate and long-term bonds. You should consider this
impending policy change prior to making an investment in the funds. The fund is
designed for investors whose primary goal is a level of current income higher
than is generally provided by money market or short- and intermediate-term
securities and who can accept the generally greater price volatility associated
with longer-term bonds.

The value of the shares of all three of these funds will vary from day to
day. See "Fundamentals of Fixed Income Investing," page 10.

Under normal market conditions, each fund will maintain at least 65% of the
value of its total assets in investment grade bonds and other debt instruments.
Under normal market conditions, each of the funds may invest up to 35% of its
assets, and for temporary defensive purposes, up to 100% of its assets, in
short-term money market instruments.

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

To achieve their objectives, the funds may invest in diversified
portfolios of high- and medium-grade debt

8 Information Regarding the Funds American Century Investments

securities payable in United States currency. The funds may invest in securities
which at the time of purchase are rated by a nationally recognized statistical
rating organization or, if not rated, are of equivalent investment quality as
determined by the manager, as follows: short-term notes within the two highest
categories, e.g., at least MIG-2 by Moody's Investor Services ("Moody's") or
SP-2 by Standard and Poor's Corporation ("S&P"); corporate, sovereign
government, and municipal bonds within the four highest categories (for example,
at least Baa by Moody's or BBB by S&P); securities of the United States
government and its agencies and instrumentalities (described below); other types
of securities rated at least P-2 by Moody's or A-2 by S&P. According to Moody's,
bonds rated Baa are medium-grade and possess some speculative characteristics. A
BBB rating by S&P indicates S&Ps belief that a security exhibits a satisfactory
degree of safety and capacity for repayment, but is more vulnerable to adverse
economic conditions or changing circumstances.

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

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

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

For the purpose of determining the weighted average portfolio maturity of
the funds, the manager shall consider the maturity of a mortgage-related
security to be the remaining expected average life of the security. The average
life of such securities is likely to be substantially less than the original
maturity as a result of prepayments of principal on the underlying mortgages,
especially in a declining interest rate environment. In determining the
remaining expected average life, the manager makes assumptions regarding
prepayments on underlying mortgages. In a rising interest rate environment,
those prepayments generally decrease, and may decrease below the rate of
prepayment assumed by the manager when purchasing those securities. Such
slowdown may cause the remaining maturity of those securities to lengthen, which
will increase the relative volatility of those securities and, hence, the fund
holding the securities. See "Fundamentals of Fixed Income Investing," page 10.

As noted, each fund may invest up to 35% of its assets, and for temporary
defensive purposes as determined by the manager, up to 100% of its assets in
short-term money market instruments.

Those instruments may include:

(1) Securities issued or guaranteed by the U.S. government and its
agencies and instrumentalities;

(2) Commercial Paper;

(3) Certificates of Deposit and Euro Dollar Certificates of Deposit;

(4) Bankers' Acceptances;

(5) Short-term notes, bonds, debentures, or other debt instruments; and

(6) Repurchase agreements.

Prospectus Information Regarding the Funds 9

These investments must meet the rating standards for the funds. To the
extent a fund assumes a defensive position, the weighted average maturity of its
portfolio may not fall within the ranges stated for the fund.

FUNDAMENTALS OF FIXED INCOME INVESTING

HISTORICAL YIELDS
[line graph - graph data]

30-YEAR 20-YEAR 3-MONTH
TREASURY TAX-EXEMPT TREASURY
BONDS BONDS BILLS

BOND PRICE VOLATILITY

For a given change in interest rates, longer maturity bonds experience a
greater change in price, as shown below:

Price of a 7% Price of same
coupon bond bond if its Percent
Years to now trading yield increases change
Maturity to yield 7% to 8% in price

1 year $100.00 $99.06 -0.94%
3 years 100.00 97.38 -2.62%
10 years 100.00 93.20 -6.80%
30 years 100.00 88.69 -11.31%

YEARS TO MATURITY
[bar graph - graph data]

LIMITED-TERM BOND
Likely Maturities of Individual Holdings 0-8 years
Expected Weighted Average Portfolio Maturity Range 6 mos.-5 years

INTERMEDIATE-TERM BOND
Likely Maturities of Individual Holdings 0-20 years
Expected Weighted Average Portfolio Maturity Range 3-10 years

BENHAM BOND
Likely Maturities of Individual Holdings 0-30 years
Expected Weighted Average Portfolio Maturity Range 10-20 years

AUTHORIZED QUALITY RANGES
A-1 A-2 A-3
P-1 P-2 P-3
MIG-1 MIG-2 MIG-3
SP-1 SP-2 SP-3
AAA AA A BBB BB B CCC CC C D
-----------------------------------------------------
Limited-Term Bond x x x x
Intermediate-Term Bond x x x x
Benham Bond x x x x

The investment practices of our fixed income funds take into account these
relationships. The maturity and asset quality of each fund have implications for
the degree of price volatility and the yield level to be expected from each.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.

PORTFOLIO TURNOVER

The portfolio turnover rates of the funds are shown in the Financial
Highlights table on pages 5, 6 and 7 of this Prospectus.

10 Information Regarding the Funds American Century Investments

Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to the particular fund's
objectives. The manager believes that the rate of portfolio turnover is
irrelevant when it determines a change is in order to achieve those objectives
and accordingly, the annual portfolio turnover rate cannot be anticipated.

The portfolio turnover of each fund may be higher than other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the funds
pay directly. Portfolio turnover may also affect the character of capital gains,
if any, realized and distributed by a fund since short-term capital gains are
taxable as ordinary income.

REPURCHASE AGREEMENTS

Each fund may invest in repurchase agreements when such transactions
present an attractive short-term return on cash that is not otherwise committed
to the purchase of securities pursuant to the investment policies of that fund.

Since the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

The funds will limit repurchase agreement transactions to securities issued
by the United States government, its agencies and instrumentalities, and will
enter into such transactions with those banks and securities dealers who are
deemed creditworthy pursuant to criteria adopted by the funds' Board of
Directors.

DERIVATIVE SECURITIES

To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.

The return on a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.

Prospectus Information Regarding the Funds 11

There are a range of risks associated with derivative investments,
including:

o the risk that the underlying security, interest rate, market index or
other financial asset will not move in the direction the portfolio
manager anticipates;

o the risk that adverse price movements in an instrument can result in a
loss substantially greater than a fund's initial investment; and

o the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the Board of Directors as necessary. In addition, the
Board will review the manager's policy for investments in derivative securities
annually.

PORTFOLIO LENDING

In order to realize additional income, each fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including, if
applicable, the right to call the loan to enable the fund to vote the
securities. Such loans may not exceed one-third of the fund's net assets taken
at market. Interest on loaned securities may not exceed 10% of the annual gross
income of the fund (without offset for realized capital gains). The portfolio
lending policy described in this paragraph is a fundamental policy that may be
changed only by a vote of fund shareholders.

FOREIGN SECURITIES

Each of the funds may invest an unlimited amount of its assets in the
securities of foreign issuers, including foreign governments, when these
securities meet their standards of selection. Securities of foreign issuers may
trade in the U.S. or foreign securities markets. The funds will limit their
purchase of debt securities to U.S. dollar denominated investment grade
obligations. Such securities will be primarily from developed markets.

Investments in foreign securities may present certain risks, including
those resulting from fluctuations in currency exchange rates, future political
and economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.

WHEN-ISSUED SECURITIES

Each of the funds may sometimes purchase new issues of securities on a
when-issued basis without the limit when, in the opinion of the manager, such
purchases will further the investment objectives of the fund. The price of
when-issued securities is established at the time commitment to purchase is
made. Delivery of and payment for these securities typically occurs 15 to 45
days after the commitment to purchase. Market rates of interest on debt
securities at the time of delivery may be higher or lower than those contracted
for on the when-issued security. Accordingly, the value of each security may
decline prior to delivery, which could result in a loss to the fund. A separate
account for each fund consisting of cash or high-quality liquid debt securities
in an amount at least equal to the when-issued commitments will be established
and maintained with the custodian. No income will accrue to the fund prior to
delivery.

RULE 144A SECURITIES

The funds may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the funds' cri-

12 Information Regarding the Funds American Century Investments

teria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional investors rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.

With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors of the funds has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the manager.
The Board retains the responsibility to monitor the implementation of the
guidelines and procedures it has adopted.

Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A security
that is illiquid. In such an event, the funds' manager will consider appropriate
remedies to minimize the effect on such fund's liquidity. No fund may invest
more than 15% of its assets in illiquid securities (securities that may not be
sold within seven days at approximately the price used in determining the net
asset value of fund shares).

INTEREST RATE FUTURES CONTRACTS
AND OPTIONS THEREON

The funds may buy and sell interest rate futures contracts relating to debt
securities ("debt futures," i.e., futures relating to debt securities, and "bond
index futures," i.e., futures relating to indexes on types or groups of bonds)
and write and buy put and call options relating to interest rate futures
contracts.

For options sold, a fund will segregate cash or high-quality debt
securities equal to the value of securities underlying the option unless the
option is otherwise covered.

A fund will deposit in a segregated account with its custodian bank
high-quality debt obligations in an amount equal to the fluctuating market value
of long futures contracts it has purchased, less any margin deposited on its
long position. It may hold cash or acquire such debt obligations for the purpose
of making these deposits.

A fund will purchase or sell futures contracts and options thereon only for
the purpose of hedging against changes in the market value of its portfolio
securities or changes in the market value of securities that it may wish to
include in its portfolio. A fund will enter into future and option transactions
only to the extent that the sum of the amount of margin deposits on its existing
futures positions and premiums paid for related options do not exceed 5% of its
assets.

Since futures contracts and options thereon can replicate movements in the
cash markets for the securities in which a fund invests without the large cash
investments required for dealing in such markets, they may subject a fund to
greater and more volatile risks than might otherwise be the case. The principal
risks related to the use of such instruments are (1) the offsetting correlation
between movements in the market price of the portfolio investments (held or
intended) being hedged and in the price of the futures contract or option may be
imperfect; (2) possible lack of a liquid secondary market for closing out
futures or option positions; (3) the need for additional portfolio management
skills and techniques; and (4) losses due to unanticipated market price
movements. For a hedge to be completely effective, the price change of the
hedging instrument should equal the price change of the securities being hedged.
Such equal price changes are not always possible because the investment
underlying the hedging instrument may not be the same investment that is being
hedged.

The manager will attempt to create a closely correlated hedge but hedging
activity may not be completely successful in eliminating market value
fluctuation. The ordinary spreads between prices in the cash and futures
markets, due to the differences in the natures of those markets, are subject to
distortion. Due to the possibility of distortion, a correct forecast of general
interest rate trends by the manager may still not result in a successful
transaction. The

Prospectus Information Regarding the Funds 13

manager may be incorrect in its expectations as to the extent of various
interest rate movements or the time span within which the movements take place.

See the Statement of Additional Information for further information about
these instruments and their risks.

PERFORMANCE ADVERTISING

From time to time, the funds may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return and yield.
Performance data may be quoted separately for the Investor Class and for the
other classes.

Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules for all stock and bond funds. Because yield
accounting methods differ from the methods used for other accounting purposes, a
fund's yield may not equal the income paid on your shares or the income reported
in a fund's financial statements.

The funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services or Donoghue's Money Fund Report) and publications
that monitor the performance of mutual funds. Performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
In addition, fund performance may be compared to well-known indices of market
performance including the Donoghue's Money Fund Average and the Bank Rate
Monitor National Index of 21/2-year CD rates. Fund performance may also be
compared, on a relative basis, to other funds in our fund family. This relative
comparison, which may be based upon historical or expected fund performance,
volatility or other fund characteristics, may be presented numerically,
graphically or in text. Fund performance may also be combined or blended with
other funds in our fund family, and that combined or blended performance may be
compared to the same indices to which individual funds may be compared.

All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.

14 Information Regarding the Funds American Century Investments

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

AMERICAN CENTURY INVESTMENTS

INVESTING IN AMERICAN CENTURY

The following section explains how to invest in American Century, including
purchases, redemptions, exchanges and special services. You will find more
detail about doing business with us by referring to the Investor Services Guide
that you will receive when you open an account.

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as information contained
in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 20.

HOW TO OPEN AN ACCOUNT

To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.

The minimum investment is $2,500 ($1,000 for IRAs).

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:

o RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

o BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

o REFERENCE FOR BENEFICIARY (RFB):
American Century account number into which you are investing. If more than
one, leave blank and see Bank to Bank Information below.

o ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

o BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):

o Taxpayer identification or Social Security number

o If more than one account, account numbers and amount to be invested in
each account.

o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA or SARSEP-IRA.

Prospectus How To Invest With American Century Investments 15

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:

4500 Main Street
Kansas City, Missouri 64111

1665 Charleston Road
Mountain View, California 94043

2000 S. Colorado Blvd.
Denver, Colorado 80222

SUBSEQUENT INVESTMENTS

BY MAIL

When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.

BY ONLINE ACCESS

Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 15 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.

AUTOMATIC INVESTMENT PLAN

HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER

As long as you meet any minimum investment requirements, you may exchange
your fund shares to our other funds up to six times per year per account. An
exchange request will be processed the same day it is received if it is received
before the funds' net asset values are calculated, which is one hour prior to
the close of the New York Stock Exchange for the Benham Target Maturities Trust,
and at the close of the Exchange for all of our other funds.

BY MAIL

You may direct us in writing to exchange your shares from one American
Century account to

16 How To Invest With American Century Investments American Century Investments

another. For additional information, please see our Investor Services Guide.

BY TELEPHONE

You may make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line -- see page 18) if you
have authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to receive the appropriate form.

BY ONLINE ACCESS

You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a completed redemption request
is received.

Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.

BY MAIL

Your written instructions to redeem shares may be made either by a
redemption form, which we will send you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 18.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

If you have at least a $10,000 balance in your account, you may redeem
shares by Check-A-Month. A Check-A-Month plan automatically redeems enough
shares each month to provide you with a check in an amount you choose (minimum
$50). To set up a Check-A-Month plan, please call and request our Check-A-Month
brochure.

OTHER AUTOMATIC REDEMPTIONS

If you have at least a $10,000 balance in your account, you may elect to
make redemptions automatically by authorizing us to send funds to you or your
account at a bank or other financial institution. To set up automatic
redemptions, call one of our Investor Services Representatives.

REDEMPTION PROCEEDS

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.

REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS

Prospectus How To Invest With American Century Investments 17

ter's date, the shares held in the account will be redeemed and the proceeds
from the redemption will be sent by check to your address of record. We
reserve the right to increase the investment minimums.

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee will be required
when:

o redeeming more than $25,000; or

o establishing or increasing a Check-A-Month or automatic transfer on an
existing account.

You may obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.

SPECIAL SHAREHOLDER SERVICES

We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.

Our special shareholder services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.

ONLINE ACCOUNT ACCESS

You may contact us 24 hours a day, seven days a week at
www.americancentury.com to access your funds' daily share prices, receive
updates on major market indexes and view historical performance of your funds.
If you select "Full Services" on your applications, you can use your personal
access code and Social Security number to view your account balances and account
activity, make subsequent investments from your bank account or exchange shares
from one fund to another.

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.

If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.

Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.

18 How To Invest With American Century Investments American Century Investments

TAX-QUALIFIED RETIREMENT PLANS

Each fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:

o Individual Retirement Accounts (IRAs);

o 403(b) plans for employees of public school systems and non-profit
organizations; or

o Profit sharing plans and pension plans for corporations and other
employers.

If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.

You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.

IMPORTANT POLICIES REGARDING YOUR INVESTMENTS

Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.

(1) We reserve the right for any reason to suspend the offering of shares for a
period of time, or to reject any specific purchase order (including
purchases by exchange). Additionally, purchases may be refused if, in the
opinion of the manager, they are of a size that would disrupt the
management of the fund.

(3) Shares being acquired must be qualified for sale in your state of
residence.

(10) We will perform special inquiries on shareholder accounts. A research fee
of $15 per hour may be applied.

REPORTS TO SHAREHOLDERS

Prospectus How To Invest With American Century Investments 19

all year-to-date activity in your account. You may request a statement of your
account activity at any time.

With the exception of most automatic transactions, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transaction. See the Investor Services Guide for more detail.

No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.

Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.

EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS

20 Information Regarding the Funds American Century Investments

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. Net asset value for the funds offered by this Prospectus is
determined at the close of regular trading on each day that the New York Stock
Exchange is open.

Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents before the close of business on the
New York Stock Exchange, usually 3 p.m. Central time, are effective on, and will
receive the price determined, that day as of the close of the Exchange.
Investment, redemption and exchange requests received thereafter are effective
on, and receive the price determined as of the close of the Exchange on, the
next day the Exchange is open.

Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the close of business on the Exchange.

Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.

Investment and transaction instructions received by us on any business day
by mail prior to the close of business on the Exchange will receive that day's
price. Investments and instructions received after that time will receive the
price determined on the next business day.

If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption request to the funds' transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the funds' procedures or any contractual arrangement with the
funds or the funds' distributor in order for you to receive that day's price.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be summarized
as follows:

Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.

The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of business on the New York Stock Exchange, if that
is earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.

Prospectus Additional Information You Should Know 21

value of a security was established but before the net asset value per share was
determined that was likely to materially change the net asset value, then that
security would be valued at fair value as determined in accordance with
procedures adopted by the Board of Directors.

Trading of these securities in foreign markets may not take place on every
New York Stock Exchange business day. In addition, trading may take place in
various foreign markets on Saturdays or on other days when the New York Stock
Exchange is not open and on which a fund's net asset value is not calculated.
Therefore, such calculation does not take place contemporaneously with the
determination of the prices of many of the portfolio securities used in such
calculation and the value of a fund's portfolio may be affected on days when
shares of the fund may not be purchased or redeemed.

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset values of the Investor Class of the funds offered by this
Prospectus are published in leading newspapers daily. Net asset values may also
be obtained by calling us or by accessing our Web site at
www.americancentury.com.

DISTRIBUTIONS

At the close of each day, including Saturdays, Sundays and holidays, net
income of the funds is determined and declared as a distribution. The
distribution will be paid monthly on the last Friday of each month except for
year-end distributions, which will be paid on the last business day of the year.

You will begin to participate in the distributions the day after your
purchase is effective. See "When Share Price is Determined," page 21. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.

Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 591/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date. Please consult our Investor Services Guide for
further information regarding your distribution options.

TAXES

Each fund has elected to be taxed under Subchapter M of the Internal
Revenue Code, which means that to the extent its income is distributed to
shareholders, it pays no income taxes.

TAX-DEFERRED ACCOUNTS

If fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the funds will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.

TAXABLE ACCOUNTS

22 Additional Information You Should Know American Century Investments

of the length of time the shares on which such distributions are paid have been
held by the shareholder. However, you should note that any loss realized upon
the sale or redemption of shares held for six months or less will be treated as
a long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to such shares.

Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) will not have increased. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains.

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

If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, we are required by federal law to withhold and remit to
the IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.

Redemption of shares of a fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Code, resulting in a postponement of the recognition of such loss for
federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the funds. Acting pursuant
to an investment management agreement entered into with the funds, American
Century Investment Management, Inc. serves as the investment manager of the
funds. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since it was
founded in 1958.

In June 1995, American Century Companies, Inc. ("ACC"), the parent of the
manager, acquired Benham Management International, Inc. In the acquisition,
Benham Management Corporation ("BMC"), the investment advisor to the Benham
Group of Mutual Funds, became a wholly owned subsidiary of ACC. Certain
employees of BMC provide investment management services to funds managed by the
manager, while certain employees of the manager provide investment management
services to funds managed by BMC.

Prospectus Additional Information You Should Know 23

The manager supervises and manages the investment portfolio of the funds
and directs the purchase and sale of their investment securities. It utilizes
teams of portfolio managers, assistant portfolio managers and analysts acting
together to manage the assets of the funds. The teams meet regularly to review
portfolio holdings and to discuss purchase and sale activity. The teams adjust
holdings in the funds' portfolios as they deem appropriate in pursuit of the
funds' investment objectives. Individual portfolio manager members of the teams
may also adjust portfolio holdings of the funds as necessary between team
meetings.

The portfolio manager members of the teams managing the funds described in
this Prospectus and their work experience for the last five years are as
follows:

JEFFREY L. HOUSTON, Portfolio Manager, has worked for American Century
since November 1990.

The activities of the manager are subject only to directions of the funds'
Board of Directors. The manager pays all the expenses of the funds except
brokerage, taxes, interest, fees and expenses of the non-interested person
directors (including counsel fees) and extraordinary expenses.

For the services provided to the Investor Class of the funds, the manager
receives an annual fee at the following rates:

o 0.70% of the average net assets of Limited-Term Bond;

o 0.75% of the average net assets of Intermediate-Term Bond; and

o 0.80% of the average net assets of Benham Bond.

CODE OF ETHICS

The funds and the manager have adopted a Code of Ethics, which restricts
personal investing practices by employees of the manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the funds' portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.

TRANSFER AND ADMINISTRATIVE SERVICES

American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri, 64111, acts as transfer agent and dividend-paying agent for the funds.
It provides facilities, equipment and personnel to the funds and is paid for
such services by the manager.

Although there is no sales charge levied by the funds, transactions in
shares of the funds may be executed by brokers or investment advisors who charge
a transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the funds or the
investment manager. You should be aware of the fact that these transactions may
be made directly with American Century without incurring such fees.

24 Additional Information You Should Know American Century Investments

From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the manager.

DISTRIBUTION OF FUND SHARES

The funds' shares are distributed by American Century Investment Services,
Inc. (the "Distributor"), a registered broker-dealer and an affiliate of the
funds' investment manager. The manager pays all expenses for promoting and
distributing the Investor Class of fund shares offered by this Prospectus. The
Investor Class of shares does not pay any commissions or other fees to the
Distributor or to any other broker-dealers or financial intermediaries in
connection with the distribution of fund shares.

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Mutual Funds, Inc., the issuer of the funds, was organized
as a Maryland corporation on July 2, 1990. The corporation commenced operations
on February 28, 1991, the date it merged with Twentieth Century Investors, Inc.,
a Delaware corporation which had been in business since October 1958. Pursuant
to the terms of the Agreement and Plan of Merger dated July 27, 1990, the
Maryland corporation was the surviving entity and continued the business of the
Delaware corporation with the same officers and directors, the same shareholders
and the same investment objectives, policies and restrictions.

The principal office of the funds is American Century Tower, 4500 Main
Street, P.O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may
be made by mail to that address, or by telephone to 1-800-345-2021
(international calls: 816-531-5575).

American Century Mutual Funds, Inc. issues 17 series of $.01 par value
shares. Each series is commonly referred to as a fund. The assets belonging to
each series of shares are held separately by the custodian.

The other classes of shares are primarily offered to institutional
investors or through institutional distribution channels, such as
employer-sponsored retirement plans or through banks, broker-dealers, insurance
companies or other financial intermediaries. The other classes have different
fees, expenses, and/or minimum investment requirements than the Investor Class.
Different fees and expenses will affect performance. For additional information
concerning the other classes of shares not offered by this Prospectus, call us
at 1-800-345-3533 or contact a sales representative or financial intermediary
who offers those classes of shares.

Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class and (d) each class
may have different exchange privileges.

Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.

Prospectus Additional Information You Should Know 25

the appointment of auditors. However, pursuant to the funds' by-laws, the
holders of shares representing at least 10% of the votes entitled to be cast may
request the funds to hold a special meeting of shareholders. We will assist in
the communication with other shareholders.

26 Additional Information You Should Know American Century Investments

NOTES

Prospectus Notes 27

NOTES

28 Notes American Century Investments

NOTES

Prospectus Notes 29

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

Person-to-person assistance:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865

Fax: 816-340-7962

Internet: www.americancentury.com

9609 [recycled logo]
SH-BKT-6558 Recycled

[american century logo]

PROSPECTUS

[company logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

BENHAM
GROUP(R)

Limited-Term Tax-Exempt Fund
Intermediate-Term Tax-Exempt Fund
Long-Term Tax-Exempt Fund

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.

AMERICAN CENTURY INVESTMENTS

BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY(R) GROUP

MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS

Limited-Term
Tax-Exempt Fund o

Intermediate-Term
Tax-Exempt Fund o

Long-Term
Tax-Exempt Fund

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

Limited-Term Tax-Exempt Fund
Intermediate-Term Tax-Exempt Fund
Long-Term Tax-Exempt Fund

AMERICAN CENTURY MUTUAL FUNDS, INC.

American Century Mutual Funds, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. Three of the funds from our
Benham Group that invest in tax-exempt fixed income or debt instruments are
described in this Prospectus. Their investment objectives are listed on page 2
of this Prospectus. The other funds are described in separate prospectuses.

American Century offers investors a full line of no-load funds, investments
that have no sales charges or commissions.

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

Prospectus 1

INVESTMENT OBJECTIVES OF THE FUNDS

AMERICAN CENTURY - BENHAM
LIMITED-TERM TAX-EXEMPT FUND

The Limited-Term Tax-Exempt Fund seeks income generally exempt from federal
income taxes. The fund intends to pursue its investment objective by investing
in tax-exempt bonds and maintaining a weighted average maturity of three years
or less. Effective March 1, 1997, the fund's policy regarding portfolio weighted
average maturity will change. As of that date, the weighted average maturity
maintained by the fund will be five years or less. You should consider this
impending policy change prior to making an investment in this fund.

AMERICAN CENTURY - BENHAM
INTERMEDIATE-TERM TAX-EXEMPT FUND

The Intermediate-Term Tax-Exempt Fund seeks a competitive level of income
generally exempt from federal income taxes. The fund intends to pursue its
investment objective by investing in tax-exempt bonds and maintaining a weighted
average maturity of three to 10 years.

AMERICAN CENTURY - BENHAM
LONG-TERM TAX-EXEMPT FUND

The Long-Term Tax-Exempt Fund seeks a high level of income generally exempt
from federal income taxes. The fund intends to pursue its investment objective
by investing in longer-term tax-exempt bonds and maintaining a weighted average
maturity of 10 years or greater.

There is no assurance that the funds will achieve their respective
investment objectives.

2 Investment Objectives American Century Investments

TABLE OF CONTENTS

Transaction and Operating Expense Table ..............................4
Financial Highlights .................................................5

INFORMATION REGARDING THE FUNDS

Investment Policies of the Funds .....................................8
Limited-Term Tax-Exempt Fund,
Intermediate-Term Tax-Exempt Fund and
Long-Term Tax-Exempt Fund .........................................8
Fundamentals of Fixed Income Investing ...............................9
Tax-Exempt Securities ...............................................10
Other Investment Practices, Their Characteristics and Risks .........10
Portfolio Turnover ...............................................10
Repurchase Agreements ............................................10
Derivative Securities ............................................11
When-Issued Securities ...........................................12
Rule 144A Securities .............................................12
Interest Rate Futures Contracts and Options Thereon ..............12
Performance Advertising .............................................13

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

American Century Investments ........................................15
Investing in American Century .......................................15
How to Open an Account ..............................................15
By Mail ........................................................15
By Wire ........................................................15
By Exchange ....................................................16
In Person ......................................................16
Subsequent Investments ...........................................16
By Mail ........................................................16
By Telephone ...................................................16
By Online Access ...............................................16
By Wire ........................................................16
In Person ......................................................16
Automatic Investment Plan ........................................16
How to Exchange from One Account to Another .........................16
By Mail ........................................................17
By Telephone ...................................................17
By Online Access ...............................................17
How to Redeem Shares ................................................17
By Mail ........................................................17
By Telephone ...................................................17
By Check-A-Month ...............................................17
Other Automatic Redemptions ....................................17
Redemption Proceeds ..............................................17
By Check .......................................................17
By Wire and ACH ................................................17
Redemption of Shares in Low-Balance Accounts .....................17
Signature Guarantee .................................................18
Special Shareholder Services ........................................18
Automated Information Line .....................................18
Online Account Access ..........................................18
CheckWriting ...................................................18
Open Order Service .............................................19
Important Policies Regarding Your Investments .......................19
Reports to Shareholders .............................................20
Employer-Sponsored Retirement Plans and Institutional Accounts ......20

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price .........................................................21
When Share Price Is Determined ...................................21
How Share Price Is Determined ....................................21
Where to Find Information About Share Price ......................21
Distributions .......................................................21
Taxes ...............................................................22
Management ..........................................................23
Investment Management ............................................23
Code of Ethics ...................................................24
Transfer and Administrative Services .............................24
Distribution of Fund Shares .........................................24
Further Information About American Century ..........................24

Prospectus Table of Contents 3

TRANSACTION AND OPERATING EXPENSE TABLE

Limited-Term
Tax-Exempt Fund

Intermediate-Term
Tax-Exempt Fund

Long-Term
Tax-Exempt Fund

SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales Load Imposed on Purchases ...................... none
Maximum Sales Load Imposed on Reinvested Dividends ........... none
Deferred Sales Load .......................................... none
Redemption Fee(1) ............................................ none
Exchange Fee ................................................. none

ANNUAL FUND OPERATING EXPENSES (as a percentage of net assets):

Management Fees(2) ........................................... 0.60%
12b-1 Fees ................................................... none
Other Expenses(3) ............................................ 0.00%
Total Fund Operating Expenses ................................ 0.60%

EXAMPLE:

You would pay the following expenses on a 1 year $ 6
$1,000 investment, assuming a 5% annual return and 3 years 19
redemption at the end of each time period: 5 years 34
10 years 75

(1) Redemption proceeds sent by wire are subject to a $10 processing charge.

(2) A portion of the management fee may be paid by the funds' manager to
unaffiliated third parties who provide recordkeeping and administrative
services that would otherwise be performed by an affiliate of the manager.
See "Management - Transfer and Administrative Services," page 24.

(3) Other expenses, the fees and expenses (including legal counsel fees) of
those directors who are not "interested persons" as defined in the
Investment Company Act, were 0.0014 of 1% of average net assets for the
most recent fiscal year.

The purpose of the table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the shares of the funds offered by this
Prospectus. The example set forth above assumes reinvestment of all dividends
and distributions and uses a 5% annual rate of return as required by Securities
and Exchange Commission regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS

LIMITED-TERM TAX-EXEMPT FUND

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The semiannual and
annual reports contain additional performance information and will be made
available upon request and without charge. The information presented is for a
share outstanding throughout the years ended October 31, except as noted.
<TABLE>

1995 1994 1993(1)

PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .......................................... $9.95 $10.04 $10.00
------- ------- -------
Income from Investment Operations

Net Investment Income .................................................... .44 .36 .21

Net Realized and Unrealized Gains (Losses) on Investment Transactions .... .14 (.09) .04
------- ------- -------
Total from Investment Operations ......................................... .58 .27 .25
------- ------- -------
Distributions

From Net Investment Income ............................................... (.440) (.362) (.214)

From Net Realized Gains on Investment Transactions ....................... -- -- --

In Excess of Net Realized Gains on Investment Transactions ............... -- -- --
------- ------- -------
Total Distributions ...................................................... (.440) (.362) (.214)
------- ------- -------
Net Asset Value, End of Period ................................................ $10.09 $9.95 $10.04
======= ======= =======
Total Return(2) .......................................................... 5.95% 2.75% 3.83%

RATIOS/SUPPLEMENTAL DATA

Ratio of Expenses to Average Net Assets .................................. --(3) --(3) --(3)

Ratio of Net Investment Income to Average Net Assets ..................... 4.38% 3.62% 3.09%(4)

Portfolio Turnover Rate .................................................. 78% 42% 3%(4)

Net Assets, End of Period (in thousands) .................................$58,837 $60,857 $52,265
</TABLE>
(1) March 1, 1993 (inception) through October 31, 1993.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any, and are not annualized.

(3) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

(4) Annualized.

Prospectus Financial Highlights 5

FINANCIAL HIGHLIGHTS

INTERMEDIATE-TERM TAX-EXEMPT FUND

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The semiannual and
annual reports contain additional performance information and will be made
available upon request and without charge. The information presented is for a
share outstanding throughout the years ended October 31, except as noted.
<TABLE>

1995 1994 1993(1) 1992(1) 1991(1) 1990(1) 1989(1) 1988(1) 1987(1)(2)

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period ................. $10.01 $10.75 $10.27 $10.06 $9.66 $9.67 $9.73 $9.42 $10.00
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment Operations

Net Investment Income .......... .49 .48 .48 .48 .54 .56 .56 .54 .30

Net Realized and Unrealized Gains
(Losses) on Investment
Transactions ................... .52 (.61) .55 .21 .40 (.01) (.06) .31 (.58)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from
Investment Operations .......... 1.01 (.13) 1.03 .69 .94 .55 .50 .85 (.28)
------- ------- ------- ------- ------- ------- ------- ------- -------
Distributions

From Net Investment Income ..... (.487) (.476) (.476) (.481) (.536) (.560) (.558) (.539) (.300)

From Net Realized Gains on
Investment Transactions ........ (.082) (.133) (.078) -- -- -- -- -- --

In Excess of Net Realized Gains
on Investment Transactions ..... -- -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions ............ (.569) (.609) (.554) (.481) (.536) (.560) (.558) (.539) (.300)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period ...... $10.45 $10.01 $10.75 $10.27 $10.06 $9.66 $9.67 $9.73 $9.42
======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return(3) ................ 10.41% (1.25)% 10.25% 7.00% 9.91% 5.89% 5.30% 9.18% (4.34)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Expenses to
Average Net Assets ............. .60% .60% .72% .98%(4) .96%(4) 1.00% 1.00% 1.00% 1.00%(5)

Ratio of Net Investment Income
to Average Net Assets .......... 4.77% 4.59% 4.51% 4.68% 5.40% 5.80% 5.79% 5.57% 4.80%(5)

Portfolio Turnover Rate ........ 32% 74% 38% 36% 62% 102% 74% 86% 92%(5)

Net Assets, End
of Period (in thousands) .......$80,248 $81,400 $98,740 $76,745 $45,359 $25,587 $20,616 $14,286 $8,262
</TABLE>
(1) The data presented has been restated to give effect to a 10 shares for 1
stock split in the form of a stock dividend that occurred on November 13,
1993.

(2) March 2, 1987 (inception) through October 31, 1987.

(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any, and are not annualized.

(4) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

(5) Annualized.

6 Financial Highlights American Century Investments

FINANCIAL HIGHLIGHTS

LONG-TERM TAX-EXEMPT FUND

The Financial Highlights for each of the periods presented have been
audited by Baird, Kurtz & Dobson, independent certified public accountants,
whose report thereon appears in the fund's annual report, which is incorporated
by reference into the Statement of Additional Information. The semiannual and
annual reports contain additional performance information and will be made
available upon request and without charge. The information presented is for a
share outstanding throughout the years ended October 31, except as noted.
<TABLE>
1995 1994 1993(1) 1992(1) 1991(1) 1990(1) 1989(1) 1988(1) 1987(1)(2)

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ................. $9.75 $11.10 $10.36 $10.23 $9.62 $9.84 $9.73 $9.09 $10.00
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment Operations

Net Investment Income .......... .53 .52 .53 .53 .57 .60 .62 .61 .37

Net Realized and Unrealized Gains
(Losses) on Investment
Transactions ................... .83 (1.01) .90 .22 .61 (.12) .11 .64 (.91)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from
Investment Operations .......... 1.36 (.49) 1.43 .75 1.18 .48 .73 1.25 (.54)
------- ------- ------- ------- ------- ------- ------- ------- -------
Distributions

From Net Investment Income ..... (.532) (.519) (.529) (.530) (.572) (.604) (.623) (.609) (.370)

From Net Realized Gains on
Investment Transactions ........ (.044) (.342) (.161) (.088) -- (.094) -- -- --

In Excess of Net Realized Gains
on Investment Transactions ..... -- -- (.003) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions ............ (.576) (.861) (.693) (.618) (.572) (.698) (.623) (.609) (.370)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period ...... $10.54 $9.75 $11.10 $10.36 $10.23 $9.62 $9.84 $9.73 $9.09
======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return(3) ................ 14.45% (4.70)% 14.32% 7.43% 12.54% 5.04% 7.75% 14.15% (8.21)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Expenses to
Average Net Assets ............. .59% .60% .73% .98%(4) .96%(4) 1.00% 1.00% 1.00% 1.00%(5)

Ratio of Net Investment Income
to Average Net Assets .......... 5.24% 5.00% 4.90% 5.07% 5.73% 6.22% 6.36% 6.43% 6.20%(5)

Portfolio Turnover Rate ........ 61% 66% 81% 88% 110% 144% 120% 215% 94%(5)

Net Assets, End
of Period (in thousands) .......$57,997 $50,964 $70,757 $61,825 $39,229 $27,862 $20,217 $12,407 $6,426
</TABLE>
(1) The data presented has been restated to give effect to a 10 shares for 1
stock split in the form of a stock dividend that occurred on November 13,
1993.

(2) March 2, 1987 (inception) through October 31, 1987.

(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any, and are not annualized.

(4) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

(5) Annualized.

Prospectus Financial Highlights 7

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS

The funds have adopted certain investment restrictions that are set forth
in the Statement of Additional Information. Those restrictions, as well as the
investment objectives of the funds identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The funds have implemented additional investment policies
and practices to guide their activities in the pursuit of their respective
investment objectives. These policies and practices, which are described
throughout this Prospectus, are not designated as fundamental policies and may
be changed without shareholder approval.

For an explanation of the securities ratings referred to in the following
discussion, see "An Explanation of Fixed Income Securities Ratings" in the
Statement of Additional Information.

LIMITED-TERM TAX-EXEMPT FUND,
INTERMEDIATE-TERM TAX-EXEMPT FUND AND
LONG-TERM TAX-EXEMPT FUND

These funds, which seek to provide investors with income generally exempt
from federal income taxes, require a minimum initial investment of $5,000.

Limited-Term Tax-Exempt Fund invests primarily in shorter-term tax-exempt
bonds. The fund intends to maintain a weighted average portfolio maturity of
three years or less. Effective March 1, 1997, the fund's policy regarding
portfolio weighted average maturity will change. As of that date, the weighted
average maturity maintained by the fund will be five years or less. You should
consider this impending policy change prior to making an investment in this
fund. This fund is designed for investors who can accept some fluctuation in
principal in order to earn a higher level of current income than is generally
available on tax-exempt money market securities.

Intermediate-Term Tax-Exempt Fund invests in tax-exempt bonds and, under
normal market conditions, will maintain a weighted average portfolio maturity of
three to 10 years. It is designed for investors seeking a higher level of
current income than is generally available on shorter-term tax-exempt bonds and
money market securities and who are willing to accept a greater degree of
fluctuation in principal.

Long-Term Tax-Exempt Fund invests in longer-term tax-exempt bonds and,
under normal market conditions, will maintain a weighted average portfolio
maturity of 10 years or greater. The fund is designed for the investor seeking a
higher level of current income and who can accept the relatively high degree of
price volatility associated with longer-term bonds.

As a fundamental policy, at least 80% of each fund's portfolio will consist
of securities whose income is not subject to federal income tax, including the
alternative minimum tax. All such securities must be accompanied by an opinion
of Counsel to the issuer that the income is not subject to federal income taxes.
See "Tax-Exempt Securities," page 10. Under normal market conditions,
Limited-Term Tax-Exempt Fund may invest up to 100% of its assets and
Intermediate-Term Tax-Exempt Fund and Long-Term Tax-Exempt Fund may invest up to
20% of their assets in shorter-term tax-exempt securities. For temporary
defensive purposes, Intermediate-Term Tax-Exempt Fund and Long-Term Tax-Exempt
Fund may invest 100% of their assets in such securities and all three funds may
invest up to 20% of assets in taxable shorter-term securities.

The tax-exempt funds may invest in securities that, at the time of
purchase, are rated by a nationally recognized statistical rating organization
or, if not rated, are of equivalent investment quality as determined by the
manager, as follows: short-term notes within the two highest categories [for
example, at least MIG-2 by Moody's Investors Services (Moody's) or SP-2 by
Standard & Poor's Corporation (S&P)]; bonds within

8 Information Regarding the Funds American Century Investments

the four highest categories (for example, at least Baa by Moody's or BBB by
S&P); other types of securities rated at least P-2 by Moody's or A-2 by S&P.
According to Moody's, bonds rated Baa are medium-grade and possess some
speculative characteristics. A BBB rating by S&P indicates S&P's belief that a
security exhibits a satisfactory degree of safety and capacity for repayment,
but is more vulnerable to adverse economic conditions or changing circumstances.

The manager will actively manage each portfolio, adjusting the average
maturity as necessary in response to expected changes in interest rates in
general and for tax-exempt securities specifically. During periods of rising
interest rates, the weighted average maturity of a fund may be moved to the
shorter end of its maturity range in order to reduce the effect of bond price
declines on the fund's net asset value. Conversely, when prevailing interest
rates are falling and bond prices are rising, the weighted average portfolio
maturity of a fund may be moved toward the longer end of its maturity range.

Tax-exempt securities are issued by states, territories and possessions of
the United States and the District of Columbia and their political subdivisions,
agencies and instrumentalities. Interest on these securities is exempt from
federal income taxes and, in some instances, applicable state or local income
taxes. These securities are issued to obtain funds for various public purposes,
or for specified privately operated facilities.

From time to time, each fund may invest more than 25% of its assets in
tax-exempt securities which are related in such a way that an economic,
business, or political development or change affecting one such security could
also affect the other securities; for example, securities whose issuers are
located in the same state. Furthermore, each fund may invest up to 40% of its
assets in securities issued on behalf of educational facilities and 40% in
securities issued on behalf of qualified health facilities. To the extent that a
fund's assets are concentrated in securities payable from revenues on similar
facilities, the fund will be subject to the peculiar risks presented by such
facilities to a greater extent than it would if the fund's assets were not so
concentrated. Such facilities could be adversely affected by, among other
things, legislation, regulatory actions, a decline in public and private support
and increased competition.

FUNDAMENTALS OF FIXED INCOME INVESTING

HISTORICAL YIELDS
[line graph - graph data]

30-YEAR 20-YEAR 3-MONTH
TREASURY TAX-EXEMPT TREASURY
BONDS BONDS BILLS

BOND PRICE VOLATILITY

For a given change in interest rates, longer maturity bonds experience a
greater change in price, as shown below:

Price of a 7% Price of same
coupon bond bond if its Percent
Years to now trading yield increases change
Maturity to yield 7% to 8% in price

1 year $100.00 $99.06 -0.94%
3 years 100.00 97.38 -2.62%
10 years 100.00 93.20 -6.80%
30 years 100.00 88.69 -11.31%

YEARS TO MATURITY
[bar graph - graph data]

LIMITED-TERM BOND
Likely Maturities of Individual Holdings 0-8 years
Expected Weighted Average Portfolio Maturity Range 6 mos.-5 years

INTERMEDIATE-TERM BOND
Likely Maturities of Individual Holdings 0-20 years
Expected Weighted Average Portfolio Maturity Range 3-10 years

LONG-TERM BOND
Likely Maturities of Individual Holdings 0-30 years
Expected Weighted Average Portfolio Maturity Range 10-20 years

Prospectus Information Regarding the Funds 9

to change. If sustained over time, it would also have the impact of raising or
lowering the yield of the fund.

AUTHORIZED QUALITY RANGES
[bar graph - graph data]
A-1 A-2 A-3
P-1 P-2 P-3
MIG-1 MIG-2 MIG-3
SP-1 SP-2 SP-3
AAA AA A BBB BB B CCC CC C D
-----------------------------------------------------
Limited-Term Bond x x x x
Intermediate-Term Bond x x x x
Long-Term Bond x x x x

The investment practices of our fixed income funds take into account these
relationships. The maturity of each fund has implications for the degree of
price volatility and the yield level to be expected from each.

TAX-EXEMPT SECURITIES

Historically, interest paid on securities issued by states, cities,
counties, school districts and other political subdivisions of the United States
has been exempt from federal income taxes. Legislation since 1985, however,
affects the tax treatment of certain types of municipal bonds issued after
certain dates and, in some cases, subjects the income from certain bonds to
differing tax treatment depending on the tax status of its recipient.

The tax-exempt funds should be expected to invest some portion of their
assets in bonds which, in the hands of some holders, would be subject to the
alternative minimum tax, as long as management determines it is in the best
interest of shareholders generally to invest in such securities. See "Taxes,"
page 22.

As a prospective investor in tax-exempt securities, you should determine
whether your after-tax return is likely to be higher with a taxable or with a
tax-exempt security. To determine this, you may use the analysis shown in the
following example:

Suppose your maximum tax rate is 36% and you want to determine whether you
should purchase a 6% tax-exempt yield or a 9% taxable security.

6% 6%
--------------- = ------ = 9.375% taxable yield
1-.36 tax rate .64

Your after-tax return will be higher with the 6% tax-exempt yield if
taxable yields are less than 9.375%. In this example, the tax-exempt is more
attractive than the 9% taxable yield.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.

PORTFOLIO TURNOVER

The portfolio turnover rates of the funds are shown in the Financial
Highlights table on pages 5-7 of this Prospectus.

Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to a particular fund's
objectives. The manager believes that the rate of portfolio turnover is
irrelevant when it determines a change is in order to achieve those objectives
and accordingly, the annual portfolio turnover rate cannot be anticipated.

The portfolio turnover of each fund may be higher than other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the funds
pay directly. Portfolio turnover may also affect the character of capital gains,
if any, realized and distributed by a fund since short-term capital gains are
taxable as ordinary income.

REPURCHASE AGREEMENTS

While the funds are authorized to invest in repurchase agreements it is not
expected that they will regularly make such investments, because the

10 Information Regarding the Funds American Century Investments

interest earned on them typically is not tax-exempt. Repurchase agreements could
be used, however, if it is deemed in the best interest of the funds'
shareholders to invest in securities that are not exempt from federal income
taxes.

Since the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

DERIVATIVE SECURITIES

To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depository receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.

The return on a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.

There are a range of risks associated with derivative investments,
including:

o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the portfolio manager
anticipates;

o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;

o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and

Prospectus Information Regarding the Funds 11

o the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the Board of Directors as necessary. In addition, the
board will review the manager's policy for investments in derivative securities
annually.

WHEN-ISSUED SECURITIES

Each of the funds may sometimes purchase new issues of securities on a
when-issued basis without the limit when, in the opinion of the manager, such
purchases will further the investment objectives of the fund. The price of
when-issued securities is established at the time the commitment to purchase is
made. Delivery of and payment for these securities typically occurs 15 to 45
days after the commitment to purchase. Market rates of interest on debt
securities at the time of delivery may be higher or lower than those contracted
for on the when-issued security. Accordingly, the value of each security may
decline prior to delivery, which could result in a loss to the fund. A separate
account for each fund consisting of cash or high-quality liquid debt securities
in an amount at least equal to the when-issued commitments will be established
and maintained with the custodian. No income will accrue to the fund prior to
delivery.

RULE 144A SECURITIES

With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors of the funds has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the manager.
The Board retains the responsibility to monitor the implementation of the
guidelines and procedures it has adopted.

Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A security
that is illiquid. In such an event, the fund's manager will consider appropriate
remedies to minimize the effect on such fund's liquidity. No fund may invest
more than 15% of its assets in illiquid securities (securities that may not be
sold within seven days at approximately the price used in determining the net
asset value of fund shares).

INTEREST RATE FUTURES CONTRACTS
AND OPTIONS THEREON

For options sold, a fund will segregate cash or high-quality debt
securities equal to the value of securities underlying the option unless the
option is otherwise covered.

12 Information Regarding the Funds American Century Investments

that it may wish to include in its portfolio. A fund will enter into future and
option transactions only to the extent that the sum of the amount of margin
deposits on its existing futures positions and premiums paid for related options
do not exceed 5% of its assets.

See the Statement of Additional Information for further information about
these instruments and their risks.

PERFORMANCE ADVERTISING

From time to time, the funds may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return, yield and
tax-equivalent yield.

Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules for all stock and bond funds. Because yield
accounting methods differ from the methods used for other accounting purposes, a
fund's yield may not equal the income paid on your shares or the income reported
in a fund's financial statements.

A tax-equivalent yield demonstrates the taxable yield necessary to produce
an after-tax yield equivalent to that of a fund which invests in exempt
obligations. See "Tax-Exempt Securities," page 10, for a description of the
method of comparing yields and tax-equivalent yields.

Prospectus Information Regarding the Funds 13

publications that monitor the performance of mutual funds. Performance
information may be quoted numerically or may be presented in a table, graph or
other illustration. In addition, fund performance may be compared to well-known
indices of market performance including the Donoghue's Money Fund Average and
the Bank Rate Monitor National Index of 2 1/2-year CD rates. Fund performance
may also be compared, on a relative basis, to other funds in our fund family.
This relative comparison, which may be based upon historical or expected fund
performance, volatility or other fund characteristics, may be presented
numerically, graphically or in text. Fund performance may also be combined or
blended with other funds in our fund family, and that combined or blended
performance may be compared to the same indices to which individual funds may be
compared.

All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.

14 Information Regarding the Funds American Century Investments

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

AMERICAN CENTURY INVESTMENTS

INVESTING IN AMERICAN CENTURY

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 20.

HOW TO OPEN AN ACCOUNT

To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.

The minimum investment is $5,000. The minimum investment requirements may
be different for some types of retirement accounts. Call one of our Investor
Services Representatives for information on our retirement plans, which are
available for individual investors or for those investing through their
employers.

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:

o RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

o BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

o REFERENCE FOR BENEFICIARY (RFB):
American Century account number into which you are investing. If more than
one, leave blank and see Bank to Bank Information below.

o ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

o BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):

o Taxpayer identification or Social Security number.

o If more than one account, account numbers and amount to be invested
in each account.

o Current tax year, previous tax year or rollover designation if an
IRA. Specify whether IRA, SEP-IRA or SARSEP-IRA.

Prospectus How to Invest with American Century Investments 15

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:

4500 Main Street
Kansas City, Missouri 64111

1665 Charleston Road
Mountain View, California 94043

2000 S. Colorado Blvd.
Denver, Colorado 80222

SUBSEQUENT INVESTMENTS

Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see Automatic Investment Plan, this page) or by any
of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the remittance portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.

BY MAIL

When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.

BY ONLINE ACCESS

Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 15 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.

AUTOMATIC INVESTMENT PLAN

HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER

As long as you meet any minimum investment requirements, you may exchange
your fund shares to our other funds up to six times per year per account. An
exchange request will be processed the same day it is received, if it is
received before the funds' net asset values are calculated, which is one hour
prior to the close of the New York Stock Exchange for the American Century
Target Maturities Trust, and at the close of the Exchange for all of our other
funds.

16 How to Invest with American Century Investments American Century Investments

BY MAIL

You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.

BY TELEPHONE

You can make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line -- see page 18) if you
have authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to get the appropriate form.

BY ONLINE ACCESS

You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received.

Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.

BY MAIL

Your written instructions to redeem shares may be made either by a
redemption form, which we will send you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 18.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

If you have at least a $10,000 balance in your account, you may redeem
shares by Check-A-Month. A Check-A-Month plan automatically redeems enough
shares each month to provide you with a check for an amount you choose (minimum
$50). To set up a Check-A-Month plan, please call and request our Check-A-Month
brochure.

OTHER AUTOMATIC REDEMPTIONS

REDEMPTION PROCEEDS

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.

REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS

Prospectus How to Invest with American Century Investments 17

the shares held in the account will be redeemed and the proceeds from the
redemption will be sent by check to your address of record. We reserve the right
to increase the investment minimums.

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee would be
required when:

o redeeming more than $25,000;

o establishing or increasing a Check-A-Month or automatic transfer on
an existing account.

You can obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.

SPECIAL SHAREHOLDER SERVICES

We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.

Our special shareholder services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.

ONLINE ACCOUNT ACCESS

CHECKWRITING

We offer CheckWriting as a service option for Limited-Term Tax-Exempt
accounts. CheckWriting allows you to redeem shares in your account by writing a
draft ("check") against your account balance. (Shares held in certificate form
may not be redeemed by check.) There is no limit on the number of checks you can
write, but each one must be for at least $100.

If you want to add CheckWriting to an existing Limited-Term Tax-Exempt
account, contact us by phone or mail for an appropriate form. For a new account,
you may elect CheckWriting on your purchase application by choosing the "Full
Services" option. CheckWriting is not available for any account held in an IRA
or 403(b) plan.

CheckWriting redemptions may only be made on checks provided by us.
Currently, there is no charge for checks or for the CheckWriting service.

We will return checks drawn on insufficient funds or on funds from
investments made by any means other than by wire within the previous 15 days.
Neither the company nor our clearing bank will be

18 How to Invest with American Century Investments American Century Investments

liable for any loss or expenses associated with returned checks. Your account
may be assessed a $15 service charge for checks drawn on insufficient funds.

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.

If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.

Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.

IMPORTANT POLICIES REGARDING YOUR INVESTMENTS

Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.

(1) We reserve the right for any reason to suspend the offering of shares for a
period of time, or to reject any specific purchase order (including
purchases by exchange). Additionally, purchases may be refused if, in the
opinion of the manager, they are of a size that would disrupt the
management of the fund.

(3) Shares being acquired must be qualified for sale in your state of
residence.

Prospectus How to Invest with American Century Investments 19

(10) We will perform special inquiries on shareholder accounts. A research fee
of $15 per hour may be applied.

REPORTS TO SHAREHOLDERS

At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all year-to-date
activity in your account. You may request a statement of your account activity
at any time.

With the exception of most automatic transactions, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transaction. See the Investor Services Guide for more detail.

No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.

Each year, we will send you an annual and a semiannual report relating to
your fund, each of which are incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.

EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS

Information contained in our Investor Services Guide pertains to
shareholders who invest directly with American Century rather than through an
employer-sponsored retirement plan or through a financial intermediary. If you
own or are considering purchasing fund shares through an employer-sponsored
retirement plan, your ability to purchase shares of the funds, exchange them for
shares of other American Century funds, and redeem them will depend on the terms
of your plan.

20 How to Invest with American Century Investments American Century Investments

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds, except the American Century Target
Maturities Trust, net asset value is determined at the close of regular trading
on each day that the New York Stock Exchange is open, usually 3 p.m. Central
time. Net asset value for the Target Maturities is determined one hour prior to
the close of the Exchange.

Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or one of our agents before the net asset values
of the fund is determined, are effective on, and will receive the price
determined, that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined on, the next day
the Exchange is open.

Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the net asset value is determined.

Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.

Investment and transaction instructions received by us on any business day
by mail before the net asset value is determined, will receive that day's price.
Investments and instructions received after that time will receive the price
determined on the next business day.

If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the funds' transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the funds' procedures or any contractual arrangement with the
funds or the funds' distributor in order for you to receive that day's price.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be summarized
as follows:

The portfolio securities of each fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.

Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset values of the funds are published in leading newspapers
daily. Net asset values may also be obtained by calling us or by accessing our
Web site at www.americancentury.com.

DISTRIBUTIONS

You will begin to participate in the distributions the day after your
purchase is effective. See "When Share Price is Determined," this page. If you
redeem

Prospectus Additional Information You Should Know 21

shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed the distribution on the redeemed shares
will be included with your redemption proceeds.

Distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. Distribution
checks normally are mailed within seven days after the record date. Please
consult our Investor Services Guide for further information regarding your
distribution options.

TAXES

Each of the funds has elected to be taxed under Subchapter M of the
Internal Revenue Code, which means that to the extent its income is distributed
to shareholders, it pays no income taxes.

Dividends representing income derived from tax-exempt bonds generally
retain the bonds' tax-exempt character in a shareholder's hands. Distributions
which represent short-term capital gains are taxable as ordinary income.
Distributions from net long-term capital gains are taxable, as long-term capital
gains regardless of the length of time the shares on which such distributions
are paid have been held by the shareholder. However, you should note that any
loss realized upon the sale or redemption of shares held for six months or less
will be treated as a long-term capital loss to the extent of any distribution of
long-term capital gain to you with respect to such shares.

Distributions of capital gains are taxable to you regardless of whether
they are taken in cash or reinvested, even if the value of your shares is below
your cost. If you purchase shares shortly before a capital gain distribution,
you must pay income taxes on the distribution, even though the value of your
investment (plus cash received, if any) will not have increased. In addition,
the share price at the time you purchase shares may include unrealized gains in
the securities held in the investment portfolio of the fund. If these portfolio
securities are subsequently sold and the gains are realized, they will, to the
extent not offset by capital losses, be paid to you as a distribution of capital
gains and will be taxable to you as short-term or long-term capital gains.

In January of the year following the distribution, we will send you a Form
1099-DIV notifying you of the status of your distributions for federal income
tax purposes. The tax-exempt funds anticipate that substantially all of the
dividends to be paid by the funds will be exempt from federal income taxes to an
individual unless, due to that person's own tax situation, he or she is subject
to the alternative minimum tax. In that case, it is likely that a portion of the
dividends will be taxable to that shareholder, while remaining tax-exempt in the
hands of most other shareholders. The funds will advise shareholders of the
percentage, if any, of the dividends not exempt from federal income tax, and the
percentage, if any, subject to the individual alternative minimum tax should a
shareholder be subject to it.

If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, we are required by federal law to withhold and remit to
the IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.

22 Additional Information You Should Know American Century Investments

have held such shares for a period of more than one year. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the "wash sale"
rules of The Code, resulting in a postponement of the recognition of such loss
for federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the funds. Acting pursuant
to an investment management agreement entered into with the funds, American
Century Investment Management, Inc. serves as the investment manager of the
funds. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since it was
founded in 1958.

The manager supervises and manages the investment portfolio of each fund
and directs the purchase and sale of their investment securities. It utilizes
teams of portfolio managers, assistant portfolio managers and analysts acting
together to manage the assets of the funds. The teams meet regularly to review
portfolio holdings and to discuss purchase and sale activity. The teams adjust
holdings in the funds' portfolios and the funds' asset mix as they deem
appropriate in pursuit of the funds' investment objectives. Individual portfolio
manager members of the teams may also adjust portfolio holdings of the funds or
of sectors of the funds as necessary between team meetings.

The portfolio manager members of the teams managing the funds described in
this Prospectus and their work experience for the last five years are as
follows:

COLLEEN M. DENZLER, Senior Municipal Portfolio Manager, joined the manager
in January 1996 and is a member of the team that manages the funds and eight
other Benham tax-exempt funds. Prior to joining the manager, Ms. Denzler was a
portfolio manager with the Calvert Group for 10 years, specializing in state
tax-exempt portfolios. Ms. Denzler is a Chartered Financial Analyst and is a
member of the Association for Investment Management and Research (AIMR) and The
Washington Society of Investment Analysts.

G. DAVID MACEWEN joined American Century in 1991 as a Senior Municipal
Portfolio Manager, and is a member of the teams that manage the Long-Term
Tax-Exempt Fund and five other Benham tax-exempt funds. Prior to joining the
manager, Mr. MacEwen was Vice President and Municipal Portfolio Manager with
Provident Institutional Management Corporation, Wilmington, Delaware.

JOEL SILVA joined American Century in 1989, serving first as a customer
service representative, then moving to a position as a municipal bond trader. As
a Municipal Portfolio Manager, Mr. Silva is a member of the teams that manage
six Benham tax-exempt funds, including the Limited-Term, Intermediate-Term and
Long-Term Tax-Exempt funds.

The activities of the manager are subject only to directions of the funds'
Board of Directors. The manager pays all the expenses of the funds except
brokerage, taxes, interest, fees and expenses of the non-interested person
directors (including counsel fees) and extraordinary expenses.

For the services provided to the funds, the manager receives an annual fee
of 0.60% of each of the funds.

Prospectus Additional Information You Should Know 23

CODE OF ETHICS

TRANSFER AND ADMINISTRATIVE SERVICES

American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri 64111, acts as transfer agent and dividend-paying agent for the funds.
It provides facilities, equipment and personnel to the funds and is paid for
such services by the manager.

Although there is no sales charge levied by the funds, transactions in
shares of the funds may be executed by brokers or investment advisors who charge
a transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the funds or the
investment manager. You should be aware of the fact that these transactions may
be made directly with American Century without incurring such fees.

From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the manager.

DISTRIBUTION OF FUND SHARES

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Mutual Funds, Inc., the issuer of the funds, was organized
as a Maryland corporation on July 2, 1990. The corporation commenced operations
on February 28, 1991, the date it merged with Twentieth Century Investors, Inc.,
a Delaware corporation which had been in business since October 1958. Pursuant
to the terms of the Agreement and Plan of Merger dated July 27, 1990, the
Maryland corporation was the surviving entity and continued the business of the
Delaware corporation with the same officers and directors, the same shareholders
and the same investment objectives, policies and restrictions.

The principal office of the funds is American Century Tower, 4500 Main
Street, P.O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may
be made by mail to that address, or by telephone to 1-800-345-2021
(international calls: 816-531-5575).

Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value

24 Additional Information You Should Know American Century Investments

applicable to such share on all questions, except those matters which must be
voted on separately by the series or class of shares affected. Matters affecting
only one series or class are voted upon only by that series or class.

Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.

Unless required by the Investment Company Act, it will not be necessary for
the funds to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the funds' by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the funds to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.

Prospectus Additional Information You Should Know 25

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

Person-to-person assistance:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865

Fax: 816-340-7962

Internet: www.americancentury.com

[company logo]

9701
SH-BKT-6578

[recycled logo]
Recycled

[back cover]

PROSPECTUS

[company logo]

SEPTEMBER 3, 1996
REVISED DECEMBER 15, 1996

TWENTIETH
CENTURY(R)
GROUP

New Opportunities

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.

AMERICAN CENTURY INVESTMENTS

BENHAM GROUP(R) AMERICAN CENTURY GROUP TWENTIETH CENTURY GROUP

MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS New Opportunities

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED DECEMBER 15, 1996

New Opportunities

AMERICAN CENTURY MUTUAL FUNDS, INC.

American Century Mutual Funds, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. One of the funds from our
Twentieth Century Group that seeks capital growth is described in this
Prospectus. The investment objective is listed on page 2 of this Prospectus.
The other funds are described in separate prospectuses.

The fund is only available for purchase by participants in the American
Century Priority Investors Program and employees of the affiliated companies
comprising the American Century family of funds. The minimum initial investment
for Priority Investors in this fund is $10,000; the maximum investment is
$500,000. The manager intends to close the fund to new investors when the fund
reaches $400,000,000 in net assets.

SHARES OF THE FUND REDEEMED OR EXCHANGED WITHIN 5 YEARS OF THEIR PURCHASE
ARE SUBJECT TO A REDEMPTION FEE OF 2% OF THE VALUE OF THE SHARES REDEEMED OR
EXCHANGED. THIS REDEMPTION FEE IS RETAINED BY THE FUND.

AMERICAN CENTURY INVESTMENTS
4500 Main Street o P.O. Box 419287
Kansas City, Missouri 64141-6287 o 1-800-345-8810
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-753-1865
Internet: www.americancentury.com

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

Prospectus 1

INVESTMENT OBJECTIVE OF THE FUND

TWENTIETH CENTURY NEW OPPORTUNITIES FUND

New Opportunities Fund seeks capital growth. It pursues its investment
objective by investing primarily in common stocks that are considered by
management to have better-than-average prospects for appreciation.

There is no assurance that the fund will achieve its investment objective.

NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.

2 Investment Objective of the Fund American Century Investments

TABLE OF CONTENTS

Transaction and Operating Expense Table ..............................4

INFORMATION REGARDING THE FUND

A Long-Term Investment ...............................................5
Investment Policies of the Fund ......................................5
Investment Approach ...............................................5
Investments in Smaller Companies ..................................5
Other Investment Practices, Their Characteristics and Risks ..........5
Foreign Securities ................................................5
Forward Currency Exchange Contracts ...............................6
Portfolio Turnover ................................................7
Repurchase Agreements .............................................7
Derivative Securities .............................................7
Portfolio Lending .................................................8
When-Issued Securities ............................................8
Rule 144A Securities ..............................................8
Short Sales .......................................................9
Performance Advertising ..............................................9

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

American Century Investments ........................................10
Investing in American Century .......................................10
A Warning to Short Term Investors ...................................10
How to Open an Account ..............................................10
By Mail ........................................................10
By Wire ........................................................10
By Exchange ....................................................11
In Person ......................................................11
Subsequent Investments ...........................................11
By Mail ........................................................11
By Telephone ...................................................11
By Online Access ...............................................11
By Wire ........................................................11
In Person ......................................................11
Automatic Investment Plan ........................................11
How to Exchange from One Account to Another .........................12
By Mail ........................................................12
By Telephone ...................................................12
By Online Access ...............................................12
How to Redeem Shares ................................................12
By Mail ........................................................12
By Telephone ...................................................12
By Check-A-Month ...............................................12
Other Automatic Redemptions ....................................12
Redemption Proceeds ..............................................13
By Check .......................................................13
By Wire and ACH ................................................13
Special Requirements for Large Redemptions .......................13
Redemption of Shares in Low-Balance Accounts .....................13
Signature Guarantee .................................................13
Special Shareholder Services ........................................14
Automated Information Line .....................................14
Online Account Access ..........................................14
Open Order Service .............................................14
Tax-Qualified Retirement Plans .................................14
Important Policies Regarding Your Investments .......................15
Reports to Shareholders .............................................15

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price .........................................................17
When Share Price Is Determined ...................................17
How Share Price Is Determined ....................................17
Where to Find Information About Share Price ......................18
Distributions .......................................................18
Taxes ...............................................................18
Tax-Deferred Accounts ............................................18
Taxable Accounts .................................................18
Management ..........................................................19
Investment Management ............................................19
Code of Ethics ...................................................20
Transfer and Administrative Services .............................20
Distribution of Fund Shares .........................................21
Further Information About American Century ..........................21

Prospectus Table of Contents 3

TRANSACTION AND OPERATING EXPENSE TABLE

New Opportunities

SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales Load Imposed on Purchases .......................... none
Maximum Sales Load Imposed on Reinvested Dividends ............... none
Deferred Sales Load .............................................. none
Redemption Fee(1) ................................................ 2%(2)
Exchange Fee ..................................................... none

ANNUAL FUND OPERATING EXPENSES (as a percentage of net assets):

Management Fees .................................................. 1.5%
12b-1 Fees ....................................................... none
Other Expenses(3) ................................................ 0.00%
Total Fund Operating Expenses .................................... 1.5%

EXAMPLE:

You would pay the following expenses on a 1 year $ 15
$10,000 investment, assuming a 5% annual return and 3 years 47
redemption at the end of each time period:

(1) Redemption proceeds sent by wire are subject to a $10 processing fee.

(2) Shares of the fund redeemed or exchanged within 5 years of their purchase
are subject to a redemption fee of 2% of the value of the shares redeemed
or exchanged. This redemption fee which is retained by the fund, is
intended to minimize the impact that shareholder short-term investment
behavior has on fund performance and hence, on the other shareholders of
the fund. See "A Warning for Short-Term Investors," page 10.

(3) Other expenses, which includes the fees and expenses (including legal
counsel fees) of those directors who are not "interested persons" as
defined in the Investment Company Act, are expected to be less than .001 of
1% of average net assets for the most recent fiscal year.

The purpose of the table is to help you understand the various costs and
expenses that you, as an investor in the fund, will bear directly or indirectly.
The example set forth above assumes reinvestment of all dividends and
distributions and uses a 5% annual rate of return as required by Securities and
Exchange Commission regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

4 Transaction and Operating Expense Table American Century Investments

INFORMATION REGARDING THE FUND

A LONG-TERM INVESTMENT

An investment in the New Opportunities fund should be considered as a
long-term investment. The manager has adopted a number of policies regarding
investments in the fund to help insure that prospective shareholders are willing
to make a long-term commitment to the fund before investing. These policies are
described under "A Warning for Short-term Investors", page 10. THOSE PROSPECTIVE
INVESTORS WHO DO NOT WANT TO, OR ARE NOT ABLE TO, COMMIT TO LEAVE THEIR
INVESTMENT IN THE FUND FOR AT LEAST 5 YEARS SHOULD NOT INVEST IN THE FUND.

INVESTMENT POLICIES OF THE FUND

New Opportunities has adopted certain investment restrictions that are set
forth in the Statement of Additional Information. Those restrictions, as well as
the investment objective of the fund identified on page 2 of this Prospectus,
and any other investment policies designated as "fundamental" in this Prospectus
or in the Statement of Additional Information, cannot be changed without
shareholder approval. The fund has implemented additional investment policies
and practices to guide its activities in the pursuit of its investment
objective. These policies and practices, which are described throughout this
Prospectus, are not designated as fundamental policies and may be changed
without shareholder approval.

INVESTMENT APPROACH

New Opportunities seeks capital growth by investing in securities,
primarily common stocks, that meet certain fundamental and technical standards
of selection (primarily relating to accelerating earnings and revenues) and
have, in the opinion of the manager, better-than-average potential for
appreciation. So long as a sufficient number of such securities are available,
the fund intends to stay fully invested in these securities regardless of the
movement of stock prices generally. In most circumstances, the fund's actual
level of cash and cash equivalents will fluctuate between 0% and 10% of total
assets with 90% to 100% of its assets committed to equity and equity equivalent
investments.

INVESTMENTS IN SMALLER COMPANIES

New Opportunities presently intends to invest primarily in the equity
securities of smaller companies (although it can be expected that, as the fund
gets larger, it will begin to invest in medium size and larger companies). These
smaller companies may present greater opportunities for capital appreciation,
but may also involve greater risks than large, mature issuers. Such companies
may have limited product lines, markets or financial resources, and their
securities may trade less frequently and in more limited volume than the
securities of larger companies. In addition, available information regarding
these smaller companies may be less available and, when available, may be
incomplete or inaccurate. The securities of such companies may also be more
likely to be delisted from trading on their primary exchange. As a result, the
securities of smaller companies may experience significantly more price
volatility and less liquidity than securities of larger companies, and any
resulting volatility and limited liquidity will impact the net asset value of
the fund.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.

FOREIGN SECURITIES

Prospectus Information Regarding the Fund 5

countries. DRs may be sponsored or unsponsored. Direct investments in foreign
securities may be made either on foreign securities exchanges or in the
over-the-counter markets.

Investments in foreign securities may present certain risks, including
those resulting from fluctuations in currency exchange rates, future political
and economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.

FORWARD CURRENCY EXCHANGE CONTRACTS

The fund may elect to enter into a forward currency exchange contract with
respect to a specific purchase or sale of a security, or with respect to the
fund's portfolio positions generally.

6 Information Regarding the Fund American Century Investments

PORTFOLIO TURNOVER

The portfolio turnover of the fund may be higher than other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the fund
pays directly. Portfolio turnover may also affect the character of capital
gains, if any, realized and distributed by the fund since short-term capital
gains are taxable as ordinary income.

REPURCHASE AGREEMENTS

Since the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

The fund will invest no more than 15% of its assets in repurchase
agreements maturing in more than seven days.

DERIVATIVE SECURITIES

The fund may invest in securities that are commonly referred to as
"derivative" securities. Generally, a derivative is a financial arrangement the
value of which is based on, or "derived" from, a traditional security, asset, or
market index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.

The return on a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.

There are a range of risks associated with derivative investments,
including:

o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the portfolio manager
anticipates;

Prospectus Information Regarding the Fund 7

o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;

o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and

o the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the Board of Directors as necessary. In addition, the
board will review the manager's policy for investments in derivative securities
annually.

PORTFOLIO LENDING

WHEN-ISSUED SECURITIES

RULE 144A SECURITIES

With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors of the fund has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the manager.
The Board retains the responsibility to monitor the implementation of the
guidelines and procedures it has adopted.

8 Information Regarding the Fund American Century Investments

securities (securities that may not be sold within seven days at approximately
the price used in determining the net asset value of fund shares).

SHORT SALES

PERFORMANCE ADVERTISING

The fund may also include in advertisements data comparing performance with
the performance of non-related investment media, published editorial comments
and performance rankings compiled by independent organizations (such as Lipper
Analytical Services or Donoghue's Money Fund Report) and publications that
monitor the performance of mutual funds. Performance information may be quoted
numerically or may be presented in a table, graph or other illustration. In
addition, fund performance may be compared to well-known indices of market
performance including the Standard & Poor's (S&P) 500 Index and the Dow Jones
Industrial Average. Fund performance may also be compared, on a relative basis,
to other funds in our fund family. This relative comparison, which may be based
upon historical or expected fund performance, volatility or other fund
characteristics, may be presented numerically, graphically or in text. Fund
performance may also be combined or blended with other funds in our fund family,
and that combined or blended performance may be compared to the same indices to
which the fund may be compared.

Prospectus Information Regarding the Fund 9

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

AMERICAN CENTURY INVESTMENTS

The fund offered by this Prospectus is a part of the American Century
Investments family of mutual funds. Our family provides a full range of
investment opportunities, from the aggressive equity growth funds in our
Twentieth Century Group, to the fixed income funds in our Benham Group, to the
moderate risk and specialty funds in our American Century Group. Please call
1-800-345-8810 for a brochure or prospectuses for the other funds in the
American Century Investments family.

INVESTING IN AMERICAN CENTURY

A WARNING TO SHORT TERM INVESTORS

In order to protect the fund's performance potential, it is the desire of
the manager that only investors that intend to leave their money in the fund for
the long term, i.e., for over five years, actually invest in the fund. Two
policies have been adopted to highlight for potential investors that an
investment in the fund should be viewed as a long-term commitment. First, the
minimum initial investment for the fund is $10,000. Second, shares that are
redeemed or exchanged within 5 years of their purchase will be subject to a
redemption fee of 2% of the value of the shares redeemed or exchanged. This fee
will be retained by the fund to help minimize the impact such redemptions and
exchanges have on fund performance and, hence, on the other shareholders of the
fund.

BECAUSE OF THE SIGNIFICANT NEGATIVE IMPACT THAT THE FEE WILL HAVE ON
REDEMPTIONS OR EXCHANGES MADE WITHIN FIVE YEARS OF PURCHASE, THOSE PROSPECTIVE
INVESTORS WHO DO NOT WANT TO, OR ARE NOT ABLE TO, COMMIT TO LEAVE THEIR
INVESTMENT IN THE FUND FOR AT LEAST FIVE YEARS SHOULD NOT INVEST IN THE FUND.

HOW TO OPEN AN ACCOUNT

Shares of the fund are only available for purchase by participants in our
Priority Investors Program and employees of the affiliated companies comprising
the American Century family of funds.

To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.

The minimum initial investment for Priority Investors in this fund is
$10,000; the maximum aggregate investment in the fund is $500,000. Any increase
in value as a result of share price appreciation and distributions from the fund
that are reinvested in the fund do not count against this $500,000 maximum.

The manager currently intends to close the fund to new investors when the
fund reaches $400,000,000 in net assets.

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:

o RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

10 How to Invest with American Century Investments American Century Investments

o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

o BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

o REFERENCE FOR BENEFICIARY (RFB):
American Century account number into which you are investing. If more than
one, leave blank and see Bank to Bank Information below.

o ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

o BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):

o Taxpayer identification or Social Security number.

o If more than one account, account numbers and amount to be invested in
each account.

o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA or SARSEP-IRA.

BY EXCHANGE

Call 1-800-345-8810 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
page 12 for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:

4500 Main Street
Kansas City, Missouri 64111

1665 Charleston Road
Mountain View, California 94043

2000 S. Colorado Blvd.
Denver, Colorado 80222

SUBSEQUENT INVESTMENTS

BY MAIL

When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.

BY ONLINE ACCESS

Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 10 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.

AUTOMATIC INVESTMENT PLAN

Prospectus How to Invest with American Century Investments 11

HOW TO EXCHANGE FROM
ONE ACCOUNT TO ANOTHER

As long as you meet any minimum investment requirements, you may exchange
your fund shares to our other funds up to six times per year per account. An
exchange request will be processed the same day it is received, if it is
received before the fund's net asset values are calculated, which is one hour
prior to the close of the New York Stock Exchange for the Benham Target
Maturities Trust, and at the close of the Exchange for all of our other funds.

EXCHANGES OF SHARES MADE WITHIN 5 YEARS OF THEIR PURCHASE WILL BE SUBJECT
TO A REDEMPTION FEE OF 2% OF THE VALUE OF THE SHARES EXCHANGED. SEE "A WARNING
TO SHORT TERM INVESTORS," PAGE 10.

If, in any 90-day period, the total of your exchanges and your redemptions
from any one account exceeds the lesser of $250,000 or 1% of the fund's assets,
further exchanges will be subject to special requirements to comply with our
policy on large redemptions. See "Special Requirements for Large Redemptions,"
page 13.

BY MAIL

You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.

BY TELEPHONE

You can make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line -- see page 14) if you
have authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-8810
to get the appropriate form.

BY ONLINE ACCESS

You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-8810 to get the
appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received. For large redemptions, please read "Special Requirements for Large
Redemptions," page 13.

REDEMPTION OF SHARES MADE WITHIN 5 YEARS OF THEIR PURCHASE WILL BE SUBJECT
TO A REDEMPTION FEE OF 2% OF THE VALUE OF THE SHARES REDEEMED. SEE "A WARNING TO
SHORT TERM INVESTORS," PAGE 10.

Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.

BY MAIL

Your written instructions to redeem shares may be made either by a
redemption form, which we will send you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 13.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

If you have at least a $10,000 balance in your account, you may redeem
shares by Check-A-Month. A Check-A-Month plan automatically redeems enough
shares each month to provide you with a check for an amount you choose (minimum
$50). To set up a Check-A-Month plan or request a brochure, please call an
Investor Services Representative.

OTHER AUTOMATIC REDEMPTIONS

If you have at least a $10,000 balance in your account, you may elect to
make redemptions automatically by authorizing us to send funds to your account

12 How to Invest with American Century Investments American Century Investments

at a bank or other financial institution. To set up automatic redemptions,
call one of our Investor Services Representatives.

REDEMPTION PROCEEDS

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

We have elected to be governed by Rule 18f-1 under the Investment Company
Act, which obligates each fund make certain redemptions in cash. This
requirement to pay redemptions in cash applies to situations where one
shareholder redeems, during any 90-day period, up to the lesser of $250,000 or
1% of the assets of the fund. Although redemptions in excess of this limitation
will also normally be paid in cash, we reserve the right under unusual
circumstances to honor these redemptions by making payment in whole or in part
in readily marketable securities (a "redemption-in-kind").

If payment is made in securities, the securities will be selected by the
fund, will be valued in the same manner as they are in computing the fund's net
asset value and will be provided without prior notice.

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

Despite its right to redeem fund shares through a redemption-in-kind, we do
not expect to exercise this option unless the fund has an unusually low level of
cash to meet redemptions and/or is experiencing unusually strong demands for its
cash. Such a demand might be caused, for example, by extreme market conditions
that result in an abnormally high level of redemption requests concentrated in a
short period of time. Absent these or similar circumstances, we expect
redemptions in excess of $250,000 to be paid in cash in any fund with assets of
more than $50 million if total redemptions from any one account in any 90-day
period do not exceed one-half of 1% of the total assets of the fund.

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you of the necessity to bring
the value of the shares held in the account up to the minimum. If action is not
taken within 90 days of the letter's date, the shares held in the account will
be redeemed and the proceeds from the redemption will be sent by check to your
address of record. We reserve the right to increase the investment minimums.

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee would be
required when:

o redeeming more than $25,000; or

Prospectus How to Invest with American Century Investments 13

o establishing or increasing a Check-A-Month or automatic transfer on
an existing account.

You can obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.

SPECIAL SHAREHOLDER SERVICES

We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.

Our special shareholder services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.

ONLINE ACCOUNT ACCESS

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.

If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.

Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.

TAX-QUALIFIED RETIREMENT PLANS

The fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:

o Individual Retirement Accounts (IRAs); or

o 403(b) plans.

You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.

14 How to Invest with American Century Investments American Century Investments

IMPORTANT POLICIES REGARDING YOUR INVESTMENTS

Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.

(2) We reserve the right to make changes to any stated investment
requirements, including those that relate to purchases, transfers and
redemptions. In addition, we may also alter, add to or terminate any
investor services and privileges. Any changes may affect all
shareholders or only certain series or classes of shareholders. In
particular, the manager has established different minimum investment
amounts for the employees of its affiliated companies, and may change
those amounts from time to time.

(3) Shares being acquired must be qualified for sale in your state of
residence.

(4) Transactions requesting a specific price and date, other than open
orders, will be refused. Once you have mailed or otherwise transmitted
your transaction instructions to us, they may not be modified or
canceled.

(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require
evidence satisfactory to us of the authority of the individual making
the request.

(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include
requesting personal identification from callers, recording telephone
calls, and providing written confirmations of telephone transactions.
These procedures are designed to protect shareholders from
unauthorized or fraudulent instructions. If we do not employ
reasonable procedures to confirm the genuineness of instructions, then
we may be liable for losses due to unauthorized or fraudulent
instructions. The company, its transfer agent and investment advisor
will not be responsible for any loss due to instructions they
reasonably believe are genuine.

(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary
Elizabeth Jones, she should sign that way and not as Mary E. Jones.

(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you
experience difficulty in reaching us during such periods, you may send
your transaction instructions by mail, express mail or courier
service, or you may visit one of our Investors Centers. You may also
use our Automated Information Line if you have requested and received
an access code and are not attempting to redeem shares.

(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 per hour may be applied.

REPORTS TO SHAREHOLDERS

At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all year-to-date
activity in your account. You may request a statement of your account activity
at any time.

With the exception of most automatic transactions, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transaction. See the Investor Services Guide for more detail.

Prospectus How to Invest with American Century Investments 15

with reasonable promptness, i.e., within 30 days of non-automatic transactions
or within 30 days of the date of your consolidated quarterly statement, in the
case of automatic transactions, we will deem you to have ratified the
transaction.

No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.

Each year, we will send you an annual and a semiannual report relating to
your fund. The annual report includes audited financial statements and a list of
portfolio securities as of the fiscal year end. The semiannual report includes
unaudited financial statements for the first six months of the fiscal year, as
well as a list of portfolio securities at the end of the period. You also will
receive an updated prospectus at least once each year. Please read these
materials carefully, as they will help you understand your fund.

16 How to Invest with American Century Investments American Century Investments

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of the fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. Net asset value for the New Opportunities Fund is determined at the
close of regular trading on each day that the New York Stock Exchange is open.

Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents before the close of business on the
New York Stock Exchange, usually 3 p.m. Central time, are effective on, and will
receive the price determined, that day as of the close of the Exchange.
Investment, redemption and exchange requests received thereafter are effective
on, and receive the price determined as of, the close of the Exchange on, the
next day the Exchange is open.

Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the close of business on the Exchange.

Investments by telephone pursuant to your prior authorization to us to draw
on a bank account are considered received at the time of your telephone call.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be summarized
as follows:

The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. If no sale is reported, the mean of the latest bid and asked
price is used. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.

Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.

The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of business on the New York Stock Exchange, if that
is earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.

Trading of these securities in foreign markets may not take place on every
New York Stock Exchange business day. In addition, trading may take place in

Prospectus Additional Information You Should Know 17

various foreign markets on Saturdays or on other days when the New York Stock
Exchange is not open and on which a fund's net asset value is not calculated.
Therefore, such calculation does not take place contemporaneously with the
determination of the prices of many of the portfolio securities used in such
calculation and the value of the fund's portfolio may be affected on days when
shares of the fund may not be purchased or redeemed.

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset values of American Century's funds are published in leading
newspapers daily. The net asset value of New Opportunities will be published in
newspapers when the fund meets the minimum size requirements for listing. The
net asset value may also be obtained by calling us or by accessing our Web site
at www.americancentury.com.

DISTRIBUTIONS

Distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. You may elect to
have distributions on shares held in Individual Retirement Accounts and 403(b)
plans paid in cash only if you are at least 59 1/2 years old or permanently and
totally disabled. Distribution checks normally are mailed within seven days
after the record date. Please consult our Investor Services Guide for further
information regarding your distribution options.

Because such gains and dividends are included in the value of your shares,
when they are distributed the value of your shares is reduced by the amount of
the distribution. If you buy your shares just before the distribution, you will
pay the full price for your shares, and then receive a portion of the purchase
price back as a taxable distribution. See "Taxes," this page.

TAXES

The fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders
it pays no income tax.

TAX-DEFERRED ACCOUNTS

If fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.

TAXABLE ACCOUNTS

18 Additional Information You Should Know American Century Investments

Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) will not have increased. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains.

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

If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, we are required by federal law to withhold and remit to
the IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.

Redemption of shares of the fund (including redemption made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Code, resulting in a postponement of the recognition of such loss for
federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

Prospectus Additional Information You Should Know 19

The manager has been providing investment advisory services to investment
companies and institutional clients since it was founded in 1958.

In June 1995, American Century Companies, Inc. ("ACC"), the parent of the
manager, acquired Benham Management International, Inc. In the acquisition,
Benham Management Corporation ("BMC"), the investment advisor to the Benham
Group of mutual funds, became a wholly owned subsidiary of ACC. Certain
employees of BMC will be providing investment management services to funds
managed by the manager, while certain employees of the manager will be providing
investment management services to funds managed by BMC.

The manager supervises and manages the investment portfolios of the fund
and directs the purchase and sale of its investment securities. It utilizes a
team of portfolio managers, assistant portfolio managers and analysts acting
together to manage the assets of the fund. The team meets regularly to review
portfolio holdings and to discuss purchase and sale activity. The team adjusts
holdings in the fund's portfolios as it deems appropriate in pursuit of the
fund's investment objectives. Individual portfolio manager members of the team
may also adjust portfolio holdings of the fund as necessary between team
meetings.

The portfolio manager members of the team managing New Opportunities Fund
and their work experience for the last five years are as follows:

GLENN A. FOGLE, Vice President and Portfolio Manager, joined American
Century in September 1990 as an Investment Analyst, a position he held until
March 1993. At that time he was promoted to Portfolio Manager.

JOHN D. SEITZER, Portfolio Manager, joined American Century in June 1993
as an Investment Analyst, a position he held until July 1996. At that time he
was promoted to Portfolio Manager. Prior to joining American Century, Mr.
Seitzer attended Indiana University from August 1991 to June 1993, where he
obtained his MBA degree. Mr. Seitzer also is a member of the team that manages
Vista.

For the services provided to the fund, the manager receives an annual fee
of 1.5% of the average net assets the fund.

CODE OF ETHICS

TRANSFER AND ADMINISTRATIVE SERVICES

Although there is no sales charge levied by the fund, transactions in
shares of the fund may be executed by brokers or investment advisors who
charge a transaction-based fee or other fee for their services. Such charges
may vary among broker-dealers and financial advisors, but in all cases will be
retained by the broker-dealer or financial advisor and not remitted to the
fund or the investment manager. You

20 Additional Information You Should Know American Century Investments

should be aware of the fact that these transactions may be made directly with
American Century without incurring such fees.

From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the manager.

DISTRIBUTION OF FUND SHARES

FURTHER INFORMATION ABOUT AMERICAN CENTURY

The principal office of the fund is American Century Tower, 4500 Main
Street, P.O. Box 419287, Kansas City, Missouri 64141-6287. All inquiries may
be made by mail to that address, or by phone to 1-800-345-8810 (international
calls: 816-531-5575).

New Opportunities, which is first being offered by this Prospectus, is one
of 17 series of $.01 par value shares issued by American Century Mutual Funds,
Inc. Each series is commonly referred to as a fund. The assets belonging to each
series of shares are held separately by the custodian.

Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable to such share on all questions, except
for those matters which must be voted on separately by the series or class of
shares affected. Matters affecting only one series or class are voted upon only
by that series or class.

Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.

Unless required by the Investment Company Act, it will not be necessary for
the fund to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.

Prospectus Additional Information You Should Know 21

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

Person-to-person assistance:
1-800-345-8810 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865

Fax: 816-531-5689

Internet: www.americancentury.com

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