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

ADVISOR CLASS

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

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

AMERICAN CENTURY INVESTMENTS

Benham Group(R) American Century Group Twentieth Century(R) Group

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

Select o Heritage o Growth
Ultra o Vista
[inside cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

SELECT o HERITAGE o GROWTH
ULTRA o VISTA
ADVISOR 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 and low-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 Advisor Class shares) are
sold at their net asset value with no sales charges or commissions. The Advisor
Class shares are subject to Rule 12b-1 shareholder services and distribution
fees as described in this Prospectus.

The Advisor Class shares are intended for purchase by participants in
employer-sponsored retirement or savings plans and for persons purchasing shares
through broker-dealers, banks, insurance companies and other financial
intermediaries that provide various administrative and distribution services.

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

How to Purchase and Sell American
Century Funds............................................16
How to Exchange Your Investment from One
American Century Fund to Another.........................16
How to Redeem Shares........................................16
Special Requirements for Large Redemptions...............16
Telephone Services..........................................17
Investors Line...........................................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...........................................22
Transfer and Administrative Services.....................22
Distribution of Fund Shares.................................22
Service and Distribution Fees...............................23
Further Information About American Century..................23

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.................................................. 0.75%
12b-1 Fees(1)..................................................... 0.50%
Other Expenses(2)................................................ 0.00%
Total Fund Operating Expenses.................................... 1.25%

EXAMPLE

You would pay the following expenses on a 1 year $ 13
$1,000 investment, assuming a 5% annual return and 3 years 40
redemption at the end of each time period: 5 years 68
10 years 150

(1) The 12b-1 fee is designed to permit investors to purchase Advisor Class
shares through broker-dealers, banks, insurance companies and other
financial intermediaries. A portion of the fee is used to compensate them
for ongoing recordkeeping and administrative services that would otherwise
be performed by an affiliate of the manager, and a portion is used to
compensate them for distribution and other shareholder services. See
"Service and Distribution Fees," page 23.

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

The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of 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 Advisor 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 Advisor
Class, resulting in different performance for those classes. For additional
information about the various classes, see "Further Information About American
Century," page 23.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS
SELECT

The Advisor 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 0.25% lower than the Advisor Class. Had the Advisor
Class been in existence for the fund for the time periods presented, the fund's
performance information would be lower as a result of the additional expense.

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 funds' annual report, which is incorporated by reference
into the Statement of Additional Information. The annual report contains
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended October 31, except as noted.
<TABLE>

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..................... $37.67 $45.76 $39.18 $40.79 $34.19 $35.98 $27.85 $32.69 $35.40 $26.48
------ ------ ------ ------ ------ ------ ------ ------ ------ ------

Income from Investment Operations

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

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

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

Distributions

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

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

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

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

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

TOTAL RETURN(2)....................... 15.02% (7.37)% 22.20% 1.76% 27.05% (2.03)% 32.59% 7.31% 3.47% 36.13%

RATIOS/SUPPLEMENTAL DATA

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

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

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

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

Net Assets, End
of Period (in millions)............... $4,008 $4,278 $5,160 $4,534 $4,163 $2,953 $2,721 $2,367 $2,417 $1,978
</TABLE>
(1) Computed using average shares outstanding throughout the period.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

(3) Not computed for period indicated.

Prospectus Financial Highlights 5

FINANCIAL HIGHLIGHTS
HERITAGE

1995 1994 1993 1992 1991 1990 1989 1988(1)

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

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

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

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

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

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

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

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

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

TOTAL RETURN(3)....................... 21.04% (1.13)% 28.64% 9.65% 33.25% (11.62)% 32.65% 25.75%

RATIOS/SUPPLEMENTAL DATA

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

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

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

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

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

(1) November 10, 1987 (inception) through October 31, 1988.

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

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

(4) Annualized.

(5) Not computed for period indicated.

6 Financial Highlights American Century Investments

FINANCIAL HIGHLIGHTS
GROWTH

The Advisor Class of the fund was established September 3, 1996. The financial
information in this table regarding selected per share data for each fund
reflects the performance of the fund's Investor Class of shares, which has a
total expense ratio that is 0.25% lower than the Advisor Class. Had the Advisor
Class been in existence for the fund for the time periods presented, the fund's
performance information would be lower as a result of the additional expense.

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

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

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

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

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

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

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

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

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

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

TOTAL RETURN(2)....................... 22.31% 2.66% 8.48% 5.96% 60.64% (11.72)% 42.74% 3.18% 9.32% 39.09%

RATIOS/SUPPLEMENTAL DATA

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

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

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

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

Net Assets, End
of Period (in millions)............... $5,130 $4,363 $4,641 $4,472 $3,193 $1,697 $1,597 $1,229 $1,188 $965
</TABLE>
(1) Computed using average shares outstanding throughout the period.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

(3) Not computed for period indicated.

Prospectus Financial Highlights 7

FINANCIAL HIGHLIGHTS
ULTRA

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

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

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

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

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

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

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

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

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

TOTAL RETURN(2)....................... 36.89% (2.08)% 39.78% (.45)% 101.51% (9.02)% 40.37% 19.52% (3.23)% 27.22%

RATIOS/SUPPLEMENTAL DATA

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

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

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

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

Net Assets, End
of Period (in millions)............... $14,376 $10,344 $8,037 $4,275 $2,148 $330 $347 $258 $236 $315
</TABLE>
(1) Computed using average shares outstanding throughout the period.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

(3) Not computed for period indicated.

8 Financial Highlights American Century Investments

FINANCIAL HIGHLIGHTS
VISTA

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

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

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

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

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

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

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

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

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

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

TOTAL RETURN(2)....................... 44.20% 4.16% 17.71% 4.55% 67.67% (22.17)% 48.19% 11.41% (7.70)% 47.00%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======

RATIOS/SUPPLEMENTAL DATA

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

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

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

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

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

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

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

(3) Not computed for period indicated.

Prospectus Financial Highlights 9

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS

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

GROWTH EQUITY FUNDS

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

SELECT AND HERITAGE

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

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

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

GROWTH, ULTRA AND VISTA

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

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

10 Information Regarding the Funds American Century Investments

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

The median capitalization of the companies in a given fund may change over time.
In addition, the criteria outlined above 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 a fund to purchase or
sell a specific currency at a future date at a specific price.

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

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

Prospectus Information Regarding the Funds 11

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

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

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

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

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

PORTFOLIO TURNOVER

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

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

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

REPURCHASE AGREEMENTS

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

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

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

12 Information Regarding the Funds American Century Investments

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

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

DERIVATIVE SECURITIES

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

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

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

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

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

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

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

Prospectus Information Regarding the Funds 13

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

WHEN-ISSUED SECURITIES

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

RULE 144A SECURITIES

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

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

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

SHORT SALES

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

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

PERFORMANCE ADVERTISING

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

14 Information Regarding the Funds American Century Investments

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.

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

The following section explains how to purchase, exchange and redeem Advisor
Class shares of the funds offered by this Prospectus.

HOW TO PURCHASE AND SELL AMERICAN
CENTURY FUNDS

One or more of the funds offered by this Prospectus is available as an
investment option under your employer-sponsored retirement or savings plan or
through or in connection with a program, product or service offered by a
financial intermediary, such as a bank, broker-dealer or insurance company.
Since all records of your share ownership are maintained by your plan sponsor,
plan recordkeeper, or other financial intermediary, all orders to purchase,
exchange and redeem shares must be made through your employer or other financial
intermediary, as applicable.

If you are purchasing through a retirement or savings plan, the administrator of
your plan or your employee benefits office can provide you with information on
how to participate in your plan and how to select American Century funds as an
investment option.

If you are purchasing through a financial intermediary, you should contact your
service representative at the financial intermediary for information about how
to select American Century funds.

If you have questions about a fund, see "Investment Policies of the Funds," page
10, or call one of our Institutional Service Representatives at 1-800-345-3533.

Orders to purchase shares are effective on the day we receive payment. See "When
Share Price is Determined," page 18.

We may discontinue offering shares generally in the funds (including any class
of shares of a fund) or in any particular state without notice to shareholders.

HOW TO EXCHANGE FROM ONE AMERICAN CENTURY
FUND TO ANOTHER

Your plan or program may permit you to exchange your investment in the shares of
a fund for shares of another fund in our family. See your plan administrator,
employee benefits office or financial intermediary for details on the rules in
your plan governing exchanges.

Exchanges are made at the respective net asset values, next computed after
receipt of the exchange instruction by us. If in any 90-day period, the total of
the exchanges and redemptions from the account of any one plan participant or
financial intermediary client exceeds the lesser of $250,000 or 1% of a fund's
assets, further exchanges may be subject to special requirements to comply with
our policy on large equity fund redemptions. See "Special Requirements for Large
Redemptions," this page.

HOW TO REDEEM SHARES

Subject to any restrictions imposed by your employer's plan or financial
intermediary's program, you can sell ("redeem") your shares through the plan or
financial intermediary at their net asset value. Your plan administrator,
trustee, or financial intermediary or other designated person must provide us
with redemption instructions. The shares will be redeemed at the net asset value
next computed after receipt of the instructions in good order. See "When Share
Price Is Determined," page 18. If you have any questions about how to redeem,
contact your plan administrator, employee benefits office, or service
representative at your financial intermediary, as applicable.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

We have elected to be governed by Rule 18f-1 under the Investment Company Act,
which obligates each fund to redeem shares in cash, with respect to any one
participant account 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 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

16 How to Invest with American Century InvestmentsAmerican Century Investments

be provided to the redeeming plan participant or financial intermediary in lieu
of cash without prior notice.

If you expect to make a large redemption and would like to avoid any possibility
of being paid in securities, you may do so by providing 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. Receipt of your
instruction 15 days prior to the transaction provides the fund with sufficient
time to raise the cash in an orderly manner to pay the redemption and thereby
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.

TELEPHONE SERVICES

INVESTORS LINE

To request information about our funds and a current prospectus, or get answers
to any questions that you may have about the funds and the services we offer,
call one of our Institutional Service Representatives at 1-800-345-3533.

Prospectus How to Invest with American Century Investments 17

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net asset
value is determined by calculating the total value of a fund's assets, deducting
total liabilities and dividing the result by the number of shares outstanding.
For all American Century funds except the American Century Target Maturities
Trust, net asset value is determined at the close of regular trading on each day
that the New York Stock Exchange is open, usually 3 p.m. Central time. Net asset
value for the Target Maturities is determined one hour prior to the close of the
Exchange.

Investments and requests to redeem or exchange shares will receive the share
price next determined after 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 one of our agents before the net asset value
of the fund is determined are effective on, and will receive the price
determined, that day as of the close of the Exchange. 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.

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

HOW SHARE PRICE IS DETERMINED

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

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

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

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

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

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 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. Because the total expense ratio for the Advisor Class shares
is 0.25% higher than the Investor Class, their net asset values will be lower
than the Investor Class. The net asset value of the Advisor 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.

Participants in employer-sponsored retirement or savings plan must reinvest all
distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 591/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date.

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

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

TAXES

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

TAX-DEFERRED ACCOUNTS

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

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

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

Prospectus Additional Information You Should Know 19

capital gains are taxable as long-term capital gains regardless of the length of
time you have held the shares on which such distributions are paid. However, you
should note that any loss realized upon the sale or redemption of shares held
for six months or less will be treated as a long-term capital loss to the extent
of any distribution of long-term capital gain to you with respect to such
shares.

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

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

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

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

In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV from either us or your
financial intermediary 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
and Regulations, either 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 redemption made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders

20 Additional Information You Should Know American Century Investments

have held such shares for a period of more than one year. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the "wash sale"
rules of the Code, resulting in a postponement of the recognition of such loss
for federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

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

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

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

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

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

CHARLES M. DUBOC, Senior Vice President and Portfolio Manager, joined Twentieth
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 21

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

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

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

For the services provided to the Advisor Class of the funds, the manager
receives an annual fee of 0.75% 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.

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

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

DISTRIBUTION OF FUND SHARES

The funds' shares are distributed by American Century Investment Services, Inc.,
a registered broker-dealer and an affiliate of the manager. As agent for the
funds and the manager, the distributor enters into contracts with various banks,
broker-dealers, insurance companies and other financial intermediaries with
respect to the sale of the funds' shares and/or the use of the funds' shares in
various financial services. The manager (or an affiliate) pays all expenses
incurred in promoting sales of, and distributing, the Advisor Class and in
securing such services out of the Rule 12b-1 fees described in the section that
follows.

22 Additional Information You Should Know American Century Investments

SERVICE AND DISTRIBUTION FEES

Rule 12b-1 adopted by the Securities and Exchange Commission ("SEC") under the
Investment Company Act permits investment companies that adopt a written plan to
pay certain expenses associated with the distribution of their shares. Pursuant
to that rule, the funds' Board of Directors and the initial shareholder of the
funds' Advisor Class shares have approved and entered into a Master Distribution
and Shareholder Services Plan (the "Plan") with the Distributor. Pursuant to the
Plan, each fund pays the manager a shareholder services fee and a distribution
fee, each equal to 0.25% (for a total of 0.50%) per annum of the average daily
net assets of the shares of the fund's Advisor Class. The shareholder services
fee is paid for the purpose of paying the costs of securing certain shareholder
and administrative services, and the distribution fee is paid for the purpose of
paying the costs of providing various distribution services. All or a portion of
such fees are paid by the manager to the banks, broker-dealers, insurance
companies or other financial intermediaries through which such shares are made
available.

The Plan has been adopted and will be administered in accordance with the
requirements of Rule 12b-1 under the Investment Company Act. For additional
information about the Plan and its terms, see "Master Distribution and
Shareholder Services Plan" in the Statement of Additional Information. Fees paid
pursuant to the Plan may be paid for shareholder services and the maintenance of
accounts and therefore may constitute "service fees" for purposes of applicable
rules of the National Association of Securities Dealers.

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 phone 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 Advisor Class shares.

The Investor Class is primarily made available to retail investors. The
Institutional Class and Service 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 Advisor 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 Institutional
or Service 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.

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

Prospectus Additional Information You Should Know 23

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.

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.

24 Additional Information You Should Know 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

9701 [recycled logo]
SH-BKT-6571 Recycled

[company logo]
American
Century(sm)

PROSPECTUS

[company logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

AMERICAN
CENTURY
GROUP

Balanced

ADVISOR 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

ADVISOR 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 and low-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 shares offered in this Prospectus (the Advisor Class shares) are
sold at its net asset value with no sales charges or commissions. The Advisor
Class shares are subject to Rule 12b-1 shareholder services and distribution
fees as described in this Prospectus.

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

How to Purchase and Sell American Century Funds .....................12
How to Exchange from One American Century Fund to Another ...........12
How to Redeem Shares ................................................12
Special Requirements for Large Redemptions .......................12
Telephone Services ..................................................13
Investors Line ...................................................13

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price .........................................................14
When Share Price Is Determined ...................................14
How Share Price Is Determined ....................................14
Where to Find Information About Share Price ......................15
Distributions .......................................................15
Taxes ...............................................................15
Tax-Deferred Accounts ............................................15
Taxable Accounts .................................................15
Management ..........................................................17
Investment Management ............................................17
Code of Ethics ...................................................17
Transfer and Administrative Services .............................18
Distribution of Fund Shares .........................................18
Service and Distribution Fees ....................................18
Further Information About American Century ..........................18

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 ................................................. 0.75%
12b-1 Fees(1) ................................................... 0.50%
Other Expenses(2) ............................................... 0.00%
Total Fund Operating Expenses ................................... 1.25%

EXAMPLE:

You would pay the following expenses on a 1 year $ 13
$1,000 investment, assuming a 5% annual return and 3 years 40
redemption at the end of each time period: 5 years 68
10 years 150

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.

The shares offered by this prospectus are Advisor 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 Advisor
Class, resulting in different performance for those classes. For additional
information about the various classes, see "Further Information About American
Century," page 18.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS

BALANCED

The Advisor 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 0.25% lower than the Advisor Class. Had the
Advisor Class been in existence for the fund for the time periods presented, the
fund's performance information would be lower as a result of the additional
expense.

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

1995 1994 1993 1992 1991 1990 1989 1988(1)

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $15.94 $16.52 $14.89 $15.11 $10.89 $11.84 $10.13 $10.22
------- ------- ------- ------- ------- ------- ------- -------
Income from Investment Operations

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

Net Realized and Unrealized Gain (Loss)
on Investment Transactions ..................... 2.03 (.58) 1.62 (.23) 4.22 (.62) 1.71 (.10)
------- ------- ------- ------- ------- ------- ------- -------
Total from Investment Operations .................. 2.51 (.16) 2.00 .10 4.60 (.21) 2.08 (.09)
------- ------- ------- ------- ------- ------- ------- -------
Distributions

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

From Net Realized Gains
on Investment Transactions ..................... (.274) -- -- -- -- (.320) -- --
------- ------- ------- ------- ------- ------- ------- -------
Total Distributions ............................... (.749) (.416) (.375) (.322) (.384) (.737) (.372) --
------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period ....................... $17.70 $15.94 $16.52 $14.89 $15.11 $10.89 $11.84 $10.13
======= ======= ======= ======= ======= ======= ======= =======
Total Return(3) ................................... 16.36% (.93)% 13.64% .63% 42.92% (2.10)% 20.94% (.88)%

RATIOS/SUPPLEMENTAL DATA

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

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

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

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

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

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

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

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

(4) Annualized.

(5) Not computed for period indicated.

Prospectus Financial Highlights 5

INFORMATION REGARDING THE FUND

INVESTMENT POLICIES OF THE FUND

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 United States
government, its agencies and instrumentalities; corporate securities (bonds,
notes, preferreds and convertible issues), and sovereign government, municipal,
mortgage-backed and other asset-backed securities.

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

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

6 Information Regarding the Fund American Century Investments

securities which at the time of purchase are rated 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.

Prospectus Information Regarding the Fund 7

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

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

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

Prospectus Information Regarding the Fund 9

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 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 Advisor Class and 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

10 Information Regarding the Fund American Century Investments

percentage is then annualized. Capital gains and losses are not included in
the calculation.

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

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

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

Prospectus Information Regarding the Fund 11

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

The following section explains how to purchase, exchange and redeem Advisor
Class shares of the fund offered by this Prospectus.

HOW TO PURCHASE AND SELL AMERICAN
CENTURY FUNDS

The fund offered by this Prospectus is available as an investment option
under your employer-sponsored retirement or savings plan or through or in
connection with a program, product or service offered by a financial
intermediary, such as a bank, broker-dealer or insurance company. Since all
records of your share ownership are maintained by your plan sponsor, plan
recordkeeper, or other financial intermediary, all orders to purchase, exchange
and redeem shares must be made through your employer or other financial
intermediary, as applicable.

If you are purchasing through a retirement or savings plan, the
administrator of your plan or your employee benefits office can provide you with
information on how to participate in your plan and how to select American
Century funds as an investment option.

If you are purchasing through a financial intermediary, you should contact
your service representative at the financial intermediary for information about
how to select American Century funds.

If you have questions about the fund, see "Investment Policies of the
Fund," page 6, or call one of our Institutional Service Representatives at
1-800-345-3533.

Orders to purchase shares are effective on the day we receive payment. See
"When Share Price is Determined," page 14.

We may discontinue offering shares generally in the fund (including any
class of shares of the fund) or in any particular state without notice to
shareholders.

HOW TO EXCHANGE FROM ONE AMERICAN CENTURY
FUND TO ANOTHER

Your plan or program may permit you to exchange your investment in the
shares of the fund for shares of another fund in our family. See your plan
administrator, employee benefits office or financial intermediary for details on
the rules in your plan governing exchanges.

HOW TO REDEEM SHARES

Subject to any restrictions imposed by your employer's plan or financial
intermediary's program, you can sell ("redeem") your shares through the plan or
financial intermediary at their net asset value. Your plan administrator,
trustee, or financial intermediary or other designated person must provide us
with redemption instructions. The shares will be redeemed at the net asset value
next computed after receipt of the instructions in good order. See "When Share
Price Is Determined," page 14. If you have any questions about how to redeem,
contact your plan administrator, employee benefits office, or service
representative at your financial intermediary, as applicable.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

We have elected to be governed by Rule18f-1 under the Investment Company
Act, which obligates the fund to redeem shares in cash, with respect to any one
participant account 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

12 How to Invest with American Century Investments American Century Investments

right 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 to the redeeming plan participant or financial intermediary in lieu of
cash without prior notice.

If you expect to make a large redemption and would like to avoid any
possibility of being paid in securities, you may do so by providing 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.
Receipt of your instruction 15 days prior to the transaction provides the fund
with sufficient time to raise the cash in an orderly manner to pay the
redemption and thereby minimizes the effect of the redemption on the fund and
its remaining shareholders.

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

TELEPHONE SERVICES

INVESTORS LINE

To request information about our funds and a current prospectus, or get
answers to any questions that you may have about the funds and the services we
offer, call one of our Institutional Service Representatives at 1-800-345-3533.

Prospectus How to Invest with American Century Investments 13

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 for 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 Trust 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.

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

HOW SHARE PRICE IS DETERMINED

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

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.

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

14 Additional Information You Should Know American Century Investments

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

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset value of the Investor Class of the fund is published in
leading newspapers daily. Because the total expense ratio for the Advisor Class
shares is 0.25% higher than the Investor Class, their net asset values will be
lower than the Investor Class. The net asset value of the Advisor 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.

Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distribution 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.

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

Because such gains and dividends are included in the value of your shares,
when they are distributed, the value of your shares is reduced by the amount of
the distribution. If you buy your 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, income and capital
gains distributions paid by the fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.

TAXABLE ACCOUNTS

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 taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes.

Prospectus Additional Information You Should Know 15

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, either 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 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.

16 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 advisory agreement entered into with the fund, American Century
Investment Management, Inc. serves as the investment manager of the fund. Its
principal place of business is American Century Tower, 4500 Main Street, Kansas
City, Missouri 64111. The manager has been providing investment advisory
services to investment companies and institutional clients since it was founded
in 1958.

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

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

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

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

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

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

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 Advisor Class of the fund, the manager
receives an annual fee of 0.75% 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 17

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

TRANSFER AND ADMINISTRATIVE SERVICES

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

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

The manager and the transfer agent are both wholly owned by American
Century Companies, Inc. James E. Stowers Jr., Chairman of the 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. As agent for
the fund and the manager, the distributor enters into contracts with various
banks, broker-dealers, insurance companies and other financial intermediaries
with respect to the sale of the fund's shares and/or the use of the fund's
shares in various financial services. The manager (or an affiliate) pays all
expenses incurred in promoting sales of, and distributing, the Advisor Class and
in securing such services out of the Rule 12b-1 fees described in the section
that follows.

SERVICE AND DISTRIBUTION FEES

Rule 12b-1 adopted by the Securities and Exchange Commission ("SEC") under
the Investment Company Act permits investment companies that adopt a written
plan to pay certain expenses associated with the distribution of their shares.
Pursuant to that rule, the fund's Board of Directors and the initial shareholder
of the fund's Advisor Class shares have approved and adopted a Master
Distribution and Shareholder Services Plan (the "Plan"). Pursuant to the Plan,
the fund pays the manager a shareholder services fee and a distribution fee,
each equal to 0.25% (for a total of 0.50%) per annum of the average daily net
assets of the shares of the fund's Advisor Class. The shareholder services fee
is paid for the purpose of paying the costs of securing certain shareholder and
administrative services, and the distribution fee is paid for the purpose of
paying the costs of providing various distribution services. All or a portion of
such fees are paid by the manager to the banks, broker-dealers, insurance
companies or other financial intermediaries through which such shares are made
available.

FURTHER INFORMATION ABOUT AMERICAN CENTURY

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

The principal office of the fund is American Century Tower, 4500 Main
Street, P.O. Box 419385,

18 Additional Information You Should Know American Century Investments

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 offered by this
Prospectus: an Investor Class, an Institutional Class, a Service Class, and the
Advisor Class. The shares offered by this Prospectus are Advisor Class shares.

The Investor Class is primarily made available to retail investors. The
Institutional Class and Service 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 Advisor 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 Institutional
or Service 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.

Except as described below, all classes of shares of the fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences 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 the Investor Class of the 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 fund to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.

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 19

NOTES

20 Notes American Century Investments

NOTES

Prospectus Notes 21

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

[company logo]
American
Century(sm)

9701 [recycled logo]
SH-BKT-6567 Recycled

PROSPECTUS

[american century logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

BENHAM
GROUP(R)

Cash Reserve

ADVISOR CLASS

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

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

AMERICAN CENTURY INVESTMENTS

Benham Group American Century Group Twentieth Century(R) Group

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

Cash Reserve

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

Cash Reserve

ADVISOR 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 and low-load
mutual funds covering a variety of investment opportunities. One of the money
market funds from our Benham Group is described in this Prospectus. Its
investment objective is listed on page 2 of this Prospectus. The other funds are
described in separate prospectuses.

The fund shares offered by this Prospectus (the Advisor Class shares) are
sold at their net asset value with no sales charges or commissions. The Advisor
Class shares are subject to Rule 12b-1 shareholder services and distribution
fees as described in this Prospectus.

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

Prospectus 1

INVESTMENT OBJECTIVE OF THE FUND

AMERICAN CENTURY - BENHAM CASH RESERVE FUND

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

INVESTMENTS IN THE FUND ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY OTHER AGENCY. THERE IS NO ASSURANCE THAT THE FUND WILL BE
ABLE TO MAINTAIN A $1.00 SHARE PRICE.

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

2 Investment Objective American Century Investments

TABLE OF CONTENTS

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

INFORMATION REGARDING THE FUND

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

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

How to Purchase and Sell American
Century Funds..............................................10
How to Exchange From One
American Century Fund to Another...........................10
How to Redeem Shares..........................................10
Telephone Services............................................10
Investors Line.............................................10

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price...................................................11
When Share Price Is Determined.............................11
How Share Price Is Determined..............................11
Where to Find Yield Information ...........................11
Distributions.................................................11
Taxes.........................................................12
Tax-Deferred Accounts......................................12
Taxable Accounts...........................................12
Management....................................................12
Investment Management......................................12
Code of Ethics.............................................13
Transfer and Administrative Services.......................13
Distribution of Fund Shares...................................13
Service and Distribution Fees..............................14
Further Information About American Century....................14

Prospectus Table of Contents 3

TRANSACTION AND OPERATING EXPENSE TABLE

Cash
Reserve

SHAREHOLDER TRANSACTION EXPENSES:

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

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

Management Fees............................................... 0.45%
12b-1 Fees.................................................... 0.50%
Other Expenses(2)............................................. 0.00%
Total Fund Operating Expenses................................. 0.95%

EXAMPLE

You would pay the following expenses on a 1 year $10
$1,000 investment, assuming a 5% annual return and 3 years 30
redemption at the end of each time period: 5 years 52
10 years 116

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 Cash Reserve offered by
this Prospectus. The example set forth above assumes reinvestment of all
dividends and distributions and uses a 5% annual rate of return as required by
Securities and Exchange Commission regulations.

The shares offered by this Prospectus are Advisor Class shares. The fund
offers two other classes of shares, one of which is primarily made available to
retail investors and one that is primarily made available to institutional
investors. The other classes have different fee structures than the Advisor
Class, resulting in different performance for those classes. For additional
information about the various classes, see "Further Information About American
Century," page 14.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS
CASH RESERVE

The Advisor 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 0.25% lower than the Advisor Class. Had the
Advisor Class been in existence for the fund for the time periods presented, the
fund's performance information would be lower as a result of the additional
expense.

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

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

PER-SHARE DATA

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net Investment Income .05(2) .03 .02 .04 .06 .07 .08 .07 .06 .06
Net Realized and Unrealized
Gain on Investment Transactions -- -- -- -- -- -- -- -- -- .001
Total from Investment Operations .05 .03 .02 .04 .06 .07 .08 .07 .06 .06
Distributions
From Net Investment Income (.052) (.032) (.023) (.037) (.058) (.074) (.083) (.065) (.056) (.062)
From Net Realized Gains on
Investment Transactions -- -- -- -- -- -- -- -- -- (.001)
In Excess of Net Realized Gains -- -- -- -- -- -- -- -- -- --
Total Distributions (.052) (.032) (.023) (.037) (.058) (.074) (.083) (.065) (.056) (.063)
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return(3) 5.38% 3.21% 2.30% 3.74% 5.95% 7.67% 8.66% 6.73% 5.75% 6.46%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to
Average Net Assets .70% .80% 1.00% .98%(4) .97%(4) 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of Net Investment Income to
Average Net Assets 5.27% 3.18% 2.30% 3.62% 5.75% 7.40% 8.35% 6.52% 5.80% 5.83%
Net Assets, End of
Period (in thousands) $1,469,546 $1,298,982 $1,256,012 $1,487,961 $1,236,309 $953,687 $639,115 $488,781 $447,917 $134,958
</TABLE>

(1) The data presented has been restated to give effect to a 100 shares for 1
stock split in the form of a stock dividend that occurred on November 13,
1993.

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

(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

(4) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

Prospectus Financial Highlights 5

INFORMATION REGARDING THE FUND

INVESTMENT POLICIES OF THE FUND

For an explanation of the securities ratings referred to in the following
discussion, see "An Explanation of Fixed Income Securities Ratings" in the
Statement of Additional Information.

CASH RESERVE

Cash Reserve seeks to obtain a level of current income consistent with
preservation of capital and maintenance of liquidity. Cash Reserve is designed
for investors who want income and no fluctuation in their principal.

Cash Reserve expects, but cannot guarantee, that it will maintain a
constant share price of $1.00. The fund follows industry-standard guidelines on
the quality and maturity of its investments, purchasing only securities having
remaining maturities of not more than 13 months and by maintaining a weighted
average portfolio maturity of not more than 90 days.

Cash Reserve invests substantially all of its assets in a diversified
portfolio of U.S. dollar denominated high quality money market instruments,
consisting of:

(1) Securities issued or guaranteed by the U.S. government and its agencies and
instrumentalities

(2) Commercial Paper

(3) Certificates of Deposit and Euro Dollar Certificates of Deposit

(4) Bankers' Acceptances

(5) Short-term notes, bonds, debentures, or other debt instruments

(6) Repurchase agreements

These classes of securities may be held in any proportion, and such
proportion may vary as market conditions change.

All portfolio holdings are limited to those which at the time of purchase
have a short-term rating of A-1 by Standard & Poor's Corporation ("S&P") or P-1
by Moody's Investors Services ("Moody's"), or if they have no short-term rating
are issued or guaranteed by an entity having a long-term rating of at least AA
by S&P or Aa by Moody's.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

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

REPURCHASE AGREEMENTS

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 disposi-

6 Information Regarding the Fund American Century Investments

tion of the collateral may be delayed or limited. To the extent the value of
the security decreases, the fund could experience a loss.

The fund may invest in repurchase agreements with respect to any security
in which the fund is authorized to invest, even if the remaining maturity of the
underlying security would make that security ineligible for purchase by such
fund. The fund will not invest more than 10% of its assets in repurchase
agreements maturing in more than seven days.

DERIVATIVE SECURITIES

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

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

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

The fund may not invest in a derivative security unless the reference index
or the instrument to which it relates is an eligible investment for the fund.

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

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

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

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

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

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

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

PORTFOLIO LENDING

In order to realize additional income, the fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including, if
applicable, the right to call the loan to enable the fund to vote the
securities. Such loans may not exceed one-third of the fund's net assets taken
at market. Interest on loaned

Prospectus Information Regarding the Fund 7

securities may not exceed 10% of the annual gross income of the fund (without
offset for realized capital gains). The portfolio lending policy described in
this paragraph is a fundamental policy that may be changed only by a vote of
fund shareholders.

FOREIGN SECURITIES

The fund may invest an unlimited amount of its assets in the securities of
foreign issuers, including foreign governments, when these securities meet its
standards of selection. Securities of foreign issuers may trade in the U.S. or
foreign securities markets. The fund will limit its purchase of debt securities
to U.S. dollar denominated obligations. Such securities will be primarily from
developed markets.

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

WHEN-ISSUED SECURITIES

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

RULE 144A SECURITIES

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

Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and the fund may, from time to time, hold a Rule 144A
security that is illiquid. In such an event, the fund's manager will consider
appropriate remedies to minimize the effect on the fund's liquidity. The fund
may not invest more than 10% of its assets in illiquid securities (securities
that may not be sold within seven days at approximately the price used in
determining the net asset value of fund shares).

PERFORMANCE ADVERTISING

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

8 Information Regarding the Fund American Century Investments

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. In the case of Cash
Reserve, yield is calculated by measuring the income generated by an investment
in the fund over a seven-day period (net of fund expenses). This income is then
"annualized." That is, the amount of income generated by the investment over the
seven-day period is assumed to be generated over each similar period each week
throughout a full year and is shown as a percentage of the investment. The
"effective yield" is calculated in a similar manner but, when annualized, the
income earned by the investment is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of the
assumed reinvestment.

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

The fund may also include in advertisements data comparing performance with
the performance of non-related investment media, published editorial comments
and performance rankings compiled by independent organizations (such as Lipper
Analytical Services or Donoghue's Money Fund Report) and publications that
monitor the performance of mutual funds. Performance information may be quoted
numerically or may be presented in a table, graph or other illustration. In
addition, fund performance may be compared to well-known indices of market
performance including the Donoghue's Money Fund Average and the Bank Rate
Monitor National Index of 21/2-year CD rates. Fund performance may also be
compared, on a relative basis, to other funds in our fund family. This relative
comparison, which may be based upon historical or expected fund performance,
volatility or other fund characteristics, may be presented numerically,
graphically or in text. Fund performance may also be combined or blended with
other funds in our fund family, and that combined or blended performance may be
compared to the same indices to which individual funds may be compared.

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

Prospectus Information Regarding the Fund 9

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

The following section explains how to purchase, exchange and redeem Advisor
Class shares of the fund offered by this Prospectus.

HOW TO PURCHASE AND SELL AMERICAN
CENTURY FUNDS

If you are purchasing through a retirement or savings plan, the
administrator of your plan or your employee benefits office can provide you with
information on how to participate in your plan and how to select American
Century funds as an investment option.

If you are purchasing through a financial intermediary, you should contact
your service representative at the financial intermediary for information about
how to select American Century funds.

If you have questions about the fund, see "Investment Policies of the
Fund," page 6, or call one of our Institutional Service Representatives at
1-800-345-3533.

Orders to purchase shares are effective on the day we receive payment. See
"When Share Price is Determined," page 11.

We may discontinue offering shares generally in the fund (including any
class of shares of the fund) or in any particular state without notice to
shareholders.

HOW TO EXCHANGE FROM ONE AMERICAN CENTURY
FUND TO ANOTHER

HOW TO REDEEM SHARES

Subject to any restrictions imposed by your employer's plan or financial
intermediary's program, you can sell ("redeem") your shares through the plan or
financial intermediary at their net asset value. Your plan administrator,
trustee, or financial intermediary or other designated person must provide us
with redemption instructions. The shares will be redeemed at the net asset value
next computed after receipt of the instructions in good order. See "When Share
Price Is Determined," page 11. If you have any questions about how to redeem,
contact your plan administrator, employee benefits office, or service
representative at your financial intermediary, as applicable.

TELEPHONE SERVICES

INVESTORS LINE

To request information about our funds and a current prospectus, or get
answers to any questions that you may have about the funds and the services we
offer, call one of our Institutional Service Representatives at 1-800-345-3533.

10 How To Invest American Century Investments

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of the fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds, except the American Century Target
Maturities Trust, net asset value is determined at the close of regular trading
on each day that the New York Stock Exchange is open, usually 3 p.m. Central
time. Net asset value for the Target Maturities is determined one hour prior to
the close of the Exchange.

Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or one of our agents before the net asset values
of the fund is determined, are effective on, and will receive the price
determined, that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined as of the close of
the Exchange on the next day the Exchange is open.

Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the net asset value is determined.

HOW SHARE PRICE IS DETERMINED

The securities held by the fund are valued on the basis of amortized cost.
This method involves initially valuing a security at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium paid at
the time of the purchase, rather than determining the security's market value
from day to day.

WHERE TO FIND YIELD INFORMATION

The yield of the Investor Class of Cash Reserve is published weekly in
leading financial publications and daily in many local newspapers. Because the
total expense ratio for the Advisor Class shares is 0.25% higher than the
Investor Class shares, the yield will be lower than the Investor Class. Yield
information of the Advisor Class may be obtained by calling us.

DISTRIBUTIONS

At the close of each day, including Saturdays, Sundays and holidays, net
income plus net realized gains on portfolio securities is determined and
declared as a distribution. The distribution will be paid monthly on the last
Friday of each month, except for year-end distributions which will be paid on
the last business day of the year.

You will begin to participate in the distributions the day after your
purchase is effective. See "When Share Price is Determined," above. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.

Cash Reserve does not expect to realize any long-term capital gains, and
accordingly, does not expect to pay any capital gains distributions.

Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For 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

Prospectus Additional Information You Should Know 11

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.

TAXES

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

TAX-DEFERRED ACCOUNTS

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

TAXABLE ACCOUNTS

If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income of the
fixed income funds do not qualify for the 70% dividends-received deduction for
corporations since they are derived from interest income. Distributions from net
long-term capital gains are taxable as long-term capital gains regardless of the
length of time the shares on which such distributions are paid have been held by
the shareholder.

Distributions are taxable to you regardless of whether they are taken in
cash or reinvested.

In January of the year following the distribution, if you own shares in
taxable accounts, you will receive a Form 1099-DIV notifying you of the status
of your distributions for federal income tax purposes.

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

If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, either 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.

MANAGEMENT

INVESTMENT MANAGEMENT

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

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 provide investment management services to funds
managed by BMC.

12 Additional Information You Should Know American Century Investments

The manager supervises and manages the investment portfolio of the fund and
directs the purchase and sale of its investment securities. It utilizes a team
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the fund. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. The team adjusts holdings in
the portfolio and the asset mix 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 or of sectors of the fund as necessary
between team meetings.

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

ROBERT V. GAHAGAN, Vice President and Portfolio Manager, has worked for
American Century since May 1983. He became a Portfolio Manager in December
1991. Prior to that he served as Assistant Portfolio Manager.

AMY O'DONNELL joined American Century in 1988, becoming a member of its
portfolio department in 1988. In 1992 she assumed her current position as a
Portfolio Manager of three American Century funds.

For the services provided to the fund, the manager receives an annual fee
of 0.45% of the average net assets of Cash Reserve.

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

CODE OF ETHICS

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

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 fund's investment
manager. As agent for the fund and the manager, the distributor enters into
contracts with various banks, broker-dealers, insurance companies and other
financial intermediaries with respect to the sale of the fund's shares and/or
the use of the fund's shares in various financial services. The manager (or an
affiliate) pays all expenses incurred in promoting sales of, and distributing,
the Advisor Class and in securing

Prospectus Additional Information You Should Know 13

such services out of the Rule 12b-1 fees described in the section that follows.

SERVICE AND DISTRIBUTION FEES

Rule 12b-1 adopted by the Securities and Exchange Commission ("SEC") under
the Investment Company Act permits investment companies that adopt a written
plan to pay certain expenses associated with the distribution of their shares.
Pursuant to that rule, the fund's Board of Directors and the initial shareholder
of the fund's Advisor Class shares have approved and adopted a Master
Distribution and Shareholder Services Plan (the "Plan") with the manager.
Pursuant to the Plan, the fund pays the manager services fee and a distribution
fee, each equal to 0.25% (for a total of 0.50%) per annum of the average daily
net assets of the shares of the fund's Advisor Class. The shareholder services
fee is paid for the purpose of paying the costs of securing certain shareholder
and administrative services, and the distribution fee is paid for the purpose of
paying the costs of providing various distribution services. All or a portion of
such fees are paid by the the manager to the banks, broker-dealers, insurance
companies or other financial intermediaries through which such shares are made
available.

FURTHER INFORMATION ABOUT AMERICAN CENTURY

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 three classes of the fund offered by this
Prospectus: an Investor Class, a Service Class, and the Advisor Class. The
shares offered by this Prospectus are Advisor Class shares.

The Investor Class is primarily made available to retail investors. The
Service Class is 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 Advisor 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 Class of shares, call one of our
Institutional Service Representatives at 1-800-345-3533 or contact a sales
representative or financial intermediary who offers that class of shares.

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

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

14 Additional Information You Should Know American Century Investments

only one series or class are voted upon only by that series or class.

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

Unless required by the Investment Company Act, it will not be necessary for
the fund to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders. The manager 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 15

NOTES

16 Prospectus Notes

NOTES

Prospectus Notes 17

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

9609 [recycle logo]
SH-BKT-6563 Recycled

[american century logo]
American
Century(sm)

PROSPECTUS

[company logo]
American
Century(sm)

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

BENHAM
GROUP(R)

Short-Term Government Fund
Intermediate-Term Government Fund

ADVISOR 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

Short-Term
Government Fund

Intermediate-Term
Government Fund

[inside front cover]

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

Short-Term Government Fund
Intermediate-Term Government Fund

ADVISOR 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 and low-load
mutual funds covering a variety of investment opportunities. Two of the funds
from our Benham Group that invest primarily in debt instruments of the U.S.
government and its agencies are described in this Prospectus. Their investment
objectives are listed on page 2 of this Prospectus. The other funds are
described in separate prospectuses.

Each fund's shares offered in this Prospectus (the Advisor Class shares)
are sold at their net asset value with no sales charges or commissions. The
Advisor Class shares are subject to Rule 12b-1 shareholder services and
distribution fees as described in this Prospectus.

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

Prospectus 1

INVESTMENT OBJECTIVES OF THE FUNDS

AMERICAN CENTURY -- BENHAM
SHORT-TERM GOVERNMENT FUND

The Short-Term Government Fund seeks a competitive level of income. The
fund intends to pursue its investment objective by investing in securities of
the U.S. government and its agencies and maintaining a weighted average maturity
of three years or less.

AMERICAN CENTURY -- BENHAM
INTERMEDIATE-TERM GOVERNMENT FUND

The Intermediate-Term Government Fund seeks a competitive level of income.
The fund intends to pursue its investment objective by investing in securities
of the U.S. government and its agencies and maintaining a weighted average
maturity of three to 10 years.

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

2 Investment Objectives American Century Investments

TABLE OF CONTENTS

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

INFORMATION REGARDING THE FUNDS

Investment Policies of the Funds .........................................7
Short-Term Government Fund and Intermediate-Term Government Fund ....7
Fundamentals of Fixed Income Investing ...................................8
Other Investment Practices, Their Characteristics and Risks ..............9
Portfolio Turnover ..................................................9
Repurchase Agreements ...............................................9
Derivative Securities ...............................................9
Portfolio Lending ..................................................10
When-Issued Securities .............................................10
Performance Advertising .................................................11

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

How to Purchase and Sell American Century Funds .........................12
How to Exchange from One American Century Fund to Another ...............12
How to Redeem Shares ....................................................12
Telephone Services ......................................................12
Investors Line .....................................................12

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price .............................................................13
When Share Price Is Determined .....................................13
How Share Price Is Determined ......................................13
Where to Find Information About Share Price ........................13
Distributions ...........................................................13
Taxes ...................................................................14
Tax-Deferred Accounts ..............................................14
Taxable Accounts ...................................................14
Management ..............................................................15
Investment Management ..............................................15
Code of Ethics .....................................................16
Transfer and Administrative Services ...............................16
Distribution of Fund Shares .............................................16
Service and Distribution Fees ......................................16
Further Information About American Century ..............................17

Prospectus Table of Contents 3

<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE

Intermediate-Term Short-Term
Government Fund Government Fund

SHAREHOLDER TRANSACTION EXPENSES:

<S> <C> <C>
Maximum Sales Load Imposed on Purchases ................... none none
Maximum Sales Load Imposed on Reinvested Dividends ........ none none
Deferred Sales Load ....................................... none none
Redemption Fee ............................................ none none
Exchange Fee .............................................. none none

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

Management Fees ........................................... 0.50% 0.45%
12b-1 Fees(1) ............................................. 0.50% 0.50%
Other Expenses(2) ......................................... 0.00% 0.00%
Total Fund Operating Expenses ............................. 1.00% 0.95%

EXAMPLE

You would pay the following expenses on a 1 year $10 $10
$1,000 investment, assuming a 5% annual return and 3 years 32 30
redemption at the end of each time period: 5 years 55 52
10 years 122 116
</TABLE>

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

The shares offered by this Prospectus are Advisor Class shares. The funds
offer two other classes of shares, one of which is primarily made available to
retail investors and one that is primarily made available to institutional
investors. The other classes have different fee structures than the Advisor
Class, resulting in different performance for those classes. For additional
information about the various classes, see "Further Information About American
Century," page 17.

4 Transaction and Operating Expense Table American Century Investments

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS

SHORT-TERM GOVERNMENT FUND

The Advisor 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 0.25% lower than the Advisor Class. Had the
Advisor Class been in existence for the fund for the time periods presented, the
fund's performance information would be lower as a result of the additional
expense.

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

1995 1994 1993(1) 1992(1) 1991(1) 1990(1) 1989(1) 1988(1) 1987(1) 1986(1)

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ................ $9.27 $9.67 $9.61 $9.41 $9.08 $9.32 $9.42 $9.55 $10.16 $9.95
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment Operations

Net Investment Income ........... .52 .40 .36 .44 .63 .79 .84 .81 .79 .87

Net Realized and Unrealized
Gain (Loss) on
Investment Transactions ......... .24 (.40) .06 .20 .33 (.24) (.10) (.13) (.49) .27
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Income from
Investment Operations ........... .76 -- .42 .64 .96 .55 .74 .68 .30 1.14
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Distributions

From Net Investment Income ...... (.519) (.402) (.36) (.441) (.635) (.789) (.843) (.816) (.792) (.871)

From Net Realized Gains
on Investment Transactions ...... -- -- -- -- -- -- -- -- (.122) (.056)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions ............. (.519) (.402) (.36) (.441) (.635) (.789) (.843) (.816) (.914) (.927)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period ..... $9.51 $9.27 $9.67 $9.61 $9.41 $9.08 $9.32 $9.41 $9.55 $10.16
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return(2) ................. 8.42% .07% 4.45% 6.85% 10.99% 6.28% 8.36% 7.44% 3.14% 11.89%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets .............. .70% .81% 1.00% .99%(3) .99%(3) 1.00% 1.00% 1.00% 1.00% 1.01%

Ratio of Net Investment Income
to Average Net Assets .............. 5.53% 4.17% 3.73% 4.62% 6.88% 8.64% 9.10% 8.60% 8.10% 8.54%

Portfolio Turnover Rate ............ 128% 470% 413% 391% 779% 620% 567% 578% 468% 464%

Net Assets, End
of Period (in thousands) ..........$391,331 $396,753 $511,981 $569,430 $534,515 $455,536 $443,475 $440,380 $335,601 $254,714
</TABLE>

(1) The data presented has been restated to give effect to a 10 shares for 1
stock split in the form of a stock dividend that occurred on November 13,
1993.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

(3) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

Prospectus Financial Highlights 5

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS

INTERMEDIATE-TERM GOVERNMENT FUND

The Advisor 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 0.25% lower than the Advisor Class. Had the
Advisor Class been in existence for the fund for the time periods presented, the
fund's performance information would be lower as a result of the additional
expense.

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

1995 1994(1)

PER-SHARE DATA

<S> <C> <C>
Net Asset Value, Beginning of Period ........................................ $9.55 $10.00
------- -------
Income from Investment Operations

Net Investment Income .................................................. .58 .34

Net Realized and Unrealized Gain (Loss) on Investment Transactions ..... .49 (.45)
------- -------
Total Income (Loss) from Investment Operations ......................... 1.07 (.11)
------- -------
Distributions

From Net Investment Income ............................................. (.583) (.343)
------- -------
Net Asset Value, End of Period .............................................. $10.04 $9.55
------- -------
Total Return(2) ........................................................ 11.58% (1.01)%
======= =======
RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average Net Assets ........................... .74% .75%(3)

Ratio of Net Investment Income to Average Net Assets ........................ 5.99% 5.43%(3)

Portfolio Turnover Rate ..................................................... 137% 205%(3)

Net Assets, End of Period (in thousands) ....................................$21,981 $6,280
</TABLE>

(1) March 1, 1994 (inception) through October 31, 1994.

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

(3) Annualized.

6 Financial Highlights American Century Investments

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS

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

For an explanation of the securities ratings referred to in the following
discussion, see "An Explanation of Fixed Income Securities Ratings" in the
Statement of Additional Information.

SHORT-TERM GOVERNMENT FUND AND
INTERMEDIATE-TERM GOVERNMENT FUND

These funds seek to provide a competitive level of income and limited price
volatility by investing in securities of the U.S. government and its agencies,
securities that are considered to be of the highest credit quality.

The two funds differ in the weighted average maturities of their portfolios
and accordingly, in their degree of risk and level of income. Generally, the
longer the weighted average maturity of a fund's portfolio, the higher the yield
and the greater the price volatility.

The Short-Term Government Fund will maintain a weighted average portfolio
maturity of three years or less. The fund is designed for investors who can
accept some fluctuation in principal in order to earn a higher level of current
income than is generally available from money market securities, but who do not
want as much price volatility as is inherent in longer-term securities.

The Intermediate-Term Government Fund will maintain a weighted average
portfolio maturity of three to 10 years. The fund is designed for investors
seeking a higher level of current income than is generally available from
shorter-term government securities and who are willing to accept a greater
degree of price fluctuation.

The market value of the securities in which the Short-Term Government
Fund and Intermediate-Term Government Fund invest will fluctuate, and
accordingly, the value of your shares will vary from day to day. See
"Fundamentals of Fixed Income Investing," page 8.

Both funds may invest in (1) direct obligations of the United States, such
as Treasury bills, notes and bonds, which are supported by the full faith and
credit of the United States, and (2) obligations (including mortgage-related
securities) issued or guaranteed by agencies and instrumentalities of the U.S.
government that are established under an act of Congress. The securities of some
of these agencies and instrumentalities, such as the Government National
Mortgage Association, are guaranteed as to principal and interest by the U.S.
Treasury, and other securities are supported by the right of the issuer, such as
the Federal Home Loan Banks, to borrow from the Treasury. Other obligations,
including those issued by the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation, are supported only by the credit of the
instrumentality.

Mortgage-related securities in which the funds may invest include
collateralized mortgage obligations ("CMOs") issued by a U.S. agency or
instrumentality. A CMO is a debt security that is collateralized by a portfolio
or pool of mortgages or mortgage-backed securities. The issuer's obligation to
make interest and principal payments is secured by the underlying pool or
portfolio of mortgages or securities.

The market value of mortgage-related securities, even those in which the
underlying pool of mortgage loans is guaranteed as to the payment of principal
and interest by the U.S. government, is not insured. When interest rates rise,
the market value of those

Prospectus Information Regarding the Funds 7

securities may decrease in the same manner as other debt, but when interest
rates decline, their market value may not increase as much as other debt
instruments because of the prepayment feature inherent in the underlying
mortgages. If such securities are purchased at a premium, the fund will suffer a
loss if the obligation is prepaid. Prepayments will be reinvested at prevailing
rates, which may be less than the rate paid by the prepaid obligation.

For the purpose of determining the weighted average portfolio maturity of
the funds, the manager will consider the maturity of a mortgage-related security
to be the remaining expected average life of the security. The average life of
such securities is likely to be substantially less than the original maturity as
a result of prepayments of principal on the underlying mortgages, especially in
a declining interest rate environment. In determining the remaining expected
average life, the manager makes assumptions regarding prepayments on underlying
mortgages. In a rising interest rate environment, those prepayments generally
decrease, and may decrease below the rate of prepayment assumed by the manager
when purchasing those securities. Such slowdown may cause the remaining maturity
of those securities to lengthen, which will increase the relative volatility of
those securities and, hence, the fund holding the securities.

FUNDAMENTALS OF FIXED INCOME INVESTING

HISTORICAL YIELDS
[line graph - graph data]

30-YEAR 20-YEAR 3-MONTH
TREASURY TAX-EXEMPT TREASURY
BONDS BONDS BILLS

1/91 8.19% 7.14% 6.38%
2/91 8.20 7.00 6.26
3/91 8.25 6.84 5.93
4/91 8.18 6.67 5.69
5/91 8.26 6.65 5.69
6/91 8.4 6.72 5.69
7/91 8.34 6.61 5.68
8/91 8.06 6.6 5.48
9/91 7.81 6.43 5.25
10/91 7.91 6.4 4.97
11/91 7.94 6.5 4.46
12/91 7.4 6.25 3.96
1/92 7.76 6.33 3.94
2/92 7.79 6.35 4.02
3/92 7.96 6.4 4.14
4/92 8.04 6.43 3.77
5/92 7.84 6.25 3.77
6/92 7.78 6.13 3.65
7/92 7.46 5.78 3.24
8/92 7.41 6.01 3.22
9/92 7.38 6.04 2.74
10/92 7.62 6.34 3.01
11/92 7.6 6.08 3.34
12/92 7.4 6.04 3.14
1/93 7.2 5.9 2.97
2/93 6.9 5.45 3
3/93 6.92 5.61 2.96
4/93 6.93 5.52 2.96
5/93 6.98 5.54 3.11
6/93 6.67 5.32 3.08
7/93 6.56 5.38 3.1
8/93 6.09 5.15 3.07
9/93 6.02 4.99 2.98
10/93 5.97 5 3.1
11/93 6.3 5.24 3.2
12/93 6.35 5.1 3.06
1/94 6.24 4.97 3.03
2/94 6.66 5.26 3.43
3/94 7.09 5.87 3.55
4/94 7.31 6.04 3.95
5/94 7.43 5.99 4.24
6/94 7.61 6.05 4.22
7/94 7.39 5.91 4.36
8/94 7.45 5.96 4.66
9/94 7.82 6.17 4.77
10/94 7.97 6.36 5.15
11/94 8 6.64 5.71
12/94 7.88 6.45 5.69
1/95 7.7 6.12 6
2/95 7.44 5.78 5.94
3/95 7.43 5.77 5.87
4/95 7.34 5.81 5.86
5/95 6.65 5.55 5.8
6/95 6.62 5.77 5.57
7/95 6.85 5.77 5.58
8/95 6.65 5.73 5.45
9/95 6.5 5.67 5.41
10/95 6.33 5.49 5.51
11/95 6.13 5.31 5.49
12/95 5.95 5.18 5.08

BOND PRICE VOLATILITY

For a given change in interest rates, longer maturity bonds experience a
greater change in price, as shown below:

Price of a 7% Price of same
coupon bond bond if its Percent
Years to now trading yield increases change
Maturity to yield 7% to 8% in price
- -----------------------------------------------------------------------------
1 year $100.00 $99.06 -0.94%
3 years 100.00 97.38 -2.62%
10 years 100.00 93.20 -6.80%
30 years 100.00 88.69 -11.31%

YEARS TO MATURITY
[bar graph - graph data]

SHORT-TERM GOVERNMENT FUND
Likely Maturities of Individual Holdings 0-8 years
Expected Weighted Average Portfolio Maturity Range 6 mos.-5 years

INTERMEDIATE-TERM GOVERNMENT FUND
Likely Maturities of Individual Holdings 0-20 years
Expected Weighted Average Portfolio Maturity Range 3-10 years

Over time, the level of interest rates available in the marketplace
changes. As prevailing rates fall, the prices of bonds and other securities that
trade on a yield basis rise. On the other hand, when prevailing interest rates
rise, bond prices fall.

Generally, the longer the maturity of a debt security, the higher its yield
and the greater its price volatility. Conversely, the shorter the maturity, the
lower the yield but the greater the price stability.

These factors operating in the marketplace have a similar impact on bond
portfolios. A change in the level of interest rates causes the net asset value
per share of any bond fund, except money market funds, to change. If sustained
over time, it would also have the impact of raising or lowering the yield of the
fund.

In addition to the risk arising from fluctuating interest rate levels, debt
securities are subject to credit risk. When a security is purchased, its
anticipated yield is dependent on the timely payment by the borrower of each
interest and principal installment. Credit analysis and resultant bond ratings
take into account the relative likelihood that such timely payment will occur.
As a result, lower-rated bonds tend to sell at higher yield levels than
top-rated bonds of similar maturity.

8 Information Regarding the Funds American Century Investments

AUTHORIZED QUALITY RANGES
A-1 A-2 A-3
P-1 P-2 P-3
MIG-1 MIG-2 MIG-3
SP-1 SP-2 SP-3
AAA AA A BBB BB B CCC CC C D
-----------------------------------------------------
Short-Term
Government Fund x
Intermediate-Term
Government Fund x

In addition, as economic, political and business developments unfold,
lower-quality bonds, which possess lower levels of protection with regard to
timely payment, usually exhibit more price fluctuation than do higher-quality
bonds of like maturity.

The investment practices of our fixed income funds take into account these
relationships. The portfolio maturity of each fund has implications for the
degree of price volatility and the yield level to be expected from each.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

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

PORTFOLIO TURNOVER

The portfolio turnover rates of the funds are shown in the Financial
Highlights tables on pages 5 and 6 of this Prospectus.

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

REPURCHASE AGREEMENTS

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

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

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

Each of the funds may invest in repurchase agreements with respect to any
security in which that fund is authorized to invest, even if the remaining
maturity of the underlying security would make that security ineligible for
purchase by such fund. No fund will invest more than 15% of its assets in
repurchase agreements maturing in more than seven days.

DERIVATIVE SECURITIES

To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities

Prospectus Information Regarding the Funds 9

whose value or performance is linked to other equity securities (such as
depositary receipts), currencies, interest rates, indices or other financial
indicators ("reference indices").

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

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

No fund may invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the fund. For
example, a bond whose interest rate is indexed to the return on two-year
treasury securities would be a permissible investment (assuming it otherwise
meets the other requirements for the funds), while a security whose underlying
value is linked to the price of oil would not be a permissible investment since
the funds may not invest in oil and gas leases or futures.

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

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

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

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

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

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

PORTFOLIO LENDING

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

WHEN-ISSUED SECURITIES

10 Information Regarding the Funds American Century Investments

could result in a loss to the fund. A separate account for each fund consisting
of cash or high-quality liquid debt securities in an amount at least equal to
the when-issued commitments will be established and maintained with the
custodian. No income will accrue to the fund prior to delivery.

PERFORMANCE ADVERTISING

From time to time, 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 Advisor 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.

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

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

The funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services or Donoghue's Money Fund Report) and publications
that monitor the performance of mutual funds. Performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
In addition, fund performance may be compared to well-known indices of market
performance including the Donoghue's Money Fund Average and the Bank Rate
Monitor National Index of 2 1/2-year CD rates. Fund performance may also be
compared, on a relative basis, to other funds in our fund family. This relative
comparison, which may be based upon historical or expected fund performance,
volatility or other fund characteristics, may be presented numerically,
graphically or in text. Fund performance may also be combined or blended with
other funds in our fund family, and that combined or blended performance may be
compared to the same indices to which individual funds may be compared.

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

Prospectus Information Regarding the Funds 11

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

The following section explains how to purchase, exchange and redeem Advisor
Class shares of the funds offered by this Prospectus.

HOW TO PURCHASE AND SELL AMERICAN
CENTURY FUNDS

One or more of the funds offered by this Prospectus is available as an
investment option under your employer-sponsored retirement or savings plan or
through or in connection with a program, product or service offered by a
financial intermediary, such as a bank, broker-dealer or an insurance company.
Since all records of your share ownership are maintained by your plan sponsor,
plan recordkeeper, or other financial intermediary, all orders to purchase,
exchange and redeem shares must be made through your employer or other financial
intermediary, as applicable.

If you are purchasing through a retirement or savings plan, the
administrator of your plan or your employee benefits office can provide you with
information on how to participate in your plan and how to select American
Century funds as an investment option.

If you are purchasing through a financial intermediary, you should contact
your service representative at the financial intermediary for information about
how to select American Century funds.

If you have questions about a fund, see "Investment Policies of the Funds,"
page 7, or call one of our Institutional Service Representatives at
1-800-345-3533.

Orders to purchase shares are effective on the day we receive payment. See
"When Share Price is Determined," page 13.

We may discontinue offering shares generally in the funds (including any
class of shares of a fund) or in any particular state without notice to
shareholders.

HOW TO EXCHANGE FROM ONE
AMERICAN CENTURY FUND TO ANOTHER

Your plan or program may permit you to exchange your investment in the
shares of a fund for shares of another fund in our family. See your plan
administrator, employee benefits office or financial intermediary for details on
the rules in your plan governing exchanges.

HOW TO REDEEM SHARES

Subject to any restrictions imposed by your employer's plan or financial
intermediary's program, you can sell ("redeem") your shares through the plan or
financial intermediary at their net asset value. Your plan administrator,
trustee, or financial intermediary or other designated person must provide us
with redemption instructions. The shares will be redeemed at the net asset value
next computed after receipt of the instructions in good order. See "When Share
Price Is Determined," page 13. If you have any questions about how to redeem,
contact your plan administrator, employee benefits office, or service
representative at your financial intermediary, as applicable.

TELEPHONE SERVICES

INVESTORS LINE

To request information about our funds and a current prospectus, or get
answers to any questions that you may have about the funds and the services we
offer, call one of our Institutional Service Representatives at 1-800-345-3533.

12 How to Invest with American Century Investments American Century Investments

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds, except the American Century Target
Maturities Trust, net asset value is determined at the close of regular trading
on each day that the New York Stock Exchange is open, usually 3 p.m. Central
time.

Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or our agent 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.

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

HOW SHARE PRICE IS DETERMINED

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

The portfolio securities of each fund, except as otherwise noted, are
valued through valuations obtained from a commercial pricing service or at the
most recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.

When market quotations are not readily available, securities and other
assets are valued at fair value as determined in accordance with procedures
adopted by the Board of Directors.

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset values of the Investor Class of the funds are published in
leading newspapers daily. Because the total expense ratio for the Advisor Class
shares is 0.25% higher than the Investor Class, their net asset values will be
lower than the Investor Class. Net asset value of the Advisor Class of the funds
may be obtained by calling us.

DISTRIBUTIONS

At the close of each day, including Saturdays, Sundays and holidays, net
income is determined and declared as a distribution. The distribution will be
paid monthly on the last Friday of each month, except for year-end
distributions, which will be paid on the last business day of the year.

You will begin to participate in the distributions the day after your
purchase is effective. See "When Share Price is Determined," this page. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.

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

Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For

Prospectus Additional Information You Should Know 13

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.

TAXES

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

TAX-DEFERRED ACCOUNTS

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

TAXABLE ACCOUNTS

If Advisor Class shares are purchased through taxable accounts,
distributions of net investment income and net short-term capital gains are
taxable to you as ordinary income, except as described below. The dividends from
net income of the fixed income funds do not qualify for the 70%
dividends-received deduction for corporations since they are derived from
interest income. Distributions from net long-term capital gains are taxable as
long-term capital gains, regardless of the length of time the shares on which
such distributions are paid have been held by the shareholder. However, you
should note that any loss realized upon the sale or redemption of shares held
for six months or less will be treated as a long-term capital loss to the extent
of any distribution of long-term capital gain to you with respect to such
shares.

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

In January of the year following the distribution, if you own shares in
taxable accounts, you will receive a Form 1099-DIV from either us or your
financial intermediary notifying you of the status of your distributions for
federal income tax purposes. The funds will advise shareholders of the
percentage, if any, of the dividends not exempt from federal income tax.

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

14 Additional Information You Should Know American Century Investments

a penalty of $50, which will be charged against your account if you fail to
provide the certification by the time the report is filed, and is not
refundable.

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

MANAGEMENT

INVESTMENT MANAGEMENT

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

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

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

C. CASEY COLTON, Portfolio Manager, joined BMC in 1990 as a Municipal
Analyst. He was promoted to his current position in 1995. Mr. Colton is a
Chartered Financial Analyst (CFA). He is a member of the team that manages the
Intermediate-Term Government Fund.

ROBERT V. GAHAGAN, Vice President and Portfolio Manager, has worked for
American Century since May 1983. He became a Portfolio Manager in December 1991.
Prior to that he served as Assistant Portfolio Manager. He is a member of the
team that manages the Short-Term Government Fund.

NEWLIN RANKIN, Portfolio Manager, joined BMC in 1994. He is a member of the
team that manages the Short-Term Government Fund. Prior to joining BMC, Mr.
Rankin was an Assistant Vice-President at Wells Fargo Bank from 1991 to 1993.

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

For the services provided to the funds, the manager receives an annual fee
at the following rates:

o 0.95% of the average net assets of Short-Term Government; and

o 1% of the average net assets of Intermediate-Term Government.

On the first business day of each month, each fund pays a management fee
to the manager for the

Prospectus Additional Information You Should Know 15

previous month at the specified rate. The fee for the previous month is
calculated by multiplying the applicable fee for such fund by the aggregate
average daily closing value of each fund's net assets during the previous month
by a fraction, the numerator of which is the number of days in the previous
month and the denominator of which is 365 (366 in leap years).

CODE OF ETHICS

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

TRANSFER AND ADMINISTRATIVE SERVICES

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

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

DISTRIBUTION OF FUND SHARES

The funds' shares are distributed by American Century Investment Services,
Inc., a registered broker-dealer and an affiliate of the manager. As agent for
the funds and the manager, the distributor enters into contracts with various
banks, broker-dealers, insurance companies and other financial intermediaries
with respect to the sale of the funds' shares and/or the use of the funds'
shares in various financial services. The manager (or an affiliate) pays all
expenses incurred in promoting sales of, and distributing, the Advisor Class and
in securing such services out of the Rule 12b-1 fees described in the section
that follows.

SERVICE AND DISTRIBUTION FEES

Rule 12b-1 adopted by the Securities and Exchange Commission ("SEC") under
the Investment Company Act permits investment companies that adopt a written
plan to pay certain expenses associated with the distribution of their shares.
Pursuant to that rule, the funds' Board of Directors and the initial shareholder
of the funds' Advisor Class shares have approved and adopted a Master
Distribution and Shareholder Services Plan (the "Plan"). Pursuant to the Plan,
each fund pays the manager a shareholder services fee and a distribution fee,
each equal to 0.25% (for a total of 0.50%) per annum of the average daily net
assets of the shares of the fund's Advisor Class. The shareholder services fee
is paid for the purpose of paying the costs of securing certain shareholder and
administrative services, and the distribution fee is paid for the purpose of
paying the costs of providing various distribution services. All or a portion of
such fees are paid by the manager to the banks, broker-dealers, insurance
companies or other financial intermediaries through which such shares are made
available.

16 Additional Information You Should Know American Century Investments

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 three classes of each of the funds offered by this
Prospectus: an Investor Class, a Service Class, and an Advisor Class. The shares
offered by this Prospectus are Advisor Class shares.

The Investor Class is primarily made available to retail investors. The
Service Class is primarily made available to institutional investors or through
institutional distribution channels, such as employer-sponsored retirement plans
or through banks, broker-dealers, insurance companies or other financial
intermediaries. The other classes have different fees, expenses, and/or minimum
investment requirements than the Advisor Class. Different fees and expenses will
affect performance. For information concerning the Investor Class of shares,
call one of our Investor Services Representatives at 1-800-345-2021. For
information concerning the Service Class of shares, call one of our
Institutional Service Representatives at 1-800-345-3533 or contact a sales
representative or financial intermediary who offers the Service Class of shares.

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

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

Unless required by the Investment Company Act, it will not be necessary for
the funds to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the funds' bylaws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the funds to hold a
special meeting of shareholders. The manager 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 17

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

[company logo]
American
Century(sm)

9701 [recycled logo]
SH-BKT-6575 Recycled

[back cover]

PROSPECTUS

[company logo]

SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

BENHAM
GROUP(R)

Limited-Term Bond
Intermediate-Term Bond
Benham Bond

ADVISOR CLASS

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

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

AMERICAN CENTURY INVESTMENTS

BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY(R) GROUP

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

Limited-Term Bond
Intermediate-Term Bond
Benham Bond

PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997

LIMITED-TERM BOND
INTERMEDIATE-TERM BOND o BENHAM BOND

ADVISOR 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 and low-load
mutual funds covering a variety of investment opportunities. Three of the funds
from our Benham Group that invest primarily in fixed income or debt instruments
are described in this Prospectus. Their investment objectives are listed on page
2 of this Prospectus. The other funds are described in separate prospectuses.

Each fund's shares offered in this Prospectus (the Advisor Class shares)
are sold at their net asset value with no sales charges or commissions. The
Advisor Class shares are subject to Rule 12b-1 shareholder services and
distribution fees as described in this Prospectus.

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

Prospectus 1

INVESTMENT OBJECTIVES OF THE FUNDS

AMERICAN CENTURY - BENHAM LIMITED-TERM BOND
FUND

The Limited-Term Bond Fund seeks income. The fund intends to pursue its
investment objective by investing in bonds and other debt obligations and
maintaining a weighted average maturity of five years or less.

AMERICAN CENTURY - BENHAM INTERMEDIATE-TERM
BOND FUND

The Intermediate-Term Bond Fund seeks a competitive level of income. The
fund intends to pursue its investment objective by investing in bonds and other
debt obligations and maintaining a weighted average maturity of three to 10
years.

AMERICAN CENTURY - BENHAM BOND FUND

The Benham Bond Fund seeks a high level of income. The fund intends to
pursue its investment objective by investing in bonds and other debt obligations
and maintaining a weighted average maturity of 10 years or greater. Effective
March 1, 1997 the fund's policy regarding portfolio weighted average will
change. As of that date, there will be no weighted average portfolio maturity
requirement for the fund, although it is expected that the fund will invest
primarily in intermediate and long-term bonds. You should consider this
impending policy change prior to making an investment in the fund.

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

2 Investment Objectives American Century Investments

TABLE OF CONTENTS

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

INFORMATION REGARDING THE FUNDS

Investment Policies of the Funds..............................8
Limited-Term Bond, Intermediate-Term Bond
and Benham Bond.........................................8
Fundamentals of Fixed Income Investing........................10
Other Investment Practices, Their Characteristics
and Risks..................................................10
Portfolio Turnover.........................................10
Repurchase Agreements......................................11
Derivative Securities......................................11
Portfolio Lending..........................................12
Foreign Securities.........................................12
When-Issued Securities.....................................12
Rule 144A Securities.......................................12
Interest Rate Futures Contracts and
Options Thereon.........................................13
Performance Advertising....................................14

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

How to Purchase and Sell American
Century Funds..............................................15
How to Exchange from One American Century
Fund to Another............................................15
How to Redeem Shares..........................................15
Telephone Services............................................15
Investors Line.............................................15

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price...................................................16
When Share Price Is Determined.............................16
How Share Price Is Determined..............................16
Where to Find Information About Share Price................17
Distributions.................................................17
Taxes.........................................................17
Tax-Deferred Accounts......................................17
Taxable Accounts...........................................17
Management....................................................18
Investment Management......................................18
Code of Ethics.............................................19
Transfer and Administrative Services.......................19
Distribution of Fund Shares...................................19
Service and Distribution Fees..............................19
Further Information About American Century....................20

Prospectus Table of Contents 3

<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE

Benham Intermediate-Term Limited-Term
Bond Bond Bond

SHAREHOLDER TRANSACTION EXPENSES:

<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases..................... none none none
Maximum Sales Load Imposed on Reinvested Dividends.......... none none none
Deferred Sales Load......................................... none none none
Redemption Fee.............................................. none none none
Exchange Fee................................................ none none none

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

Management Fees............................................. 0.55% 0.50% 0.45%
12b-1 Fees(1)............................................... 0.50% 0.50% 0.50%
Other Expenses(2)........................................... 0.00% 0.00% 0.00%
Total Fund Operating Expenses............................... 1.05% 1.00% 0.95%

EXAMPLE

You would pay the following expenses on a 1 year $11 $10 $10
$1,000 investment, assuming a 5% annual return and 3 years 33 32 30
redemption at the end of each time period: 5 years 58 55 52
10 years 128 122 116
</TABLE>

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

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS
LIMITED-TERM BOND

The Advisor 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 0.25% lower than the Advisor Class. Had the
Advisor Class been in existence for the fund for the time periods presented, the
fund's performance information would be lower as a result of the additional
expense.

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

1995 1994(1)

PER-SHARE DATA

Net Asset Value, Beginning of Period.................. $9.68 $10.00
Income from Investment Operations
Net Investment Income.............................. .56(2) .31
Net Realized and Unrealized Gains (Losses) on
Investment Transactions............................ .28 (.32)
Total from Investment Operations................... .84 (.01)
Distributions
From Net Investment Income......................... (.557) (.312)
From Net Realized Gains on Investment Transactions. -- --
In Excess of Net Realized Gains.................... -- --
Total Distributions................................ (.557) (.312)
Net Asset Value, End of Period........................ $9.96 $9.68
Total Return(3).................................... 8.89% (.08)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average Net Assets.. .69% .70%(4)
Ratio of Net Investment Income to Average Net Assets 5.70% 4.79%(4)
Portfolio Turnover Rate............................ 116% 48%
Net Assets, End of Period (in thousands)........... $7,193 $4,375

(1) March 1, 1994 (inception) through October 31, 1994.

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

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

(4) Annualized.

Prospectus Financial Highlights 5

FINANCIAL HIGHLIGHTS
INTERMEDIATE-TERM BOND

The Advisor 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 0.25% lower than the Advisor Class. Had the
Advisor Class been in existence for the fund for the time periods presented, the
fund's performance information would be lower as a result of the additional
expense.

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

1995 1994(1)

PER-SHARE DATA
Net Asset Value, Beginning of Period.................. $9.53 $10.00
Income from Investment Operations
Net Investment Income.............................. .59(2) .34
Net Realized and Unrealized Gains (Losses) on
Investment Transactions............................ .54 (.47)
Total from Investment Operations................... 1.13 (.13)
Distributions
From Net Investment Income......................... (.587) (.337)
From Net Realized Gains on Investment Transactions. -- --
In Excess of Net Realized Gains.................... -- --
Total Distributions................................ (.587) (.337)
Net Asset Value, End of Period........................ $10.07 $9.53
Total Return(3).................................... 12.19% (1.24)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets.. .74% .75%(4)
Ratio of Net Investment Income to Average Net Assets 6.05% 5.23%(4)
Portfolio Turnover Rate............................ 133% 48%
Net Assets, End of Period (in thousands)........... $12,827 $4,262

(1) March 1, 1994 (inception) through October 31, 1994.

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

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

(4) Annualized.

6 Financial Highlights American Century Investments

FINANCIAL HIGHLIGHTS
BENHAM BOND(1)

The Advisor 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 0.25% lower than the Advisor Class. Had the
Advisor Class been in existence for the fund for the time periods presented, the
fund's performance information would be lower as a result of the additional
expense.

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

1995 1994 1993 1992 1991 1990 1989 1988 1987(2)

PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ....... $8.91 $10.21 $9.92 $9.56 $8.90 $9.54 $9.18 $8.96 $10.00
Income from Investment Operations
Net Investment Income ................... .61(3) .58 .66 .63 .75 .80 .82 .84 .48
Net Realized and Unrealized Gains
(Losses) on Investment Transactions ..... .87 (1.12) 1.88 .35 .66 (.64) .36 .23 (1.05)
Total from Investment Operations ........ 1.48 (.54) 2.54 .98 1.41 .16 1.18 1.07 (.57)
Distributions
From Net Investment Income .............. (.611) (.576) (.662) (.622) (.746) (.796) (.819) (.836) (.475)
From Net Realized Gains on
Investment Transactions ................. -- (.186) (1.587) -- -- (.006) -- -- --
Total Distributions ..................... (.611) (.762) (2.249) (.622) (.746) (.802) (.819) (.836) (.475)
Net Asset Value, End of Period ............. $9.78 $8.91 $10.21 $9.92 $9.56 $8.90 $9.54 $9.19 $8.96
Total Return(4) ......................... 17.16% (5.47)% 11.81% 10.40% 16.44% 1.93% 13.51% 12.31% (8.63)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................... .78% .88% 1.00% .98%(5) .96(5) 1.00% 1.00% 1.00% 1.00%(6)
Ratio of Net Investment Income
to Average Net Assets ................... 6.53% 6.07% 6.54% 6.30% 8.06% 8.81% 8.83% 9.15% 8.10%(6)
Portfolio Turnover Rate ................. 105% 78% 113% 186% 219% 98% 216% 280% 146%(6)
Net Assets, End of Period (in thousands) $149,223 $121,012 $172,120 $154,031 $114,342 $77,270 $62,302 $25,788 $9,403
</TABLE>

(1) The data presented has been restated to give effect to a 10 shares for 1
stock split in the form of a stock dividend that occurred on November 13,
1993.

(2) March 2, 1987 (inception) through October 31, 1987.

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

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

(5) Expenses are shown net of management fees waived by the manager for
low-balance account fees collected during period.

(6) Annualized.

Prospectus Financial Highlights 7

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS

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

For an explanation of the securities ratings referred to in the following
discussion, see "An Explanation of Fixed Income Securities Ratings" in the
Statement of Additional Information.

LIMITED-TERM BOND, INTERMEDIATE-TERM BOND AND BENHAM BOND

These funds seek to provide investors with income through investments in
bonds and other debt instruments.

The three funds differ in the weighted average maturities of their
portfolios and accordingly in their degree of risk and level of income.
Generally, the longer the weighted average maturity, the higher the yield and
the greater the price volatility.

Limited-Term Bond will invest primarily in investment grade corporate
securities and other debt instruments and will maintain, under normal market
conditions, a weighted average maturity of five years or less. The fund is
designed for investors seeking a competitive level of current income with
limited price volatility.

Intermediate-Term Bond will invest primarily in investment grade corporate
securities and other debt instruments and will maintain, under normal market
conditions, a weighted average maturity of three to 10 years. The fund is
designed for investors seeking a higher level of current income than is
generally available from shorter-term corporate and government securities and
who are willing to accept a greater degree of price fluctuation.

Benham Bond will invest primarily in investment grade corporate bonds and
other debt instruments and until March 1, 1997, will maintain, under normal
market conditions, a weighted average portfolio maturity of 10 years or greater.
Effective March 1, 1997, the fund's policy regarding portfolio weighted average
maturity will change. As of that date, there will be no weighted average
portfolio maturity requirement, although it is expected that the fund will
probably invest in intermediate and long-term bonds. You should consider this
impending policy change prior to making an investment in the fund. The fund is
designed for investors whose primary goal is a level of current income higher
than is generally provided by money market or short- and intermediate-term
securities and who can accept the generally greater price volatility associated
with longer-term bonds.

The value of the shares of all three of these funds will vary from day to
day. See "Fundamentals of Fixed Income Investing," page 10.

Under normal market conditions, each fund will maintain at least 65% of the
value of its total assets in investment grade bonds and other debt instruments.
Under normal market conditions, each of the funds may invest up to 35% of its
assets, and for temporary defensive purposes, up to 100% of its assets, in
short-term money market instruments.

The manager will actively manage the portfolios, adjusting the weighted
average portfolio maturities as necessary in response to expected changes in
interest rates. During periods of rising interest rates, the weighted average
maturity of a fund may be moved to the shorter end of its maturity range in
order to reduce the effect of bond price declines on the fund's net asset value.
When interest rates are falling and bond prices are rising, the weighted average
portfolio maturity may be moved toward the longer end of its maturity range.

To achieve their objectives, the funds may invest in diversified
portfolios of high- and medium-grade debt

8 Information Regarding the Funds American Century Investments

securities payable in United States currency. The funds may invest in securities
which at the time of purchase are rated by a nationally recognized statistical
rating organization or, if not rated, are of equivalent investment quality as
determined by the manager, as follows: short-term notes within the two highest
categories, e.g., at least MIG-2 by Moody's Investor Services ("Moody's") or
SP-2 by Standard and Poor's Corporation ("S&P"); corporate, sovereign
government, and municipal bonds within the four highest categories (for example,
at least Baa by Moody's or BBB by S&P); securities of the United States
government and its agencies and instrumentalities (described below); other types
of securities rated at least P-2 by Moody's or A-2 by S&P. According to Moody's,
bonds rated Baa are medium-grade and possess some speculative characteristics. A
BBB rating by S&P indicates S&Ps belief that a security exhibits a satisfactory
degree of safety and capacity for repayment, but is more vulnerable to adverse
economic conditions or changing circumstances.

The government securities in which the funds may invest include: (1) direct
obligations of the United States, such as Treasury bills, notes and bonds, which
are supported by the full faith and credit of the United States, and (2)
obligations (including mortgage-related securities) issued or guaranteed by
agencies and instrumentalities of the United States government that are
established under an act of Congress. The securities of some of these agencies
and instrumentalities, such as the Government National Mortgage Association, are
guaranteed as to principal and interest by the U.S. Treasury, and other
securities are supported by the right of the issuer, such as the Federal Home
Loan Banks, to borrow from the Treasury. Other obligations, including those
issued by the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation, are supported only by the credit of the instrumentality.

Mortgage-related securities in which the funds may invest include
collateralized mortgage obligations ("CMOs") issued by a United States agency or
instrumentality. A CMO is a debt security that is collateralized by a portfolio
or pool of mortgages or mortgage-backed securities. The issuer's obligation to
make interest and principal payments is secured by the underlying pool or
portfolio of mortgages or securities.

The market value of mortgage-related securities, even those in which the
underlying pool of mortgage loans is guaranteed as to the payment of principal
and interest by the United States government, is not insured. When interest
rates rise, the market value of those securities may decrease in the same manner
as other debt, but when interest rates decline, their market value may not
increase as much as other debt instruments because of the prepayment feature
inherent in the underlying mortgages. If such securities are purchased at a
premium, the fund will suffer a loss if the obligation is prepaid. Prepayments
will be reinvested at prevailing rates, which may be less than the rate paid by
the prepaid obligation.

For the purpose of determining the weighted average portfolio maturity of
the funds, the manager shall consider the maturity of a mortgage-related
security to be the remaining expected average life of the security. The average
life of such securities is likely to be substantially less than the original
maturity as a result of prepayments of principal on the underlying mortgages,
especially in a declining interest rate environment. In determining the
remaining expected average life, the manager makes assumptions regarding
prepayments on underlying mortgages. In a rising interest rate environment,
those prepayments generally decrease, and may decrease below the rate of
prepayment assumed by the manager when purchasing those securities. Such
slowdown may cause the remaining maturity of those securities to lengthen, which
will increase the relative volatility of those securities and, hence, the fund
holding the securities. See "Fundamentals of Fixed Income Investing," page 10.

As noted, each fund may invest up to 35% of its assets, and for temporary
defensive purposes as determined by the manager, up to 100% of its assets in
short-term money market instruments.

Those instruments may include:

(1) Securities issued or guaranteed by the U.S. government and its agencies and
instrumentalities;

(2) Commercial Paper;

(3) Certificates of Deposit and Euro Dollar Certificates of Deposit;

(4) Bankers' Acceptances;

(5) Short-term notes, bonds, debentures, or other debt instruments; and

(6) Repurchase agreements.

Prospectus Information Regarding the Funds 9

These investments must meet the rating standards for the funds. To the
extent a fund assumes a defensive position, the weighted average maturity of its
portfolio may not fall within the ranges stated for the fund.

FUNDAMENTALS OF FIXED INCOME INVESTING

HISTORICAL YIELDS
[line graph - graph data]

30-YEAR 20-YEAR 3-MONTH
TREASURY TAX-EXEMPT TREASURY
BONDS BONDS BILLS

BOND PRICE VOLATILITY

For a given change in interest rates, longer maturity bonds experience a greater
change in price, as shown below:

Price of a 7% Price of same
coupon bond bond if its Percent
Years to now trading yield increases change
Maturity to yield 7% to 8% in price

1 year $100.00 $99.06 -0.94%
3 years 100.00 97.38 -2.62%
10 years 100.00 93.20 -6.80%
30 years 100.00 88.69 -11.31%

YEARS TO MATURITY
[bar graph - graph data]

LIMITED-TERM BOND
Likely Maturities of Individual Holdings 0-8 years
Expected Weighted Average Portfolio Maturity Range 6 mos.-5 years

INTERMEDIATE-TERM BOND
Likely Maturities of Individual Holdings 0-20 years
Expected Weighted Average Portfolio Maturity Range 3-10 years

BENHAM BOND
Likely Maturities of Individual Holdings 0-30 years
Expected Weighted Average Portfolio Maturity Range 10-20 years

AUTHORIZED QUALITY RANGES

A-1 A-2 A-3
P-1 P-2 P-3
MIG-1 MIG-2 MIG-3
SP-1 SP-2 SP-3
AAA AA A BBB BB B CCC CC C D
-----------------------------------------------------
Limited-Term Bond x x x x
Intermediate-Term Bond x x x x
Benham Bond x x x x

The investment practices of our fixed income funds take into account these
relationships. The maturity and asset quality of each fund have implications for
the degree of price volatility and the yield level to be expected from each.

OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS

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

PORTFOLIO TURNOVER

The portfolio turnover rates of the funds are shown in the Financial
Highlights table on pages 5, 6 and 7 of this Prospectus.

10 Information Regarding the Funds American Century Investments

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

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

REPURCHASE AGREEMENTS

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

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

DERIVATIVE SECURITIES

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

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

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

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

Prospectus Information Regarding the Funds 11

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

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

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

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

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

PORTFOLIO LENDING

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

FOREIGN SECURITIES

Each of the funds may invest an unlimited amount of its assets in the
securities of foreign issuers, including foreign governments, when these
securities meet their standards of selection. Securities of foreign issuers may
trade in the U.S. or foreign securities markets. The funds will limit their
purchase of debt securities to U.S. dollar denominated investment grade
obligations. Such securities will be primarily from developed markets.

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

WHEN-ISSUED SECURITIES

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

RULE 144A SECURITIES

The funds may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the funds' cri-

12 Information Regarding the Funds American Century Investments

teria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional investors rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.

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

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

INTEREST RATE FUTURES CONTRACTS AND
OPTIONS THEREON

The funds may buy and sell interest rate futures contracts relating to debt
securities ("debt futures," i.e., futures relating to debt securities, and "bond
index futures," i.e., futures relating to indexes on types or groups of bonds)
and write and buy put and call options relating to interest rate futures
contracts.

For options sold, a fund will segregate cash or high-quality debt
securities equal to the value of securities underlying the option unless the
option is otherwise covered.

A fund will deposit in a segregated account with its custodian bank
high-quality debt obligations in an amount equal to the fluctuating market value
of long futures contracts it has purchased, less any margin deposited on its
long position. It may hold cash or acquire such debt obligations for the purpose
of making these deposits.

A fund will purchase or sell futures contracts and options thereon only for
the purpose of hedging against changes in the market value of its portfolio
securities or changes in the market value of securities that it may wish to
include in its portfolio. A fund will enter into future and option transactions
only to the extent that the sum of the amount of margin deposits on its existing
futures positions and premiums paid for related options do not exceed 5% of its
assets.

Since futures contracts and options thereon can replicate movements in the
cash markets for the securities in which a fund invests without the large cash
investments required for dealing in such markets, they may subject a fund to
greater and more volatile risks than might otherwise be the case. The principal
risks related to the use of such instruments are (1) the offsetting correlation
between movements in the market price of the portfolio investments (held or
intended) being hedged and in the price of the futures contract or option may be
imperfect; (2) possible lack of a liquid secondary market for closing out
futures or option positions; (3) the need for additional portfolio management
skills and techniques; and (4) losses due to unanticipated market price
movements. For a hedge to be completely effective, the price change of the
hedging instrument should equal the price change of the securities being hedged.
Such equal price changes are not always possible because the investment
underlying the hedging instrument may not be the same investment that is being
hedged.

The manager will attempt to create a closely correlated hedge but hedging
activity may not be completely successful in eliminating market value
fluctuation. The ordinary spreads between prices in the cash and futures
markets, due to the differences in the natures of those markets, are subject to
distortion. Due to the possibility of distortion, a correct forecast of general
interest rate trends by the manager may still not result in a successful
transaction. The

Prospectus Information Regarding the Funds 13

manager may be incorrect in its expectations as to the extent of various
interest rate movements or the time span within which the movements take place.

See the Statement of Additional Information for further information about
these instruments and their risks.

PERFORMANCE ADVERTISING

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

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

The funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services or Donoghue's Money Fund Report) and publications
that monitor the performance of mutual funds. Performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
In addition, fund performance may be compared to well-known indices of market
performance including the Donoghue's Money Fund Average and the Bank Rate
Monitor National Index of 21/2-year CD rates. Fund performance may also be
compared, on a relative basis, to other funds in our fund family. This relative
comparison, which may be based upon historical or expected fund performance,
volatility or other fund characteristics, may be presented numerically,
graphically or in text. Fund performance may also be combined or blended with
other funds in our fund family, and that combined or blended performance may be
compared to the same indices to which individual funds may be compared.

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

14 Information Regarding the Funds American Century Investments

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

The following section explains how to purchase, exchange and redeem Advisor
Class shares of the funds offered by this Prospectus.

HOW TO PURCHASE AND SELL AMERICAN
CENTURY FUNDS

One or more of the funds offered by this Prospectus is available as an
investment option under your employer-sponsored retirement or savings plan or
through or in connection with a program, product or service offered by a
financial intermediary, such as a bank, broker-dealer or an insurance company.
Since all records of your share ownership are maintained by your plan sponsor,
plan recordkeeper, or other financial intermediary, all orders to purchase,
exchange and redeem shares must be made through your employer or other financial
intermediary, as applicable.

If you are purchasing through a retirement or savings plan, the
administrator of your plan or your employee benefits office can provide you with
information on how to participate in your plan and how to select American
Century funds as an investment option.

If you are purchasing through a financial intermediary, you should contact
your service representative at the financial intermediary for information about
an American Century fund.

If you have questions about a fund, see "Investment Policies of the Funds,"
page 8, or call one of our Institutional Service Representative at
1-800-345-3533.

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

We may discontinue offering shares generally in the funds (including any
class of shares of a fund) or in any particular state without notice to
shareholders.

HOW TO EXCHANGE FROM ONE AMERICAN CENTURY
FUND TO ANOTHER

Your plan or program may permit you to exchange your investment in the
shares of a fund for shares of another fund in our family. See your plan
administrator, employee benefits office or financial intermediary for details on
the rules in your plan governing exchanges.

HOW TO REDEEM SHARES

Subject to any restrictions imposed by your employer's plan or financial
intermediary's program, you can sell ("redeem") your shares through the plan or
financial intermediary at their net asset value. Your plan administrator,
trustee, or financial intermediary or other designated person must provide us
with redemption instructions. The shares will be redeemed at the net asset value
next computed after receipt of the instructions in good order. See "When Share
Price Is Determined," page 16. If you have any questions about how to redeem,
contact your plan administrator, employee benefits office, or service
representative at your financial intermediary, as applicable.

TELEPHONE SERVICES

INVESTORS LINE

To request information about our funds and a current prospectus, or get
answers to any questions that you may have about the funds and the services we
offer, call one of our Institutional Service Representatives at 1-800-345-3533.

Prospectus How To Invest With American Century Investments 15

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds except the American Century Target
Maturities Trust, net asset value is determined at the close of regular trading
on each day that the New York Stock Exchange is open, usually 3 p.m. Central
time. Net asset value for the Target Maturities is determined one hour prior to
the close of the Exchange.

Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or 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 account
if they are deposited before the net asset value is determined.

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

HOW SHARE PRICE IS DETERMINED

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

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

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

Trading of these securities in foreign markets may not take place on every
New York Stock Exchange business day. In addition, trading may take place in

16 Additional Information You Should Know American Century Investments

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. Because the total expense ratio for the Advisor Class
shares is 0.25% higher than the Investor Class, their net asset values will be
lower than the Investor Class. The net asset values of the Advisor Class may be
obtained by calling us.

DISTRIBUTIONS

At the close of each day, including Saturdays, Sundays and holidays, net
income of the funds is determined and declared as a distribution. The
distribution will be paid monthly on the last Friday of each month, except for
year-end distributions, which will be paid on the last business day of the year.

You will begin to participate in the distributions the day after your
purchase is effective. See "When Share Price is Determined," page 16. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.

Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase made 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.

TAXES

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

TAX-DEFERRED ACCOUNTS

TAXABLE ACCOUNTS

If Advisor Class shares are purchased through taxable accounts,
distributions of net investment income and net short-term capital gains are
taxable to you as ordinary income, except as described below. The dividends from
net income of the fixed income funds do not qualify for the 70%
dividends-received deduction for corporations since they are derived from
interest income. Distributions from net long-term capital gains are taxable as
long-term capital gains regardless of the length of time the shares on which
such distributions are paid have been held by the shareholder. However, you
should note that any loss realized upon the sale or redemption of shares held
for six months or less will be treated as a long-term capital loss to the extent
of any distribution of long-term capital gain to you with respect to such
shares.

Prospectus Additional Information You Should Know 17

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

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

If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, either 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 shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Code, resulting in a postponement of the recognition of such loss for
federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

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

The manager supervises and manages the investment portfolio of 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

18 Additional Information You Should Know American Century Investments

funds' portfolios and the funds' asset mix as they deem appropriate in pursuit
of the funds' investment objectives. Individual portfolio manager members of the
teams may also adjust portfolio holdings of the funds or of sectors of the funds
as necessary between team meetings.

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

JEFFREY L. HOUSTON, Portfolio Manager, has worked for American Century
since November 1990.

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

For the services provided to the Advisor Class of the funds, the manager
receives an annual fee at the following rates:

o 0.45% of the average net assets of Limited-Term Bond;

o 0.50% of the average net assets of Intermediate-Term Bond; and

o 0.55% of the average net assets of Benham Bond.

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

CODE OF ETHICS

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

TRANSFER AND ADMINISTRATIVE SERVICES

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

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

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

DISTRIBUTION OF FUND SHARES

The funds' shares are distributed by American Century Investment Services,
Inc., a registered broker-dealer and an affiliate of the manager. As agent for
the funds and the manager, the distributor enters into contracts with various
banks, broker-dealers, insurance companies and other financial intermediaries
with respect to the sale of the funds' shares and/or the use of the funds'
shares in various financial services. The manager (or an affiliate) pays all
expenses incurred in promoting sales of, and distributing, the Advisor Class and
in securing such services out of the Rule 12b-1 fees described in the section
that follows.

SERVICE AND DISTRIBUTION FEES

Rule 12b-1 adopted by the Securities and Exchange Commission ("SEC") under
the Investment Company Act permits investment companies that adopt a writ-

Prospectus Additional Information You Should Know 19

ten plan to pay certain expenses associated with the distribution of their
shares. Pursuant to that rule, the funds' Board of Directors and the initial
shareholder of the funds' Advisor Class shares have approved and adopted a
Master Distribution and Shareholder Services Plan (the "Plan"). Pursuant to the
Plan, each fund pays the manager a shareholder services fee and a distribution
fee, each equal to 0.25% (for a total of 0.50%) per annum of the average daily
net assets of the shares of the fund's Advisor Class. The shareholder services
fee is paid for the purpose of paying the costs of securing certain shareholder
and administrative services, and the distribution fee is paid for the purpose of
paying the costs of providing various distribution services. All or a portion of
such fees are paid by the manager to the banks, broker-dealers, insurance
companies or other financial intermediaries through which such shares are made
available.

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Mutual Funds, Inc., 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 three classes of each of the funds offered by this
Prospectus: an Investor Class, a Service Class, and the Advisor Class. The
shares offered by this Prospectus are Advisor Class shares.

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

Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable to such share on all questions, except
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

20 Additional Information You Should Know American Century Investments

cast in an election of directors can elect all of the directors if they choose
to do so, and in such event the holders of the remaining votes will not be able
to elect any person or persons to the Board of Directors.

Unless required by the Investment Company Act, it will not be necessary for
the funds to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the funds' by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the funds to hold a
special meeting of shareholders. The manager 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 21

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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