AMERICAN CENTURY MUTUAL FUNDS, INC.
PROSPECTUS SUPPLEMENT
Cash Reserve
SUPPLEMENT DATED May 15, 1998
Prospectus dated March 1, 1998
The Board of Directors of Cash Reserve has unanimously agreed to enter into an
Agreement and Plan of Reorganization with American Century Investment Trust. The
Agreement provides for the consolidation of this fund with another American
Century fund, Prime Money Market Fund, which has similar investment objectives
and policies. The proposed consolidation will not decrease the dollar value of
any shareholder's account. The fund combination is contingent upon shareholder
approval.
The Board of Directors has requested that the Agreement be submitted to
shareholders for approval at a Special Meeting of Shareholders to be held on
August 7, 1998. The record date for the meeting is May 15, 1998. If you own
shares of Cash Reserve as of the close of business on that date, you will be
entitled to vote on the reorganization at that meeting. Proxy materials
containing more information about the proposed reorganization are expected to be
sent to shareholders on June 8, 1998. If the reorganization is approved, it is
expected to occur on August 29, 1998. A decision regarding an investment in Cash
Reserve should be made in light of these proposed reorganizations.
The following disclosure should be inserted after the section "Transfer and
Administrative Services" found on page 19 of the Investor Class Prospectus and
page 15 of the Advisor Class Prospectus.
YEAR 2000 ISSUES
Many of the world's computer systems currently cannot properly recognize or
process date-sensitive information relating to the Year 2000 and beyond. The
fund depends upon the computer systems of various service providers, including
the transfer agent, for its day-to-day operations. Inadequate remediation of the
Year 2000 problem by these service providers and others with whom they interact
could have an adverse effect on the fund's operations, including pricing,
securities trading and settlement, and the provision of shareholder services.
The transfer agent has assembled a team of information technology professionals
who are taking steps to address Year 2000 issues with respect to its own
computers and to obtain satisfactory assurances that comparable steps are being
taken by the fund's other major service providers and vendors. The key phases of
the remediation plan include: an inventory of all internal systems, vendor
products and services and data providers (substantially completed in 1997); an
assessment of all systems for date reliance and the impact of the century
rollover on each (substantially completed with respect to critical systems in
early 1998); and the renovation and testing of affected systems (targeted for
completion with respect to critical systems by the end of 1998). The manager
will pay for the remediation effort with revenues from its management fee, so
that the fund will not directly bear any of the cost.
In light of these remediation efforts, the fund does not anticipate a material
adverse impact on its business, operations or financial condition relating to
Year 2000 issues. However, there can be no assurance that the remediation plan
will be sufficient and timely or that interaction with other noncomplying
computer systems will not have a material adverse effect on the fund's business,
operations or financial condition.
In addition, companies in which the fund invests may have Year 2000 computer
problems. The value of their securities could go down if they do not fix their
problems in time or if fixing them is very expensive. Before making an
investment decision about a company, the manager asks it about its Year 2000
readiness. However, the manager cannot be sure that the information it receives
is complete and accurate, and there is no guarantee that portfolio companies'
Year 2000 problems will not hurt the fund's performance.
American
Century(reg.tm)
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
SH-SPL-xxxxx 9805
