AMERICAN CENTURY MUTUAL FUNDS INC, 497, 1997-01-15

AMERICAN CENTURY MUTUAL FUNDS INC
497, 1997-01-15

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PROSPECTUS

[company logo]

SEPTEMBER 3, 1996
Revised January 1, 1997

TWENTIETH
CENTURY(R)
GROUP

Select
Heritage
Growth
Ultra
Vista

INSTITUTIONAL 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) American Century Group Twentieth Century 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

Select o Heritage o Growth
Ultra o Vista

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

SELECT o HERITAGE o GROWTH
ULTRA o VISTA

INSTITUTIONAL 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.

Each fund's shares offered in this Prospectus (the Institutional Class shares)
are sold at their net asset value with no sales charges or commissions.

The Institutional Class shares are made available for purchase by large
institutional shareholders, such as bank trust departments, corporations,
endowments, foundations and financial advisors that meet the funds' minimum
investment requirements. Institutional Class shares are not available for
purchase by insurance companies or participant-directed employer-sponsored
retirement plans.

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 o P.O. Box 419385
Kansas City, Missouri 64141-6385 o 1-800-345-3533
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 o In Missouri: 816-753-0700
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............................................16
In Person..............................................16
Subsequent Investments...................................17
By Mail................................................17
By Telephone...........................................17
By Wire................................................17
In Person..............................................17
Automatic Investment Plan................................17
Minimum Investment..........................................17
How to Exchange from One Account to Another ................17
By Mail ...............................................18
By Telephone...........................................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........................................18
Special Requirements for Large Redemptions...............18
Signature Guarantee.........................................19
Special Shareholder Services................................19
Open Order Service.....................................19
Tax-Qualified Retirement Plans.........................19
Important Policies Regarding Your Investments...............20
Reports to Shareholders.....................................20
Customers of Banks, Broker-Dealers and
Other Financial Intermediaries...........................21

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price.................................................22
When Share Price Is Determined...........................22
How Share Price Is Determined............................22
Where to Find Information About Share Price..............23
Distributions...............................................23
Taxes.......................................................23
Tax-Deferred Accounts....................................23
Taxable Accounts.........................................23
Management..................................................25
Investment Management....................................25
Code of Ethics...........................................26
Transfer and Administrative Services.....................26
Distribution of Fund Shares.................................27
Further Information About American Century..................27

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

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

Management Fees.............................................. 0.80%
12b-1 Fees.................................................... none
Other Expenses(1)............................................ 0.00%
Total Fund Operating Expenses................................ 0.80%

EXAMPLE

You would pay the following expenses on a 1 year $ 8
$1,000 investment, assuming a 5% annual return 3 years 26
and redemption at the end of each time period: 5 years 44
10 years 99

(1) 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 Institutional Class shares. The funds
offer three other classes of shares, one of which is primarily made available to
retail investors and two that are primarily made available to institutional
investors. The other classes have different fee structures than the
Institutional Class, resulting in different performance for those classes. For
additional information about the various classes, see "Further Information About
American Century," page 27.

4 Transaction and Operating Expense Table American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
SELECT

The Institutional Class of the fund was established September 3, 1996. The
financial information in this table regarding selected per share data for the
fund reflects the performance of the fund's Investor Class of shares, which has
a total expense ratio that is 0.20% higher than the Institutional Class. Had the
Institutional Class been in existence for the fund for the time periods
presented, the fund's performance information would be higher as a result of the
lower expenses.

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 1993 1992 1991 1990 1989 1988 1987 1986

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
HERITAGE

1995 1994 1993 1992 1991 1990 1989 1988(1)

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
GROWTH

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
ULTRA

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
VISTA

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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

Prospectus Information Regarding the Funds 11

is sometimes referred to as "transaction 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 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.

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

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:

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 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

Prospectus Information Regarding the Funds 13

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.

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 Institutional 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, 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.

14 Information Regarding the Funds American Century Investments

A quotation of yield reflects a fund's income over a stated period 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
1-800-345-3533 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 with 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 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 "Minimum Investment," page 17 and "Customers of Banks,
Broker-Dealers and Other Financial Intermediaries," page 21.

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.

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.

BY EXCHANGE

Call 1-800-345-3533 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
17 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

16 How to Invest with American Century Investments American Century Investments

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 Institutional Service Representative or use our
Automated Information Line.

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 page 16.

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 Institutional Service Representatives.

MINIMUM INVESTMENT

The minimum investment is $5 million ($3 million for endowments and
foundations). If you invest with us through a bank, broker-dealer or other
financial intermediary, the minimum investment requirement may be met by
aggregating the investments of various clients of your financial intermediary.
The minimum investment requirement may be waived if you or your financial
intermediary, if applicable, has an aggregate investment in our family of funds
of $10 million or more ($5 million for endowments and foundations). If your
balance or the balance of your financial intermediary, if applicable, falls
below the minimum investment requirements due to redemptions or exchanges, we
reserve the right to convert your shares to Investor Class shares of the same
fund. The Investor Class shares have a unified management fee that is 0.20%
higher than the Institutional Class shares.

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
Price is Determined," page 22.

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 18.

Prospectus How to Invest with American Century Investments 17

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 telephone if you have authorized us to accept
telephone instructions. You can authorize this by selecting "Full Services" on
your application or by calling one of our Institutional Service Representatives
at 1-800-345-3533 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," this page.

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 Institutional Service 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 to your account at a bank or other financial institution. To set up
automatic redemptions, call one of our Institutional Service 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.

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.
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.

18 How to Invest with American Century Investments American Century Investments

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.

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:

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:

o Individual Retirement Accounts (IRAs);

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

Prospectus How to Invest with American Century Investments 19

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

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.

(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.

(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.

20 How to Invest with American Century Investments American Century Investments

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.

CUSTOMERS OF BANKS, BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARIES

Information contained in our Investor Services Guide pertains to shareholders
who invest directly with American Century rather than through a bank,
broker-dealer or other financial intermediary.

If you own or are considering purchasing fund shares through a bank,
broker-dealer, 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 financial intermediary.

Prospectus How to Invest with American Century Investments 21

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 receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or 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 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 a bank, financial advisor or other
financial intermediary, it is the responsibility of your 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
of business on each day that the New York Stock

22 Additional Information You Should Know American Century Investments

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 of the Institutional Class of each fund
may be obtained by calling us.

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.

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.

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 prior
to distribution, 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 (excluding participant-directed
employer-sponsored retirement plans, which are ineligible to invest in
Institutional Class shares), income and capital gains distributions paid by the
funds will generally not be subject to current taxation, but will accumulate in
your account on a tax-deferred basis.

TAXABLE ACCOUNTS

Prospectus Additional Information You Should Know 23

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. See "Distributions," page 23.

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.

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,
we or your financial intermediary is required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends,
capital gains distributions and redemptions). 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

24 Additional Information You Should Know American Century Investments

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 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 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, 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.

Prospectus Additional Information You Should Know 25

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 Assistance 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 Institutional Class of the funds, the manager
receives an annual fee of 0.80% of the average net assets of each of the funds.

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 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.

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.

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.

26 Additional Information You Should Know American Century Investments

DISTRIBUTION OF FUND SHARES

The funds' shares are distributed by American Century Investment Services, Inc.,
broker-dealer and an affiliate of the manager. The manager pays all expenses for
promoting sales of, and distributing the fund shares offered by this Prospectus.
The Institutional 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 419385, Kansas City, Missouri 64141-6385. All inquiries may be made by
mail to that address, or by telephone to 1-800-345-3533 (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 the
Advisor Class. The shares offered by this Prospectus are Institutional Class
shares and have no up-front charges, commissions, or 12b-1 fees.

The Investor Class is primarily made available to retail investors. The Service
Class and Advisor Class 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 Institutional Class. Different
fees and expenses will affect performance. For additional information concerning
the Investor Class of shares, call one of our Investor Services Representatives
at 1-800-345-2021. For information concerning the Service or Advisor classes of
shares not offered by this Prospectus, call one of our Institutional Service
Representatives 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 the Investor Class of
the same fund.

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 a fund to hold a special
meeting of shareholders. We will assist in the communication with other
shareholders.

Prospectus Additional Information You Should Know 27

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.

28 Additional Information You Should Know American Century Investments

NOTES

Prospectus Notes 29

P.O. Box 419385
Kansas City, Missouri
64141-6385

Person-to-person assistance:
1-800-345-3533 or 816-531-5575

Telecommunications Device for the Deaf:
1-800-345-1833 or 816-753-0700

Fax: 816-340-4655

Internet: www.americancentury.com

9701 [recycled logo]
SH-BKT-6573 Recycled

[company logo]
American
Century(sm)

PROSPECTUS

[company logo]
American
Century(sm)

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

AMERICAN
CENTURY
GROUP

Balanced

INSTITUTIONAL 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) 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

Balanced

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

Balanced

INSTITUTIONAL 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.

The fund's shares offered in this Prospectus (the Institutional Class) are
sold at their net asset value with no sales charges or commissions.

The Institutional Class shares are made available for purchase by large
institutional shareholders, such as bank trust departments, corporations,
endowments, foundations and financial advisors that meet the fund's minimum
investment requirement. Institutional Class shares are not available for
purchase by insurance companies or participant-directed employer-sponsored
retirement plans.

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:

AMERICAN CENTURY INVESTMENTS
4500 Main Street o P.O. Box 419385
Kansas City, Missouri 64141-6385 o 1-800-345-3533
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 o In Missouri: 816-753-0700
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 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 ............................................9
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 ....................................................12
In Person ......................................................12
Subsequent Investments ...........................................13
By Mail ........................................................13
By Telephone ...................................................13
By Wire ........................................................13
In Person ......................................................13
Automatic Investment Plan ........................................13
Minimum Investment ..................................................13
How to Exchange from One Account to Another .........................13
By Mail ........................................................14
By Telephone ...................................................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 .......................14
Signature Guarantee .................................................15
Special Shareholder Services ........................................15
Open Order Service .............................................15
Tax-Qualified Retirement Plans .................................16
Important Policies Regarding Your Investments .......................16
Reports to Shareholders .............................................17
Customers of Banks, Broker-Dealers
and Other Financial Intermediaries ...............................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 ......................19
Distributions .......................................................19
Taxes ...............................................................19
Tax-Deferred Accounts ............................................19
Taxable Accounts .................................................19
Management ..........................................................21
Investment Management ............................................21
Code of Ethics ...................................................21
Transfer and Administrative Services .............................22
Distribution of Fund Shares .........................................22
Further Information About American Century ..........................22

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

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

Management Fees .....................................................0.80%
12b-1 Fees ..........................................................none
Other Expenses(1) ...................................................0.00%
Total Fund Operating Expenses .......................................0.80%

EXAMPLE:

You would pay the following expenses on a 1 year $ 8
$1,000 investment, assuming a 5% annual return and 3 years 26
redemption at the end of each time period: 5 years 44
10 years 99

(1) 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 Institutional Class shares. The
fund offers three other classes of shares, one of which is primarily made
available to retail investors and two that are primarily made available to
institutional investors. The other classes have different fee structures than
the Institutional Class, resulting in different performance for those classes.
For additional information about the various classes, see "Further Information
About American Century," page 22.

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 Gains (Losses)
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

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

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 revenues 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 U.S. 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

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.

Prospectus Information Regarding the Fund 7

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 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 the 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 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 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 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 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 a majority of the fund's 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 the commitment to purchase is made.
Delivery of and payment for these securities typically occur

Prospectus Information Regarding the Fund 9

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.

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 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

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 Institutional Class and for
the other classes offered by the fund.

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.

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.

10 Information Regarding the Fund American Century Investments

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

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
1-800-345-3533 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 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 "Minimum Investment," page 13 and "Customers of Banks,
Broker-Dealers and Other Financial Intermediaries," 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.

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 64141

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 1-800-345-3533 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 13 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

12 How to Invest with American Century Investments American Century Investments

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

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 Institutional Service Representative.

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 pages 12 and
13.

AUTOMATIC INVESTMENT PLAN

MINIMUM INVESTMENT

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 Price is Determined," page 18.

Prospectus How to Invest with American Century Investments 13

to comply with our policy on large redemptions. See "Special Requirements for
Large Redemptions," this page.

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 telephone if you have authorized us to
accept telephone instructions. You can authorize this by selecting "Full
Services" on your application or by calling one of our Institutional Service
Representatives at 1-800-345-3533 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," this page.

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 Institutional Service Representative.

BY CHECK-A-MONTH

OTHER AUTOMATIC REDEMPTIONS

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 Institutional Service 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 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").

14 How to Invest with American Century Investments American Century Investments

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.

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:

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

This 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.

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.

(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.

16 How to Invest with American Century Investments American Century Investments

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.

CUSTOMERS OF BANKS, BROKER-DEALERS
AND OTHER FINANCIAL INTERMEDIARIES

Information contained in our Investor Services Guide pertains to
shareholders who invest directly with American Century rather than through a
bank, broker-dealer or other financial intermediary.

If you own or are considering purchasing fund shares through a bank,
broker-dealer 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.

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 the 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 receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or 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.

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 a bank, financial advisor or other
financial intermediary, it is the responsibility of your 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:

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 exchanged to dollars at the prevailing foreign
exchange rate.

18 Additional Information You Should Know American Century Investments

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 newspaper daily. The net asset value of the Institutional Class may be
obtained by calling us.

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, in all
events in a manner consistent with the provisions of the Investment Company Act.

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
prior to distribution, 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

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 (excluding
participant-directed employer-sponsored retirement plans, which are ineligible
to invest in Institutional Class shares), income and capital gains distributions
paid by the fund will generally not be subject to current taxation, but will
accumulate in your account 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. 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 the fund on foreign securities may
give rise to withholding and other

Prospectus Additional Information You Should Know 19

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 you.

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 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, 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.

20 Additional Information You Should Know American Century Investments

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
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 fund's 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.

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 Institutional Class of the fund, the
manager receives an annual fee of 0.80% 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 portfolio
obtain preclearance before executing personal trades.

Prospectus Additional Information You Should Know 21

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 the fund.

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.

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.

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., a registered broker-dealer and an affiliate of the manager. The manager
pays all expenses for promoting sales of, and distributing the fund shares
offered by this Prospectus. The Institutional 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., 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 419385, Kansas City, Missouri 64141-6385. All inquiries may
be made by mail to that address, or by telephone to 1-800-345-3533
(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 the fund: an Investor Class, an
Institutional Class, a Service Class, and the Advisor Class. The shares offered
by this Prospectus are Institutional Class shares and have no up-front charges,
commissions, or 12b-1 fees.

22 Additional Information You Should Know American Century Investments

banks, broker-dealers, insurance companies or other financial intermediaries.
The other classes have different fees, expenses, and/or minimum investment
requirements than the Institutional Class. Different fees and expenses will
affect performance. For additional information concerning the Investor Class of
shares, call one of our Investor Services Representatives at 1-800-345-2021. For
information concerning the Service or Advisor Classes of shares, call one of our
Institutional Service Representatives 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 bylaws, 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.

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.

Prospectus Additional Information You Should Know 23

NOTES

24 Notes American Century Investments

NOTES

Prospectus Notes 25

P.O. Box 419385
Kansas City, Missouri
64141-6385

Person-to-person assistance:
1-800-345-3533 or 816-531-5575

Telecommunications Device for the Deaf:
1-800-345-1833 or 816-753-0700

Fax: 816-340-4655

Internet: www.americancentury.com

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