AMERICAN CENTURY MUTUAL FUNDS INC, N-30D, 1998-06-30

AMERICAN CENTURY MUTUAL FUNDS INC
N-30D, 1998-06-30

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[front cover] April 30, 1998

SEMIANNUAL REPORT
- -----------------
AMERICAN CENTURY

[graphic of globe, U.S. Currency, and money managers overlooking monitors]

TWENTIETH CENTURY GROUP
- -----------------------
GIFTRUST

[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]

A Note from the Founder
- --------------------------------------------------------------------------------

On our 40th anniversary, I would personally like to express my profound
appreciation for the confidence you have shown in American Century. We are
grateful for the opportunity to manage your money, and we will do our utmost to
continue to meet your expectations and justify your confidence in us.

I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.

Sincerely,
/s/James E. Stowers

About our New Report Design
- --------------------------------------------------------------------------------

WHY WE CHANGED.

We're trying hard to be reader-friendly. Our reports contain a lot of very good
information, from fund statistics and financials to Q & As with fund managers.
We hope the new design will make the reports more interesting and
understandable, and easier for you to keep abreast of your fund's strategy and
performance.

WHAT'S NEW.

The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming.

New features include:

* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.

THE BOTTOM LINE.

The new design actually costs slightly less than the old one. We reallocated
costs and eliminated a cover letter and the envelope that previously came with
your report enclosed. This not only saves money, but cuts down on the number of
mailing pieces you receive.

The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.

We believe we've come up with a more interesting, informative, and user-friendly
publication.

We hope you enjoy it.

[left margin]

TWENTIETH CENTURY GROUP
GIFTRUST
(TWGTX)

[40 Years logo]
Four Decades of Serving Investors
40 YEARS
American Century
1958-1998

On the Cover:

Kevin Lewis and Cindy Miller are part of the investment group at American
Century.

Our Message to You
- --------------------------------------------------------------------------------

[photo of James E. Stowers, Jr. with James E. Stowers III]
James E. Stowers, Jr. with James E. Stowers III, seated

Stocks have posted historic returns over the last three calendar years
(1995-1997), and the first six months of our fiscal year (October 31, 1997, to
April 30, 1998) did not interrupt the momentum. U.S. financial indices continued
to soar, the generous market values accorded many large, high-profile companies
grew even more generous, and small to midsize stocks performed respectably.

We've been optimistic about the stock market for many years, and today is
no exception. We believe stocks should continue to produce good returns over the
long haul. But there is one key provision: Inflation and interest rates must
remain low. Low inflation and interest rates fuel economic growth and provide a
healthy environment for financial assets. Our capital markets should do well
until that environment changes.

Corporate America is also in excellent condition. Companies are highly
productive and generating historically strong returns on their investments,
including investments in their own stock. But despite the robust economy, not
every company is selling at record prices. This remains a market of individual
stocks, and many companies have earnings potential that has been either
overlooked or poorly understood. These stocks are attractive opportunities, even
by the standards of a potentially less enthusiastic market.

On the corporate front, the past six months have been eventful for American
Century. As many of you may know, we gained a powerful business partner in
January when J.P. Morgan became a substantial minority shareholder. The new
business partnership will eventually broaden the menu of investment options and
services we provide.

Finally, we're proud to note that 1998 is our 40th anniversary. Few fund
companies have been around that long, and not many offer nearly 70 stock, bond,
money market and blended (stock and bond) funds that provide investors with such
a wide range of choice and flexibility.

We appreciate your investment with American Century.

Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer

[right margin]

Table of Contents

Report Highlights ...................................................... 2
Market Perspective ..................................................... 3
GIFTRUST
Performance Information ................................................ 5
Management Q & A ....................................................... 6
Portfolio at a Glance ................................................ 6
Top Ten Holdings ..................................................... 7
Top Five Industries .................................................. 7
Types of Investments ................................................. 8
Schedule of Investments ................................................ 9
Statement of Assets and Liabilities .................................... 11
Statement of Operations ................................................ 12
Statements of Changes in Net Assets .................................... 13
Notes to Financial Statements .......................................... 14
Financial Highlights ................................................... 16
BACKGROUND INFORMATION
Investment Philosophy and Policies ..................................... 17
Comparative Indices .................................................... 17
Investment Team Leaders ................................................ 17
Glossary ............................................................... 18

www.americancentury.com 1

Report Highlights
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MARKET PERSPECTIVE

o The U.S. stock market continued its powerful advance during the six months
ended April 30, 1998. The S&P 500 gained 22.47%.

o A robust economy has fueled the stock market's performance. Low inflation
and interest rates and continued corporate earnings growth have contributed
to economic strength.

o Earnings growth and profitability are top corporate priorities. The U.S. is
one of the most technologically proficient of the industrial nations, and as
a result many U.S. companies are enjoying high returns.

o Investors also continue to pour money into the market. Stock prices and
investor expectations remain very high. On a historical basis, corporate
assets are expensive, and the average dividend yield is very low.

GIFTRUST

o Giftrust's total return for the six months ended April 30, 1998, was 1.47%,
compared to a 9.95% return for its benchmark, the Russell 2000 Growth Index.
(See total returns on page 5.)

o Smaller stocks suffered significantly because of the Southeast Asian crisis,
which was expected to have a significant negative influence on several key
industries, notably technology.

o Energy holdings were decreased. They were hit hard by weak oil prices, and
earnings slowed in the fourth quarter of 1997.

o Family Dollar Stores and Spine-Tech were two stocks that performed
particularly well. Family Dollar, the fund's fourth-largest holding as of
April 30, benefited from timely strategic moves and a strong retail
environment. Spine-Tech rebounded in the last six months after a rough prior
six-month period, when competition threatened its medical specialty
products.

o Holdings in the business services and supply area increased significantly.
This category includes an eclectic group of companies. For example, Applied
Graphics provides computer formatting for magazines, brochures and
advertisements, while PMT Services, Inc. is a credit card processing
company.

[left margin]

GIFTRUST (TWGTX)

TOTAL RETURNS: AS OF 4/30/98
6 Months 1.47%*
1 Year 36.76%

NET ASSETS: $1.1 billion
INCEPTION DATE: 11/25/83

HOLDINGS IN THE BUSINESS SERVICES AND
SUPPLY AREA INCREASED SIGNIFICANTLY. ...
ENERGY HOLDINGS WERE DECREASED.

* Not annualized.

Investment terms are defined in the Glossary on page 18.

2 1-800-345-2021

Market Perspective from Bob Puff
- ----------------------------------------
[photo of Bob Puff]
Bob Puff, chief investment officer of American Century Investments

A STRONG MARKET

Most stocks have performed exceptionally well over the past few years. As
the chart on page 4 illustrates, the Standard & Poor's 500 Index has been
climbing at a very heady rate.

In fact, calendar 1995-1997 marked one of the best three-year performance
runs on record for the large companies that make up the S&P 500. It was the most
consistent performance period ever for large-stock indices. All three years saw
returns top 20%.

Small and midsize companies have also performed well, although they have
reacted with more volatility to disappointments like the crisis in Southeast
Asia, especially if they had a significant customer base in the region. During
the six months ended April 30, the Russell 2000 Growth Index gained 9.95%, a
solid performance.

A STRONG ECONOMY

Large and smaller stocks both owe much of their success to a robust,
low-inflation economy. The U.S. economy is currently demonstrating a vigor we
haven't seen in a generation.

o U. S. economic growth hit 3.8% in 1997, and 4.8% in the first quarter of
1998.

o Inflation was a mere 1.4% for the 12 months ended April 30, 1998.

o In 1997, prices rose at the slowest pace in 12 years.

o Real interest rates (after adjusting for inflation) are among the lowest
since the 1960s.

o Unemployment was the lowest it's been in 28 years.

o The U.S. government is projecting the first budget surplus in 30 years.

A successful market is also tied to the success of individual companies.
Earnings growth and productivity are at the top of the business agenda. We are
also among the most technologically proficient of the industrial nations, and as
a result, U.S. companies are enjoying extraordinarily high internal returns.
Return on equity, for example, which is one measure of a company's value to its
shareholders, has annualized above 20%, a high number by historical standards.

Given the positive business climate, it's not surprising stocks remain such
a popular investment, and that cash continues to flow into the market at record
volumes.

However, by some key measures stock prices are expensive. Price-earnings
ratios are at or near records, and corporate assets at a number of larger
companies are richly valued. Dividend yields are also depressed.

INFLATION, INTEREST RATES AND EARNINGS

[right margin]

GIVEN THE POSITIVE BUSINESS CLIMATE,
IT'S NOT SURPRISING STOCKS REMAIN SUCH A
POPULAR INVESTMENT.

MARKET RETURNS

FOR THE SIX MONTHS ENDED APRIL 30, 1998

S&P 500 22.47%
S&P MIDCAP 400 19.17%
RUSSELL 2000 11.88%
Source: Lipper Analytical Services, Inc.

These indices represent the performance
of large, medium and small
capitalization stocks.

[line graph - data below]

MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE SIX MONTHS ENDED APRIL 30, 1998

S&P 500 S&P Mid-Cap 400 Russell 2000
10/31/97 $1.00 $1.00 $1.00
11/30/97 $1.05 $1.01 $0.99
12/31/97 $1.06 $1.05 $1.01
1/31/98 $1.08 $1.03 $0.99
2/28/98 $1.15 $1.12 $1.07
3/31/98 $1.21 $1.17 $1.11
4/30/98 $1.23 $1.19 $1.12

Value on 4/30/98
S&P 500 $1.22
S&P Midcap 400 $1.19
Russell 2000 $1.12

www.americancentury.com 3

Market Perspective (continued)
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deepening economic crisis in Southeast Asia, raised the specter of higher
inflation and lower earnings--and temporarily set the market on its ear.

If inflation picks up, interest rates are likely to rise too, as the bond
market and the Federal Reserve boost rates to slow the economy. Higher interest
rates increase the cost of borrowing for everyone, from corporations to
prospective home buyers, and thus tend to slow economic growth and dampen
inflation. Our central bank, the Federal Reserve Board, sets short-term interest
rates, but market forces determine intermediate- and long-term rates.

Over the past few years, bond investors have been quick to push rates up --
and moderate economic growth -- at the first hint of inflation. In other words,
market forces, and not the Federal Reserve, took the lead in raising and
lowering interest rates.

In 1997, inflation failed to take off. Oil prices went into a tailspin when
Asian demand fell. By early 1998, as crude oil prices hit a nine-year low,
stocks were soaring, even though the fallout from Asia had slowed many
companies' earnings.

This remains a very resilient market, and we are optimistic about its
long-term prospects. But expectations are running high, as reflected in the
market's steep climb over the last three-plus years. Any uptick in inflation or
interest rates could lead to an increase in price volatility and perhaps to
returns that are closer to the historical average.

[left margin]

THIS REMAINS A VERY RESILIENT MARKET,
AND WE ARE OPTIMISTIC ABOUT ITS
LONG-TERM PROSPECTS. BUT EXPECTATIONS
ARE RUNNING HIGH, AS REFLECTED IN THE
MARKET'S STEEP CLIMB OVER THE LAST
THREE-PLUS YEARS.

[mountain graph - data below]

S&P 500 PERFORMANCE
FROM DECEMBER 1970 TO DECEMBER 1997
DATE PRICE
12/70 92.15
12/71 102.09
12/72 118.05
12/73 97.55
12/74 68.56
12/75 90.19
12/76 107.46
12/77 95.10
12/78 96.11
12/79 107.94
12/80 135.76
12/81 122.55
12/82 140.64
12/83 164.93
12/84 167.24
12/85 211.28
12/86 242.17
12/87 247.08
12/88 277.72
12/89 353.40
12/90 330.22
12/91 417.09
12/92 435.71
12/93 466.45
12/94 459.27
12/95 615.93
12/96 740.74
12/97 970.43
Source: Bloomberg

4 1-800-345-2021

Performance--Giftrust
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TOTAL RETURNS AS OF APRIL 30, 1998

RUSSELL 2000
GIFTRUST GROWTH

6 MONTHS(1) ................ 1.47% 9.95%
1 YEAR ..................... 36.76% 43.70%
- ----------------------------------------------------------
AVERAGE ANNUAL RETURNS
- ----------------------------------------------------------
3 YEARS .................... 11.79% 20.08%
5 YEARS .................... 19.14% 16.61%
10 YEARS ................... 19.96% 12.75%
LIFE OF FUND(2) ............ 19.14% 9.99%(3)

(1) Returns for less than one year are not annualized.
(2) Inception was 11/25/83.
(3) Return since 11/30/83, the date nearest the fund's inception for which data
are available.

See pages 17 and 18 for information about the Russell 2000 Growth Index and
returns.

[mountain chart - data below]

GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made 4/30/88
Giftrust Russell 2000 Growth
DATE ACCT VALUE ACCT VALUE
4/30/88 $10,000 $10,000
4/30/89 $11,986 $11,289
4/30/90 $13,569 $11,362
4/30/91 $15,757 $12,816
4/30/92 $20,452 $14,535
4/30/93 $25,729 $15,393
4/30/94 $33,407 $17,630
4/30/95 $44,176 $19,169
4/30/96 $61,919 $26,713
4/30/97 $45,154 $23,095
4/30/98 $61,753 $33,188

VALUE ON 4/30/98:
Giftrust $61,753
Russell 2000 Growth $33,188

The chart at left shows the growth of a $10,000 investment in the fund over 10
years, while the chart below shows the fund's year-by-year performance. Russell
2000 Growth is provided for comparison in each chart. Past performance does not
guarantee future results. Investment return and principal value will fluctuate,
and redemption value may be more or less than the original cost. Giftrust's
total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of Russell 2000
Growth do not.

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING APRIL 30)

Giftrust Russell 2000 Growth
DATE RETURN RETURN
4/30/89 19.86% 12.89%
4/30/90 13.21% 0.64%
4/30/91 16.12% 12.79%
4/30/92 29.79% 13.42%
4/30/93 25.80% 5.90%
4/30/94 29.84% 14.54%
4/30/95 32.24% 8.73%
4/30/96 40.16% 39.35%
4/30/97 -27.08% -13.61%
4/30/98 36.76% 43.70%

www.americancentury.com 5

Giftrust--Q&A
- --------------------------------------------------------------------------------
An interview with John Seitzer and Chris Boyd, portfolio managers on the
Giftrust investment team.

HOW DID THE FUND PERFORM DURING THE SIX MONTHS ENDED APRIL 30?

Giftrust's total return was 1.47%. Its low return was primarily a
reflection of the last two months of 1997, when smaller stocks suffered the
effects of the "Asian contagion." The phrase refers to the punishment inflicted
on many U.S. stocks as Asian economies began to contract. Some Giftrust holdings
fell because they do a significant amount of business in Southeast Asia -- home
to the world's fastest-growing economies until late last year. Other holdings
fell in sympathy with the market and have since rebounded.

Another significant factor hurting performance was Giftrust's large
weighting in energy services. This industry, which provides services and
equipment to oil and gas companies, was one of the strongest performers in the
portfolio for the prior six-month period. However, the recent drop in energy
prices forced producers to reevaluate capital expenditure plans, depressing
share prices of service stocks.

HOW DID THE FUND PERFORM RELATIVE TO ITS BENCHMARK?

Giftrust's benchmark, the Russell 2000 Growth Index, returned 9.95% for the
period and 43.70% for the year. Giftrust's overweighting in energy services and
technology, and its lighter weighting in financial stocks relative to the
benchmark explains much of the difference. The financial sector performed well
during the period.

If you look at the one-year returns chart on the previous page, you will
see Giftrust's return was 36.76% over the 12 months ending April 30, 1998, its
second-highest annualized return over the 10 years shown.

GIFTRUST HAS STUMBLED OVER THE LAST FEW YEARS, HOWEVER. WHAT ARE YOU DOING TO
GET PERFORMANCE IN LINE WITH ITS MUCH BETTER LONG-TERM RECORD?

Giftrust's recent returns are not up to either our shareholders' or
American Century's expectations, and the company has taken steps to enhance
performance. First, the size of the Giftrust investment team has been increased.
Secondly, the portfolio's scope has widened to include a broader range of
industries that are showing earnings and revenue acceleration. Finally, we are
executing our buy and sell decisions in a more timely fashion in an effort to
move in and out of positions more effectively. We are optimistic that these
changes will result in better performance.

ARE SMALLER AND MID-SIZED COMPANIES MORE INSULATED THAN LARGE, MULTINATIONAL
COMPANIES FROM ECONOMIC EVENTS OUTSIDE THE U.S.?

Not necessarily. In fact, the opposite can be true. For example, a large
multinational company may be dependent on Southeast Asia for only a portion of
its revenues, whereas a smaller company with a narrower product line may be more
tied to Southeast Asian economies. The sector that saw the steepest decline in
Southeast Asia's wake was technology, and company size did not make a
difference. Among the fund's holdings, Powerwave Technologies, which makes
amplifiers for use in wireless communications networks, depended on South Korea
for a majority of its revenues in 1997. We sold it in mid-December in response
to slowing order trends from South Korea, which resulted in a slower earnings
growth outlook.

[left margin]

PORTFOLIO AT A GLANCE
4/30/98 10/31/97
- ----------------------------------------------------------
NO. OF COMPANIES 85 67

MEDIAN P/E RATIO 35.6 31.8

MEDIAN MARKET $1.21 $760
CAPITALIZATION BILLION MILLION

PORTFOLIO TURNOVER 73%(1) 118%(2)

EXPENSE RATIO 1.00%(3) 1.00%

A LARGE MULTINATIONAL COMPANY MAY BE
DEPENDENT ON SOUTHEAST ASIA FOR ONLY A
PORTION OF ITS REVENUES, WHEREAS A
SMALLER COMPANY WITH A NARROWER PRODUCT
LINE MAY BE MORE TIED TO SOUTHEAST ASIAN
ECONOMIES.

(1) Six months ended 4/30/98.
(2) Year ended 10/31/97.
(3) Annualized.

Investment terms are defined in the Glossary on page 18.

6 1-800-345-2021

Giftrust--Q&A (continued)
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And then there are Burr Brown Corp. and Vitesse Semiconductor Corp., which
produce specialized computer chips for the industrial, automotive and
telecommunications markets. Although the companies rely on Southeast Asia for
only a small portion of their business, their stocks dipped along with the rest
of the technology sector. We held onto them and they have rebounded to new
highs.

WHICH STOCKS OR SECTORS CONTRIBUTED MOST TO GIFTRUST'S PERFORMANCE?

Like the chip makers, computer software and services companies rebounded
after sinking in October on news of problems in Southeast Asia. These stocks,
which included CBT Group and HBO & Co., were the fund's strongest performers.
CBT makes interactive education software for information technology workers
while HBO & Co. provides software to hospitals and physician groups.

Spine-Tech Inc., one of the fund's worst performers for the prior six
months, also rebounded to become the top single contributor. The company makes
spinal cages, which are metal columns that are inserted between vertebrae when
an injured disc is removed. Spine-Tech was depressed last year by concerns that
a competing product would be introduced sooner than previously anticipated. Our
research led us to believe that the competitor had insufficient research data to
receive Food and Drug Administration approval. Rather than join the market in
selling the stock, we held our large position. We purchased Spine-Tech in the
second calendar quarter of 1997 at an average price of $34. It fell to $29.50 on
October 30 as concerns over competition mounted. We ultimately sold it in
mid-December at $52.

Another top contributor was Family Dollar Stores Inc., which benefited from
its specific strategies as well as a strong retail environment. The discount
store initiated an "everyday low price" strategy in 1995 and competes
effectively with Wal-Mart in towns where it attracts shoppers who prefer a
smaller store. It has very flexible inventory management and has successfully
introduced products that have increased sales while discontinuing unpopular
products.

WHICH STOCKS OR SECTORS HURT PERFORMANCE?

Kos Pharmaceuticals was the biggest disappointment. The company introduced
a new cholesterol-lowering drug, Niaspan, in September. Its stock price dropped
in November as sales of the drug got off to a slower start than analysts
anticipated.

Another holding, Trico Marine Services, Inc. was hurt by falling oil
prices. The company's diversified fleet of vessels provides a range of services
to offshore oil rigs in the Gulf of Mexico, the North Sea and Brazil.

A final example of a disappointing stock was Rainforest Cafe, a chain of 18
theme restaurants. The stock enjoyed a very good run until January, when
management surprised investors with an abrupt change in sales estimates and a
more pessimistic outlook.

We sold these three stocks because their earnings acceleration did not
prove sustainable.

WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE OCTOBER 31, 1997?

As you can see from the chart at right, our holdings in the business
services and supplies category jumped considerably. This is an eclectic group of
companies that are growing for a variety of reasons. Applied Graphics provides

[right margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
- ------------------------------------------------------

VITESSE SEMICONDUCTOR CORP. 2.8% 2.2%

TEKELEC 2.7% 2.1%

NBTY, INC. 2.6% -

FAMILY DOLLAR STORES, INC. 2.5% 2.2%

SUIZA FOODS CORP. 2.3% -

APPLIED GRAPHICS
TECHNOLOGIES, INC. 2.3% 2.4%

CONCENTRA MANAGED CARE, INC. 2.3% 1.5%

UNIPHASE CORP. 2.1% -

CBT GROUP PLC ADR 2.1% 3.1%

FLEETWOOD ENTERPRISES, INC. 2.1% -

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
------------------------------------------------------

COMPUTER SOFTWARE & SERVICES 12.6% 10.8%

BUSINESS SERVICES & SUPPLIES 9.1% 2.6%

ELECTRICAL & ELECTRONIC
COMPONENTS 6.7% 13.9%

AEROSPACE & DEFENSE 6.3% 3.0%

BIOTECHNOLOGY 6.0% 8.7%

www.americancentury.com 7

Giftrust--Q&A (continued)
- --------------------------------------------------------------------------------
computer formatting for magazines, brochures and advertisements. Its growth is
partly due to its success in acquiring competitors and partly to its
introduction of a software product that archives and retrieves digital pictures.
PMT Services Inc. is a credit card processing company whose growth has come from
targeting small businesses that previously did not offer customers a credit card
payment option.

On the sell side, we lightened our holdings in energy services when weak
oil prices affected the outlook for these stocks. We also reduced holdings of
companies that manufacture communications equipment and electronic components
for computers. Although we have seen resilience in some of these stocks, which
were indiscriminately punished in the Asian downdraft, we have sold others that
are experiencing weaker demand.

We've redeployed these assets, pursuing earnings acceleration in a wider
range of industries. We've also screened our holdings to try to avoid
concentrations that are susceptible to a downward move caused by a single event.
We hope these changes will decrease volatility and enhance returns for Giftrust
beneficiaries.

CHRIS, YOU HAVE JOINED THE GIFTRUST TEAM SINCE WE LAST REPORTED TO SHAREHOLDERS.
YOU AND JOHN HAVE A COMBINED 18 YEARS OF FOLLOWING SMALL- AND MID-CAP STOCKS.
HOW HAVE THESE MARKETS CHANGED SINCE THE TWO OF YOU BEGAN YOUR CAREERS?

Today there is more focus on the largest companies due to a combination of
strong earnings growth and a trend toward indexing, or buying the stocks in a
popular index. In recent years, the stocks of smaller growth companies have not
been rewarded by the market in line with their earnings successes. We expect
this preference for large-cap stocks will run its course, but it's hard to say
when.

Another significant change is the broad and quick dissemination of
information, which has increased the volatility in the market dramatically.
Advances in computer and communication technology have compressed the time
needed to gather and analyze company financial information. Investment decisions
are made and executed more quickly due to electronic trading systems.

We have adapted to the changing landscape, yet we remain focused on our
process of pursuing stocks with accelerating earnings. We believe that money
follows earnings, that the stocks of companies with increasing rates of growth
will be rewarded most over the long term.

[left margin]

[pie charts]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF APRIL 30, 1998
Cash-1%
U.S. Stocks-99%

AS OF OCTOBER 31, 1997
Cash-5%
U.S. Stocks-95%

WE'VE REDEPLOYED ... ASSETS, PURSUING EARNINGS ACCELERATION IN A WIDER RANGE OF
INDUSTRIES.

8 1-800-345-2021

Giftrust's Schedule of Investments
- --------------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)
Shares ($ in Thousands) Value
- -------------------------------------------------------------------------------

COMMON STOCKS

AEROSPACE & DEFENSE-- 6.3%

590,000 BE Aerospace, Inc.(1) $ 18,382

428,900 DONCASTERS plc ADR(1)(2) 13,189

320,000 Goodrich (B.F.) Company (The) 17,220

250,000 Orbital Sciences Corp.(1) 11,109

165,000 Thiokol Corp. 8,889
--------------

68,789
--------------

AUTOMOBILES & AUTO PARTS-- 4.5%

495,000 Fleetwood Enterprises, Inc. 22,863

300,000 Gentex Corp.(1) 10,069

375,000 Tenneco Inc. 16,148
--------------

49,080
--------------

BANKING-- 2.8%

80,000 Centura Banks, Inc. 5,760

155,000 First Tennessee National Corp. 5,333

95,000 Marshall & Ilsley Corp. 5,551

150,000 Mercantile Bancorporation Inc. 8,306

115,900 National Commerce Bancorporation 5,143
--------------

30,093
--------------

BIOTECHNOLOGY-- 6.0%

235,000 BioChem Pharma Inc.(1) 5,963

275,000 IDEC Pharmaceuticals Corp.(1) 9,849

202,400 IDEXX Laboratories, Inc.(1) 4,459

500,000 Incyte Pharmaceuticals, Inc.(1) 22,531

421,000 PathoGenesis Corp.(1) 16,695

190,000 Sangstat Medical Corp.(1) 6,436
--------------

65,933
--------------

BROADCASTING & MEDIA-- 3.6%

88,000 Clear Channel Communications, Inc.(1) 8,294

400,000 Heftel Broadcasting Corp.(1) 17,400

240,000 Jacor Communications, Inc.(1) 13,643
--------------

39,337
--------------

BUILDING & HOME IMPROVEMENTS-- 0.6%

195,000 Premark International, Inc. 6,508
--------------

BUSINESS SERVICES & SUPPLIES-- 9.1%

311,100 Analytical Surveys, Inc.(1) 10,071

495,000 Applied Graphics Technologies, Inc.(1) 24,812

720,000 Billing Information Concepts Corp.(1) 20,048

515,000 CKS Group, Inc.(1) 11,459

77,100 HA-LO Industries, Inc.(1) 2,587

943,000 PMT Services, Inc.(1) 18,270

270,000 StaffMark, Inc.(1) 11,543
--------------

98,790
--------------

CHEMICALS & RESINS-- 0.5%

340,000 Catalytica, Inc. 4,941
--------------

Shares ($ in Thousands) Value
- -------------------------------------------------------------------------------
COMMUNICATION EQUIPMENT-- 3.6%

300,000 Brooktrout Technology, Inc.(1) $ 6,253

350,000 Periphonics Corp.(1) 4,090

575,000 Tekelec(1) 28,912
--------------

39,255
--------------

COMMUNICATION SERVICES-- 3.7%

580,000 IDT Corp.(1) 17,817

150,000 Pacific Gateway Exchange, Inc.(1) 8,559

240,000 PanAmSat Corp.(1) 14,025
--------------

40,401
--------------

COMPUTER PERIPHERALS-- 1.9%

202,000 Digi International Inc.(1) 5,353

520,000 Xylan Corp.(1) 14,804
--------------

20,157
--------------

COMPUTER SOFTWARE & SERVICES-- 12.6%

200,000 American Management System, Inc.(1) 5,769

450,000 CBT Group Plc ADR(1) 22,922

230,000 CSG Systems International, Inc.(1) 10,494

135,000 Fiserv, Inc.(1) 8,800

260,000 HBO & Co. 15,543

300,000 JDA Software Group, Inc.(1) 15,113

540,000 Macromedia, Inc.(1) 8,083

150,000 Platinum Software Corp.(1) 3,337

430,000 Saville Systems Ireland plc ADR(1) 21,487

640,000 Sterling Software, Inc.(1) 16,920

701,200 Vanstar Corp.(1) 9,334
--------------

137,802
--------------

CONSTRUCTION & PROPERTY
DEVELOPMENT-- 1.1%

400,000 Kaufman & Broad Home Corp. 11,625
--------------

CONSUMER PRODUCTS-- 2.6%

1,400,000 NBTY, Inc.(1) 27,913
--------------

EDUCATION-- 1.0%

225,000 Sylvan Learning Systems, Inc.(1) 11,088
--------------

ELECTRICAL & ELECTRONIC
COMPONENTS-- 6.7%

600,000 Burr-Brown Corp.(1) 18,206

68,100 Galileo Technology Ltd.(1) 2,205

425,000 Uniphase Corp.(1) 23,136

520,000 Vitesse Semiconductor Corp.(1) 29,949
--------------

73,496
--------------

ENERGY (SERVICES)-- 1.2%

400,000 Stolt Comex Seaway, S.A.(1) 13,050
--------------

ENVIRONMENTAL SERVICES-- 2.1%

505,000 Allied Waste Industries, Inc.(1) 13,919

185,000 USA Waste Services, Inc.(1) 9,077
--------------

22,996
--------------

See Notes to Financial Statements.

www.americancentury.com 9

Giftrust's Schedule of Investments (continued)

APRIL 30, 1998 (UNAUDITED)

Shares ($ in Thousands) Value
- -------------------------------------------------------------------------------

FINANCIAL SERVICES-- 2.3%

528,000 AMRESCO, INC.(1) $ 19,107

210,600 Heller Financial, Inc.(1) 5,686
-------------

24,793
-------------

FOOD & BEVERAGE-- 2.3%

426,000 Suiza Foods Corp.(1) 25,241
-------------

HEALTHCARE-- 2.3%

800,000 Concentra Managed Care, Inc.(1) 24,800
-------------

INDUSTRIAL EQUIPMENT & MACHINERY -- 1.5%

320,000 Trinity Industries, Inc. 16,320
-------------

INSURANCE-- 1.9%

170,000 Express Scripts, Inc. Cl A(1) 13,472

127,400 Fremont General Corp. 7,103
-------------

20,575
-------------

MACHINERY & EQUIPMENT-- 2.1%

550,000 Discreet Logic Inc.(1) 9,763

250,000 Kennametal Inc. 13,328
-------------

23,091
-------------

MEDICAL EQUIPMENT & SUPPLIES-- 2.5%

162,000 Advanced Technology
Laboratories, Inc.(1) 7,806

430,000 Safeskin Corp.(1) 15,265

150,000 Wesley Jessen VisionCare, Inc.(1) 4,622
-------------

27,693
-------------

PHARMACEUTICALS-- 2.0%

156,000 Sherer (R.P.) Corp.(1) 11,388

278,000 Twinlab Corp.(1) 10,877
-------------

22,265
-------------

PRINTING & PUBLISHING-- 1.3%

240,000 Consolidated Graphics, Inc.(1) 13,845
-------------

Shares ($ in Thousands) Value
- -------------------------------------------------------------------------------
RESTAURANTS-- 1.2%

525,000 Cheesecake Factory Inc.(1) $ 13,191
-------------

RETAIL (APPAREL)-- 2.7%

410,000 Genesco Inc.(1) 6,944

435,000 Stage Stores, Inc.(1) 22,376
-------------

29,320
-------------

RETAIL (GENERAL MERCHANDISE)-- 2.5%

805,000 Family Dollar Stores, Inc. 27,370
-------------

RETAIL (SPECIALTY)-- 1.0%

308,000 Action Performance Cos. Inc.(1) 10,674

21,462 Corporate Express, Inc.(1) 215
-------------
10,889
-------------

RUBBER & PLASTICS-- 0.9%

120,000 Armstrong World Industries, Inc. 10,290
-------------

TEXTILES & APPAREL-- 1.8%

300,000 Fruit of the Loom, Inc.(1) 11,213

525,000 Shaw Industries, Inc. 8,498
-------------
19,711
-------------

TRANSPORTATION-- 0.3%

150,000 Dollar Thrifty Automotive Group Inc.(1) 2,832
-------------

TOTAL COMMON STOCKS-98.5% 1,073,480
-------------
(Cost $855,255)

TEMPORARY CASH INVESTMENTS-1.5%

Repurchase Agreement, BA Security Services,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.48%, dated 4/30/98,
due 5/1/98 (Delivery value $16,903) 16,900
-------------
(Cost $16,900)

TOTAL INVESTMENT SECURITIES-- 100.0% $1,090,380
(Cost $872,155) =============

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt

(1) Non-income producing.

(2) Affiliated Company: represents ownership of at least 5% of the voting
securities of the issuer and is, therefore, an affiliate as defined in the
Investment Company Act of 1940. (See Note 4 in Notes to Financial Statements for
a summary of transactions for each issuer who is or was an affiliate at or
during the six months ended April 30, 1998.)

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule shows you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

o the percentage of total investments in each industry

o the number of shares of each stock

o a list of each investment

o the market value of each investment

o the percent and dollar breakdown of each investment category

o the dollar value of other short-term investments that are considered the same
as cash

See Notes to Financial Statements.

10 1-800-345-2021

Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

ASSETS (In Thousands, Except Per-Share Amounts)
- -------------------------------------------------------------------------------

Investment securities, at value
(identified cost of $872,155) (Note 3 and Note 4) ............ $ 1,090,380

Cash ......................................................... 355

Receivable for investments sold .............................. 28,238

Dividends and interest receivable ............................ 71
-----------

1,119,044
-----------

LIABILITIES

Disbursements in excess of demand deposit cash ............... 121

Payable for investments purchased ............................ 30,557

Payable for capital shares redeemed .......................... 19

Accrued management fees (Note 2) ............................. 894
-----------

31,591
-----------

Net Assets ................................................... $ 1,087,453
===========

CAPITAL SHARES, $0.01 PAR VALUE

Authorized ................................................... 200,000
===========

Outstanding .................................................. 43,539
===========

Net Asset Value Per Share .................................... $ 24.98
===========

NET ASSETS CONSIST OF:

Capital (par value and paid in surplus) ...................... $ 869,808

Net investment loss .......................................... (2,572)

Accumulated undistributed net realized
gain on investment transactions .............................. 1,992

Net unrealized appreciation on investments (Note 3) ......... 218,225
-----------
$ 1,087,453
===========

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF ASSETS AND LIABILITIES--This page details what
the fund owns (assets), what it owes (liabilities) and its net assets as of the
last day of the period. If you subtract what the fund owes from what it owns,
you get the fund's net assets. The net assets divided by the total number of
fund shares outstanding gives you the price of an individual share, or the net
asset value per share.

NET ASSETS are also broken out by capital (money invested by shareholders);
income/loss not yet paid to shareholders; gains earned but not yet paid to
shareholders (known as realized gains); and gains or losses on securities still
owned by the fund (known as unrealized gains or losses). This breakout tells you
the value of net assets that are performance-related, such as income and
investment gains or losses, and the value of net assets that are not related to
performance, such as shareholder investments and redemptions.

See Notes to Financial Statements.

www.americancentury.com 11

Statement of Operations
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)

INVESTMENT LOSS (In Thousands)
- -------------------------------------------------------------------------------

Income:

Interest ....................................................... $ 1,938

Dividends ...................................................... 518
--------

2,456
--------

Expenses (Note 2):

Management fees ................................................ 5,023

Directors' fees and expenses ................................... 5
--------

5,028
--------

Net investment loss ............................................ (2,572)
--------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3)

Net realized gain on investments ............................... 3,696

Change in net unrealized appreciation on investments ........... 16,697
--------

Net realized and unrealized gain on investments ................ 20,393
--------

Net Increase in Net Assets Resulting from Operations ........... $ 17,821
========

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF OPERATIONS--This statement breaks out how the
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.

Fund OPERATIONS include:

o income earned from investments (dividends and interest)

o management fees and expenses

o gains or losses from selling investments (known as realized gains or losses)

o gains or losses on current fund holdings (known as unrealized gains or losses

See Notes to Financial Statements.

12 1-800-345-2021

Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 1997

Increase in Net Assets

1998 1997
OPERATIONS (In Thousands)
- ------------------------------------------------------------------------------

Net investment loss ........................ $ (2,572) $ (6,690)

Net realized gain on investments ........... 3,696 30,092

Change in net unrealized
appreciation on investments ................ 16,697 4,921
----------- -----------

Net increase in net assets
resulting from operations .................. 17,821 28,323
----------- -----------

DISTRIBUTIONS TO SHAREHOLDERS

From net realized gains on
investment transactions .................... (30,705) (27,032)
----------- -----------

CAPITAL SHARE TRANSACTIONS

Proceeds from shares sold .................. 56,718 144,894

Proceeds from reinvestment
of distributions ........................... 30,700 27,026

Payments for shares redeemed ............... (10,721) (15,321)
----------- -----------

Net increase in net assets
from capital share transactions ............ 76,697 156,599
----------- -----------

Net increase in net assets ................. 63,813 157,890
----------- -----------

NET ASSETS

Beginning of period ........................ 1,023,640 865,750
----------- -----------

End of period .............................. $ 1,087,453 $ 1,023,640
=========== ===========

Undistributed net
investment loss ............................ $ (2,572) --
=========== ===========

TRANSACTIONS IN SHARES OF THE FUND

Sold ....................................... 2,385 6,139

Issued in reinvestment
of distributions ........................... 1,395 1,126

Redeemed ................................... (447) (631)
----------- -----------

Net increase ............................... 3,333 6,634
=========== ===========

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS --These statements show
how the fund's net assets changed over the past two reporting periods. It
details how much a fund grew or shrank as a result of:

o performance

o distributions to shareholders

o shareholders investing, reinvesting distributions or withdrawing money

The changes are broken out into:

o operations--a summary of the Statement of Operations from the previous page
for the most recent period

o distributions--income and gains distributed to shareholders

o share transactions--shareholders' purchases, reinvestment of distributions and
redemptions

The statement also takes net assets at the beginning of the period to the end of
the period.

See Notes to Financial Statements.

www.americancentury.com 13

Notes to Financial Statements
- --------------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century - Twentieth Century Giftrust
(the Fund) is one of the thirteen series of funds issued by the Corporation. The
Fund's investment objective is to seek capital growth by investing primarily in
common stocks. The following significant accounting policies, related to the
Fund, are in accordance with accounting policies generally accepted in the
investment company industry.

SECURITY VALUATIONS -- Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. Debt securities not
traded on a principal securities exchange are valued through a commercial
pricing service or at the mean of the most recent bid and asked prices. When
valuations are not readily available, securities are valued at fair value as
determined in accordance with procedures adopted by the Board of Directors.

SECURITY TRANSACTIONS -- Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.

INVESTMENT INCOME -- Dividend income less foreign taxes withheld (if any)
is recorded as of the ex-dividend date. Interest income is recorded on the
accrual basis and includes accretion of discounts and amortization of premiums.

REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to the Fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS -- It is the policy of the Fund to distribute all taxable
income and capital gains to shareholders and to otherwise qualify as a regulated
investment company under provisions of the Internal Revenue Code. Accordingly,
no provision has been made for federal or state income taxes.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are declared and paid annually.

The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net capital gains and losses for financial statement
and tax purposes and may result in reclassification among certain capital
accounts.

USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.

ADDITIONAL INFORMATION -- Effective January 15, 1998, Funds Distributor,
Inc. (FDI) became the Corporation's distributor. Certain officers of FDI are
also officers of the Corporation.

14 1-800-345-2021

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The Corporation has entered into a Management Agreement with ACIM that
provides the Fund with investment advisory and management services in exchange
for a single, unified management fee. The Agreement provides that all expenses
of the Fund, except brokerage commissions, taxes, interest, expenses of those
directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on the Fund's average daily closing net assets during the previous month. The
annual management fee for the Fund is 1.00%.

Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, the
Corporation's transfer agent, American Century Services Corporation, and the
registered broker-dealer, American Century Investment Services, Inc.

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities, excluding short-term
investments, were $783,578,535 and $700,887,829, respectively.

As of April 30, 1998, accumulated net unrealized appreciation on investments
was $216,530,466, based on the aggregate cost of investments for federal income
tax purposes of $873,849,556, which consisted of unrealized appreciation of
$227,268,543 and unrealized depreciation of $10,738,077.

- --------------------------------------------------------------------------------
4. AFFILIATED COMPANY TRANSACTIONS

A summary of transactions for each issuer which is or was an affiliate at or
during the six months ended April 30, 1998, follows:

<TABLE>
APRIL 30, 1998
SHARE BALANCE PURCHASE SALES REALIZED SHARE MARKET
ISSUER(1) 10/31/97 COST COST GAIN (LOSS) BALANCE VALUE

GIFTRUST ($ in Thousands)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DONCASTERS plc ADR 498,900 -- $ 1,397 $ 510 428,900 $13,189

PAREXEL International Corp. 440,000 -- 9,355 6,142 -- --

P-COM, Inc. 1,300,000 -- 16,965 6,737 -- --

Spine-Tech, Inc. 510,000 -- 17,908 8,487 -- --

Teledata Communications 612,000 -- 13,412 (3,948) -- --

Trico Marine Services, Inc. 890,000 -- 20,422 1,224 -- --
--------- --------- --------- --------- ---------
-- $79,459 $19,152 $13,189
========= ========= ========= ========= =========
</TABLE>

(1) None of the securities produced income during the period.

www.americancentury.com 15

Giftrust's Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31, 1997 (EXCEPT AS NOTED)

1998(1) 1997 1996 1995 1994 1993
PER-SHARE DATA
- ----------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .. $ 25.46 $ 25.79 $ 25.63 $ 20.50 $ 19.23 $ 13.57
---------- ---------- ---------- ---------- ---------- ----------

Income From Investment Operations

Net Investment Loss ................. (0.12)(2) (0.18)(2) (0.20)(2) (0.16)(2) (0.10) (0.09)

Net Realized and Unrealized Gain
on Investment Transactions .......... 0.39 0.63 2.46 6.37 3.28 7.18
---------- ---------- ---------- ---------- ---------- ----------

Total From Investment Operations .... 0.27 0.45 2.26 6.21 3.18 7.09
---------- ---------- ---------- ---------- ---------- ----------

Distributions

From Net Realized Gains
on Investment Transactions .......... (0.75) (0.78) (2.10) (1.08) (1.91) (1.42)

In Excess of Net Realized Gains ..... -- -- -- -- -- (0.01)
---------- ---------- ---------- ---------- ---------- ----------

Total Distributions ................. (0.75) (0.78) (2.10) (1.08) (1.91) (1.43)
---------- ---------- ---------- ---------- ---------- ----------

Net Asset Value, End of Period ........ $ 24.98 $ 25.46 $ 25.79 $ 25.63 $ 20.50 $ 19.23
========== ========== ========== ========== ========== ==========

Total Return(3) ....................... 1.47% 1.95% 9.72% 32.52% 18.75% 55.84%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ................. 1.00%(4) 1.00% 0.98% 0.98% 1.00% 1.00%

Ratio of Net Investment Loss
to Average Net Assets ................. (0.51)%(4) (0.74)% (0.80)% (0.70)% (0.70)% (0.70)%

Portfolio Turnover Rate ............... 73% 118% 121% 105% 115% 143%

Average Commission Paid per Share
of Equity Security Traded ............. $ 0.0272 $ 0.0278 $ 0.0230 $ 0.0260 --(5) --(5)

Net Assets, End of Period
(in millions) ......................... $ 1,087 $ 1,024 $ 866 $ 561 $ 266 $ 154
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.

(5) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended October 31, 1995.

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--This page itemizes what contributed to
the fund's change in share price during the period, and compares this to changes
over the last five fiscal years (or less, if the fund is not five years old).

On a per-share basis, it includes:

o share price at the beginning of the period

o investment income and capital gains or losses

o distributions of income and capital gains paid to shareholders

o share price at the end of the period

It also includes some key statistics for the period:

o total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

o expense ratio--operating expenses as a percentage of average net assets

o net income ratio--net investment income as a percentage of average net assets

o portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements.

16 1-800-345-2021

Background Information
- --------------------------------------------------------------------------------
INVESTMENT PHILOSOPHY AND POLICIES

The Twentieth Century Group offers 10 equity funds that invest in the
stocks of growing companies, both domestically and internationally. The
philosophy behind these growth funds focuses on three important principles.
First, the funds seek to own successful companies, which we define as those with
growing earnings and revenues. Second, we attempt to keep the funds fully
invested, regardless of short-term market activity. Experience has shown that
market gains can occur in unpredictable spurts and that missing those
opportunities can significantly limit the potential for gain. Third, the funds
are managed by teams, rather than by one "star." We believe this allows us to
make better, more consistent management decisions.

In addition to these principles, each fund has its own policies.

TWENTIETH CENTURY GIFTRUST generally invests in the securities of small
companies that exhibit accelerating growth. Shares of Giftrust can be given only
as a gift to someone other than yourself or spouse, and all investments must
remain in the fund for a minimum of 10 years or until the recipient reaches the
age of majority, whichever is later. The fund is subject to significant price
volatility but offers high long-term growth potential.

COMPARATIVE INDICES

The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.

THE S&P 500 is a capitalization-weighted index of the stocks of 500
publicly traded U.S. companies that are considered to be leading firms in
dominant industries. Created by Standard & Poor's Corporation, it is considered
to be a broad measure of U.S. stock market performance.

THE S&P MIDCAP 400 is a capitalization-weighted index of the stocks of the
400 largest leading U.S. companies not included in the S&P 500. Created by
Standard & Poor's Corporation, it is considered to represent the performance of
mid-cap stocks generally.

THE RUSSELL 2000 INDEX was created by the Frank Russell Company. It
measures the performance of the 2,000 smallest of the 3,000 largest publicly
traded U.S. companies, based on total market capitalization. The Russell 2000
represents approximately 10% of the total market capitalization of the top 3,000
companies. The index is further broken down into two mutually exclusive value
and growth indices. The RUSSELL 2000 GROWTH INDEX, used in this report, measures
the performance of those Russell 2000 companies with higher price-to-book ratios
and higher forecasted growth rates.

[right margin]

INVESTMENT TEAM LEADERS
GIFTRUST
PORTFOLIO MANAGER: CHRIS BOYD, CFA
PORTFOLIO MANAGER: JOHN SEITZER, CFA

www.americancentury.com 17

Glossary
- --------------------------------------------------------------------------------
RETURNS

o TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

o AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year total returns, please refer to the "Financial
Highlights" on page 16.

PORTFOLIO STATISTICS

o NUMBER OF COMPANIES -- the number of different companies held by a fund on a
given date.

o PRICE/EARNINGS (P/E) RATIO -- a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)

o PORTFOLIO TURNOVER -- the percentage of a fund's investment portfolio that is
replaced during a given time period, usually a year. Actively managed portfolios
tend to have higher turnover than passively managed portfolios such as index
funds.

o EXPENSE RATIO -- the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)

TYPES OF STOCKS

o BLUE-CHIP STOCKS -- stocks of the most established companies in American
industry. They are generally large, fairly stable companies that have
demonstrated consistent earnings and usually have long-term growth potential.
Examples include General Electric and Coca-Cola.

o CYCLICAL STOCKS -- generally considered to be stocks whose price and earnings
fluctuations tend to follow the ups and downs of the business cycle. Examples
include the stocks of automobile manufacturers, steel producers and textile
operators.

o GROWTH STOCKS -- stocks of companies that have experienced above-average
earnings growth and are expected to continue such growth. These stocks often
sell at high P/E ratios. Examples can include the stocks of high-tech,
healthcare and consumer staples companies.

o LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS -- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of more than $5 billion. These tend to be the stocks that
make up the Dow Jones Industrial Average and the S&P 500.

o MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS --generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P MidCap 400.

o SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS -- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of less than $1 billion. These tend to be the stocks that
make up the Russell 2000 Index.

o VALUE STOCKS -- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

STATISTICAL TERMINOLOGY

o PRICE/BOOK RATIO -- a stock value measurement calculated by dividing a
company's stock price by its book value per share, with the result expressed as
a multiple instead of as a percentage. (Book value per share is calculated by
subtracting a company's liabilities from its assets, then dividing that value by
the number of outstanding shares.)

18 1-800-345-2021

Notes
- --------------------------------------------------------------------------------

www.americancentury.com 19

Notes
- --------------------------------------------------------------------------------

20 1-800-345-2021

[inside back cover]

[right margin]

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[back cover]

[40 Years logo]
Four Decades of Serving Investors
40 YEARS
American Century
1958-1998

American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
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www.americancentury.com COMPANIES

9806 (c)1998 American Century Services Corporation
SH-BKT-12485 Funds Distributor, Inc.
<PAGE>
[front cover] April 30, 1998

SEMIANNUAL REPORT
- -----------------
AMERICAN CENTURY

[graphic of globe, U.S. Currency, and money managers overlooking monitors]

TWENTIETH CENTURY GROUP
- -----------------------
NEW OPPORTUNITIES

[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]

A Note from the Founder
- --------------------------------------------------------------------------------

I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.

Sincerely,
/s/James E. Stowers

About our New Report Design
- --------------------------------------------------------------------------------

WHY WE CHANGED.

WHAT'S NEW.

The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming.

New features include:

* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.

THE BOTTOM LINE.

The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.

We believe we've come up with a more interesting, informative, and user-friendly
publication.

We hope you enjoy it.

[left margin]

TWENTIETH CENTURY GROUP
NEW OPPORTUNITIES
(TWNOX)

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

On the Cover:

Kevin Lewis and Cindy Miller are part of the investment group at American
Century.

Our Message to You
- --------------------------------------------------------------------------------
[photo James E. Stowers, Jr. and James E. Stowers III]
James E. Stowers, Jr. with James E. Stowers III, seated

We appreciate your investment with American Century.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer

[right margin]

Table of Contents
Report Highlights ............... 2
Market Perspective .............. 3
NEW OPPORTUNITIES
Performance Information ......... 5
Management Q & A ................ 6
Portfolio at a Glance .... 6
Top Ten Holdings ......... 7
Top Five Industries ...... 7
Types of Investments ..... 8
Schedule of Investments ....... 9
Statement of Assets and
Liabilities ................... 11
Statement of Operations ....... 12
Statements of Changes
in Net Assets ................. 13
Notes to Financial
Statements .................... 14
Financial Highlights .......... 16
OTHER INFORMATION
Retirement Account
Information ..................... 17
Background Information
Investment Philosophy
and Policies ............. 18
Comparative Indices ...... 18
Investment Team Leaders .. 18
Glossary ...................... 19

www.americancentury.com 1

Report Highlights
- --------------------------------------------------------------------------------

MARKET PERSPECTIVE

o The U.S. stock market continued its powerful advance during the six months
ended April 30, 1998. The S&P 500 gained 22.47%.

o A robust economy has fueled the stock market's performance. Low inflation
and interest rates and continued corporate earnings growth have contributed
to economic strength

o Earnings growth and profitability are top corporate priorities. The U.S. is
one of the most technologically proficient of the industrial nations, and as
a result, many U.S. companies are enjoying high returns.

NEW OPPORTUNITIES

o New Opportunities' total return for the six months ended April 30, 1998,
was 13.37%, compared to a 9.95% return for its benchmark, the Russell 2000
Growth Index. (See total returns on page 5.)

o Several factors contributed to the fund's excellent performance, including
diversification across many industries; large holdings in strong
performers; and our bottom-up approach to selecting stocks with
accelerating earnings.

o The fund's best-performing group was computer software and services. These
companies rebounded after sinking in October in the wake of the crisis in
Southeast Asia.

o Holdings in the business services and supply area increased significantly.
This category includes an eclectic group of companies, including Applied
Graphics, which provides computer formatting for magazines, brochures and
advertisements, and International Telecommunication Data Systems, which
provides back-office support for wireless phone companies.

o Pinnacle Systems Inc., a software company, and Helen of Troy Ltd., maker of
personal care items, were the two largest holdings as of April 30 and were
among the top performing stocks in the portfolio.

o Kos Pharmaceuticals was one of the hardest hit stocks during the period.
Sales of its new cholesterol-lowering drug were slower than anticipated.

[left margin]

NEW OPPORTUNITIES (TWNOX)
TOTAL RETURNS: AS OF 4/30/98
6 Months .............. 13.37%*
1 Year ................ 50.50%
NET ASSETS: $272.9 million
INCEPTION DATE: 12/26/96

INVESTORS ALSO CONTINUE TO POUR MONEY INTO THE MARKET. STOCK PRICES AND INVESTOR
EXPECTATIONS REMAIN VERY HIGH.

* Not annualized.

Investment terms are defined in the Glossary on page 19.

2 1-800-345-2021

Market Perspective from Bob Puff
- --------------------------------------------------------------------------------

[photo of Bob Puff]
Bob Puff, chief investment officer of American Century Investments

A STRONG MARKET

Most stocks have performed exceptionally well over the past few years. As
the chart on page 4 illustrates, the Standard & Poor's 500 Index has been
climbing at a very heady rate.

A STRONG ECONOMY

Large and smaller stocks both owe much of their success to a robust,
low-inflation economy. The U.S. economy is currently demonstrating a vigor we
haven't seen in a generation.

o U. S. economic growth hit 3.8% in 1997, and 4.8% in the first quarter of
1998.

o Inflation was a mere 1.4% for the 12 months ended April 30, 1998.

o In 1997, prices rose at the slowest pace in 12 years.

o Real interest rates (after adjusting for inflation) are among the lowest
since the 1960s.

o Unemployment was the lowest it's been in 28 years.

o The U.S. government is projecting the first budget surplus in 30 years.

A successful market is also tied to the success of individual companies.
Earnings growth has annualized at a double-digit rate for five of the last six
years. We are also among the most technologically proficient of the industrial
nations, and as a result, U.S. companies are enjoying extraordinarily high
internal returns. Return on equity, for example, which is one measure of a
company's value to its shareholders, has annualized above 20%, a high number by
historical standards.

Given the positive business climate, it's not surprising stocks remain such
a popular investment, and that cash continues to flow into the market at record
volumes.

However, by some key measures, stock prices are expensive. Price-earnings
ratios are at or near records, and corporate assets at a number of larger
companies are richly valued. Dividend yields are also depressed.

INFLATION, INTEREST RATES AND EARNINGS

[right margin]

THE U.S. ECONOMY IS CURRENTLY DEMONSTRATING A VIGOR WE HAVEN'T SEEN
IN A GENERATION.

MARKET RETURNS
FOR THE SIX MONTHS ENDED APRIL 30, 1998
S&P 500 22.47%
S&P MIDCAP 400 19.17%
RUSSELL 2000 11.88%

Source: Lipper Analytical Services, Inc.

These indices represent the performance of large, medium and small
capitalization stocks.

[line chart - data below]

MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE SIX MONTHS ENDED APRIL 30, 1998

Value on 4/30/98
S&P 5000 $1.22
S&P MidCap 400 $1.19
Russell 2000 $1.12

www.americancentury.com 3

Market Perspective (continued)
- --------------------------------------------------------------------------------

deepening economic crisis in Southeast Asia, raised the specter of higher
inflation and lower earnings--and temporarily set the market on its ear.

[left margin]

THIS REMAINS A VERY RESILIENT MARKET, AND WE ARE OPTIMISTIC ABOUT ITS
LONG-TERM PROSPECTS. BUT EXPECTATIONS ARE RUNNING HIGH, AS REFLECTED IN THE
MARKET'S STEEP CLIMB OVER THE LAST THREE-PLUS YEARS.

[mountain chart - data below]

S&P 500 PERFORMANCE
FROM DECEMBER 1970 TO DECEMBER 1997

DATE PRICE
12/70 92.15
12/71 102.09
12/72 118.05
12/73 97.55
12/74 68.56
12/75 90.19
12/76 107.46
12/77 95.10
12/78 96.11
12/79 107.94
12/80 135.76
12/81 122.55
12/82 140.64
12/83 164.93
12/84 167.24
12/85 211.28
12/86 242.17
12/87 247.08
12/88 277.72
12/89 353.40
12/90 330.22
12/91 417.09
12/92 435.71
12/93 466.45
12/94 459.27
12/95 615.93
12/96 740.74
12/97 970.43

Source: Bloomberg

4 1-800-345-2021

Performance--New Opportunities
- --------------------------------------------------------------------------------

TOTAL RETURNS AS OF APRIL 30, 1998
NEW OPPORTUNITIES RUSSELL 2000 GROWTH
6 MONTHS(1) ................... 13.37% 9.95%
1 YEAR ........................ 50.50% 43.70%
AVERAGE ANNUAL RETURNS
LIFE OF FUND(2) ............... 14.83% 19.73%(3)

(1) Returns for periods less than one year are not annualized.

(2) Inception was 12/26/96.

(3) Return since 12/31/96, the date nearest the fund's inception for which data
are available.

See pages 18 and 19 for information about the Russell 2000 Growth Index and
returns.

[mountain chart - data below]

GROWTH OF $10,000 OVER LIFE OF FUND

Value on 4/30/98
Russell 200 Growth $12,713
New Opportunities $11,827

New Opps Russell 2000 Growth
DATE ACCT VALUE ACCT VALUE
12/31/96 $10,000 $10,000
1/31/97 $9,745 $10,250
2/28/97 $8,763 $9,631
3/31/97 $7,957 $8,951
4/30/97 $7,860 $8,847
5/31/97 $9,294 $10,177
6/30/97 $9,962 $10,522
7/31/97 $10,847 $11,061
8/31/97 $10,945 $11,392
9/30/97 $11,712 $12,301
10/31/97 $10,434 $11,562
11/30/97 $10,060 $11,287
12/31/97 $10,316 $11,294
1/31/98 $10,001 $11,144
2/28/98 $10,826 $12,128
3/31/98 $11,455 $12,636
4/30/98 $11,827 $12,713

$10,000 investment made 12/31/96

The chart at left shows the growth of a $10,000 investment in the fund since
12/31/96. Russell 2000 Growth is provided for comparison. Past performance does
not guarantee future results. Investment return and principal value will
fluctuate, and redemption value may be more or less than the original cost. New
Opportunities' total return includes operating expenses (such as transaction
costs and management fees) that reduce returns, while the total return of
Russell 2000 Growth does not.

www.americancentury.com 5

New Opportunities--Q&A
- --------------------------------------------------------------------------------

An interview with Chris Boyd and John Seitzer, portfolio managers on the
New Opportunities investment team.

HOW DID THE FUND PERFORM DURING THE SIX MONTHS ENDED APRIL 30?

New Opportunities' total return was 13.37%. For the year ended April 30,
the fund's return was 50.50%.

Diversification across a broad array of industries has been an advantage
for the fund, especially in the more recent period, when some sectors declined
steeply due to lower oil prices and economic problems in Southeast Asia. In
addition to avoiding some problem areas, New Opportunities was well-positioned
in several large holdings that turned in powerful performances.

One example was Pinnacle Systems Inc., whose shares appreciated 49% during
the period. The stock was owned during that entire run and represented 3.6% of
investments at April 30, 1998. Pinnacle makes editing systems that allow video
editors to introduce special computerized effects. The company's growth spurt is
the result of product introductions into new marketing channels, which have
significantly expanded Pinnacle's market. It now has a video editing product for
the consumer market that is available at stores such as Best Buy.

Another large holding, Helen of Troy, entered the period somewhat battered
by investor reaction to news about manufacturing problems. Our research
convinced us the problem was short-term. We held onto the stock and watched it
rise 23%. Helen of Troy makes hairdryers, curling irons and other personal care
items. It has grown rapidly by signing agreements to use brand names such as
Revlon and Dr. Scholl's on its products.

HOW DID NEW OPPORTUNITIES PERFORM RELATIVE TO ITS BENCHMARK?

New Opportunities' benchmark, Russell 2000 Growth, returned 9.95% for the
six months and 43.70% for the year. The fund's better performance came as a
result of our bottom-up approach to stock picking, buying companies with
accelerating earnings and selling companies that no longer pass the earnings
test.

HOW WERE HOLDINGS AFFECTED BY THE ECONOMIC PROBLEMS IN SOUTHEAST ASIA?

The impact was mostly temporary. Good examples were Burr Brown Corp. and
Vitesse Semiconductor Corp., which produce specialized computer chips for the
industrial, automotive and telecommunications markets. Although the companies
rely on Southeast Asia for only a small portion of their business, their stocks
dipped along with the rest of the technology sector late last year. We held on,
and they have rebounded to new highs.

WHICH STOCKS OR SECTORS CONTRIBUTED MOST TO PERFORMANCE?

Like the chip makers, computer software and services companies rebounded
after sinking in October on news of problems in Southeast Asia. These stocks,
which included CBT Group, were the fund's strongest performers. CBT provides
interactive education software for information technology workers.

Along with Pinnacle and Helen of Troy, DM Management Co. was another
significant contributor. The company offers high-quality women's apparel and
accessories through two catalogs, J. Jill and Nicole Summers. It has benefited
from a strong retail market and successful strategies for marketing to women
aged 35 and older.

[left margin]

PORTFOLIO AT A GLANCE
4/30/98 10/31/97
NO. OF COMPANIES 80 64
MEDIAN P/E RATIO 30.2 28.5
MEDIAN MARKET $506 $398
CAPITALIZATION MILLION MILLION
PORTFOLIO TURNOVER 74%(1) 118%(2)
EXPENSE RATIO 1.50%(3) 1.49%(3)

IN ADDITION TO AVOIDING SOME PROBLEM AREAS, NEW OPPORTUNITIES WAS
WELL-POSITIONED IN SEVERAL LARGE HOLDINGS THAT TURNED IN POWERFUL PERFORMANCES.

(1) Six months ended 4/30/98.

(2) For the period from 12/26/96 to 10/31/97.

(3) Annualized.

Investment terms are defined in the Glossary on page 19.

6 1-800-345-2021

New Opportunities--Q&A (continued)
- --------------------------------------------------------------------------------

Spine-Tech Inc., among the fund's worst performers for the prior six-month
period, also rebounded to be a top contributor. The company makes spinal cages,
which are metal columns that are inserted between vertebrae when an injured disc
is removed. Spine-Tech was depressed last year by concerns that a competing
product would be introduced sooner than previously anticipated. Our research led
us to believe that the competitor had insufficient research data to receive Food
and Drug Administration approval. Rather than join the market in selling the
stock, we held our position. We purchased Spine-Tech in the second calendar
quarter of 1997 at an average price of $42. It fell to $28 by October 31 as
concerns over competition mounted. We ultimately sold the position in
mid-December at $52.

Miscellaneous wholesalers was another top-performing group. Among companies
in this category were battery maker Rayovac Corp. and Action Performance
Companies. Rayovac's stock was boosted by continued market share gains at mass
merchants such as Wal-Mart, while Action has built on its stable of NASCAR
miniature replicas by signing exclusive product marketing agreements with NASCAR
drivers.

WHICH STOCKS OR SECTORS HURT PERFORMANCE?

Kos Pharmaceuticals was among the biggest disappointments. The company
introduced a new cholesterol-lowering drug, Niaspan, in September. Its stock
price dropped in November as sales of the drug were slower than analysts
anticipated.

A final example of a disappointing stock is Rainforest Cafe, a chain of 18
theme restaurants. The stock enjoyed a very good run until January, when
management surprised investors with an abrupt change in sales estimates and a
more pessimistic outlook.

We sold these three stocks because their earnings acceleration did not
prove sustainable.

WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE OCTOBER 31, 1997?

As you can see from the chart below, our holdings in the business services
and supplies category jumped considerably. This is an eclectic group of
companies that are growing for a variety of reasons. Applied Graphics provides
computer formatting for magazines, brochures and advertisements. Its growth is
partly due to its success in acquiring competitors and partly to its
introduction of a software product that archives and retrieves digital pictures.
International Telecommunication Data Systems provides back-office support for
wireless phone companies. Due to deregulation of the telecommunications
industry, there are many start-up wireless companies that are outsourcing
billing and other services.

On the sell side, we lightened holdings in energy services and electronics
significantly. The former was hit hard by weak oil prices while Southeast Asia
affected the latter. We've redeployed these assets, pursuing earnings
acceleration in a wide range of industries. We've also screened our holdings to
try to avoid concentrations that are susceptible to a downward move caused by a
single event. We hope these changes will decrease volatility and enhance
returns.

[right margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
PINNACLE
SYSTEMS, INC. 3.6% 2.5%

HELEN OF TROY LTD. 3.0% 2.8%

AMERICAN ITALIAN
PASTA CO. CL A 2.6% 2.1%

ROBERTS
PHARMACEUTICAL
CORP. 2.3% -

FRED'S, INC. 2.3% 1.7%

NBTY, INC. 2.3% -

INTERNATIONAL
TELECOMMUNICATION
DATA SYSTEMS, INC. 2.0% -

SUPERIOR CONSULTANT
HOLDINGS CORP. 1.9% 1.3%

APPLIED POWER INC. 1.9% 1.8%

KRONOS INC. 1.9% -

TOP FIVE INDUSTRIES
% of FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
BUSINESS SERVICES
& SUPPLIES 10.2% 2.3%

COMPUTER SOFTWARE
& SERVICES 8.7% 8.6%

MACHINERY &
EQUIPMENT 7.1% 10.6%

CONSUMER PRODUCTS 6.7% 4.1%

ELECTRIC &
ELECTRONIC
COMPONENTS 5.7% 13.6%

www.americancentury.com 7

New Opportunities--Q&A (continued)
- --------------------------------------------------------------------------------

CHRIS, YOU HAVE JOINED THE NEW OPPORTUNITIES TEAM SINCE WE LAST REPORTED TO
SHAREHOLDERS. YOU AND JOHN HAVE A COMBINED 18 YEARS OF EXPERIENCE FOLLOWING
SMALL- AND MID-CAP STOCKS. HOW HAVE THESE MARKETS CHANGED SINCE THE TWO OF YOU
BEGAN YOUR CAREERS?

Today there is more focus on the largest companies due to a combination of
strong earnings growth and a trend toward indexing, or buying the stocks in a
popular index.

In recent years, the stocks of smaller growth companies have not been
rewarded by the market in line with their earnings successes. We expect this
preference for large-cap stocks will run its course, but it's hard to say when.

We have adapted to the changing landscape, and we remain focused on our
process of pursuing stocks with accelerating earnings. We believe that money
follows earnings, that the stocks of companies with increasing rates of growth
will be rewarded most over the long term.

[left margin]

[pie charts]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF APRIL 30, 1998
Cash 1%
U.S.Stocks 99%

AS OF OCTOBER 31, 1997
Cash 8%
U.S. Stocks 92%

WE LIGHTENED HOLDINGS IN ENERGY SERVICES AND ELECTRONICS SIGNIFICANTLY.

8 1-800-345-2021

New Opportunities' Schedule of Investments
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE-- 2.0%
116,400 Anaren Microwave, Inc.(1) $ 2,146
75,000 Triumph Group, Inc.(1) 3,394
-----------
5,540
-----------
AIRLINES--0.5%
65,000 Midway Airlines Corp.(1) 1,369
-----------
AUTOMOBILES & AUTO PARTS-- 5.3%
187,000 Coachmen Industries, Inc. 4,652
60,000 Fleetwood Enterprises, Inc. 2,771
75,000 Gentex Corp.(1) 2,518
88,000 Tower Automotive, Inc.(1) 4,692
-----------
14,633
-----------
BIOTECHNOLOGY-- 1.3%
88,000 PathoGenesis Corp.(1) 3,490
-----------
BUSINESS SERVICES & SUPPLIES-- 10.2%
67,000 Applied Graphics Technologies, Inc.(1) 3,358
90,000 DA Consulting Group, Inc.(1) 1,578
117,800 HA-LO Industries, Inc.(1) 3,954
185,000 International Telecommunication
Data Systems, Inc. 5,562
130,000 Kroll-O'Gara Company(1) 2,775
97,500 Metzler Group, Inc. (The)(1) 3,425
90,000 Nova Corp.(1) 3,060
100,000 Steven Myers & Associates, Inc.(1) 1,719
100,000 Wackenhut Corrections Corp.(1) 2,613
-----------
28,044
-----------
COMMUNICATION EQUIPMENT-- 4.6%
92,500 Excel Switching Corp.(1) 1,977
92,000 Gilat Satellite Networks Ltd.(1) 3,528
65,000 NICE-Systems Ltd. ADR(1) 2,803
87,000 Tekelec(1) 4,374
-----------
12,682
-----------
COMMUNICATION SERVICES-- 0.8%
60,000 Exodus Communications, Inc.(1) 2,282
-----------
COMPUTER SOFTWARE & SERVICES-- 8.7%
52,000 CBT Group Plc ADR(1) 2,649
66,000 Deltek Systems, Inc.(1) 1,423
74,000 JDA Software Group, Inc.(1) 3,728
130,000 Macromedia, Inc.(1) 1,946
88,000 Mastech Corp.(1) 2,329
60,000 Mobius Management Systems, Inc.(1) 1,106
47,500 New Dimension Software Ltd.(1) 1,265
52,000 Project Software & Development, Inc.(1) 1,388
110,000 QuadraMed Corp.(1) 3,156
134,400 Superior Consultant Holdings Corp.(1) 5,183
-----------
24,173
-----------
CONSTRUCTION & PROPERTY
DEVELOPMENT-- 1.4%
111,000 NVR, Inc.(1) 3,843
-----------

Shares ($ in Thousands) Value
- ----------------------------------------------------------------------------
CONSUMER PRODUCTS-- 6.7%
401,800 Helen of Troy Ltd.(1) $ 8,161
312,000 NBTY, Inc.(1) 6,221
183,000 Rayovac Corporation(1) 4,255
-----------
18,637
-----------
ELECTRICAL & ELECTRONIC
COMPONENTS-- 5.8%
150,000 Burr-Brown Corp.(1) 4,552
210,000 Cree Research, Inc.(1) 3,511
15,500 Galileo Technology Ltd.(1) 502
136,500 REMEC, Inc.(1) 3,378
68,200 Vitesse Semiconductor Corp.(1) 3,928
-----------
15,871
-----------
ENERGY (SERVICES)-- 2.3%
45,000 Coflexip, S.A. ADR 3,184
60,000 Veritas DGC Inc.(1) 3,251
-----------
6,435
-----------
ENVIRONMENTAL SERVICES-- 1.1%
92,500 Superior Services Inc.(1) 3,006
-----------
FINANCIAL SERVICES-- 1.6%
125,000 AMRESCO, INC.(1) 4,523
-----------
FOOD & BEVERAGE-- 5.5%
235,000 American Italian Pasta Co. Cl A(1) 7,284
45,000 Hain Food Group, Inc. (The)(1) 931
172,600 Northland Cranberries, Inc. 2,929
70,300 Suiza Foods Corp.(1) 4,165
-----------
15,309
-----------
FURNITURE & FURNISHINGS-- 1.5%
107,000 CompX International Inc.(1) 2,688
90,000 O'Sullivan Industries Holdings, Inc.(1) 1,361
-----------
4,049
-----------
HEALTHCARE-- 4.5%
141,451 Concentra Managed Care, Inc.(1) 4,385
200,000 CryoLife, Inc.(1) 3,313
175,000 Province Healthcare Co.(1) 4,780
-----------
12,478
-----------
INDUSTRIAL EQUIPMENT & MACHINERY -- 2.3%
200,000 Johnstown America Industries, Inc.(1) 3,256
61,000 Trinity Industries, Inc. 3,111
-----------
6,367
-----------
INSURANCE-- 1.6%
84,000 LandAmerica Financial Group, Inc. 4,431
-----------
MACHINERY & EQUIPMENT-- 7.1%
137,800 Applied Power Inc. 5,150
255,000 Discreet Logic Inc.(1) 4,526
250,000 Pinnacle Systems, Inc.(1) 10,030
-----------

19,706
-----------

See Notes to Financial Statements.

www.americancentury.com 9

New Opportunities' Schedule of Investments (continued)
- ----------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)
Shares ($ in Thousands) Value
- ----------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES-- 3.1%
192,900 CONMED Corp.(1) $4,376
96,000 Cyberonics, Inc.(1) 2,292
86,500 CyberOptics Corp.(1) 1,933
-----------
8,601
-----------
OFFICE EQUIPMENT & SUPPLIES-- 1.9%
145,000 Kronos Inc.(1) 5,129
-----------
PHARMACEUTICALS-- 5.0%
90,000 Barr Laboratories, Inc.(1) 3,651
375,000 Roberts Pharmaceutical Corp.(1) 6,374
157,000 Schein Pharmaceutical, Inc.(1) 3,847
-----------
13,872
-----------
PRINTING & PUBLISHING-- 1.6%
180,000 Media Arts Group, Inc.(1) 4,359
-----------
RESTAURANTS-- 1.0%
195,000 Buffets, Inc.(1) 2,876
-----------
RETAIL (APPAREL)-- 1.5%
148,000 DM Management Co.(1) 4,061
-----------
RETAIL (GENERAL MERCHANDISE)-- 3.2%
72,000 Enesco Group, Inc.(1) 2,412
253,300 Fred's, Inc. 6,317
-----------
8,729
-----------

Shares ($ in Thousands) Value
- ---------------------------------------------------------------------------
RETAIL (SPECIALTY)-- 3.5%
39,000 Action Performance Cos. Inc.(1) $1,352
135,000 CSK Auto Corp.(1) 3,645
45,000 Watsco, Inc. 1,316
145,000 Wilmar Industries, Inc.(1) 3,403
------------
9,716
------------
STEEL-- 1.7%
80,000 Carpenter Technology Corp. 4,645
------------
TEXTILES & APPAREL-- 0.9%
120,000 Columbia Sportswear Co.(1) 2,531
------------
TRANSPORTATION-- 0.8%
80,000 AirNet Systems Inc.(1) 2,160
------------
TOTAL COMMON STOCKS-- 99.0% 273,547
------------
(Cost $219,857)

TEMPORARY CASH INVESTMENTS-1.0%
Repurchase Agreement, B.A. Securities Inc.,
(U.S. Treasury obligations), in a joint trading
account at 5.48%, dated 4/30/98,
due 5/1/98 (Delivery value $2,900)
(Cost $2,900) 2,900
------------
TOTAL INVESTMENT SECURITIES-- 100.0% $276,447
============
(Cost $222,757)

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt

(1) Non-income producing.

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS --This schedule shows you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

o the percentage of total investments in each industry
o the number of shares of each stock
o a list of each investment o the market value of each investment
o the percent and dollar breakdown of each investment category
o the dollar value of other short-term investments that are considered the same
as cash

See Notes to Financial Statements.

10 1-800-345-2021

Statement of Assets and Liabilities
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)
ASSETS (In Thousands, Except Per-Share Amounts)

Investment securities, at value
(identified cost of $222,757) (Note 3) ....................... $ 276,447
Receivable for investments sold .............................. 5,155
Receivable for capital shares sold ........................... 52
Dividends and interest receivable ............................ 18
---------
281,672
---------
LIABILITIES
Disbursements in excess of demand deposit cash ............... 268
Payable for investments purchased ............................ 8,128
Accrued management fees (Note 2) ............................. 331
---------
8,727
---------
Net Assets ................................................... $ 272,945
=========
CAPITAL SHARES, $0.01 PAR VALUE
Authorized ................................................... 100,000
=========
Outstanding .................................................. 45,336
=========
Net Asset Value Per Share .................................... $ 6.02
=========
NET ASSETS CONSIST OF:
Capital (par value and paid in surplus) ...................... $ 217,684
Net investment loss .......................................... (1,455)
Accumulated undistributed net realized
gain from investment transactions ......................... 3,026
Net unrealized appreciation
on investments (Note 3) ...................................... 53,690
---------
$ 272,945
=========

See Notes to Financial Statements.

www.americancentury.com 11

Statement of Operations
- --------------------------------------------------------------------------------

FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INVESTMENT LOSS (In Thousands)

Income:
Interest ........................................................ $ 255
Dividends ....................................................... 79
--------
334
--------
Expenses (Note 2):
Management fees ................................................. 1,788
Directors' fees and expenses .................................... 1
--------
1,789
--------
Net investment loss ............................................. (1,455)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3)
Net realized gain on investments ................................ 6,777
Change in net unrealized appreciation on investments ............ 26,995
--------
Net realized and unrealized gain on investments ................. 33,772
--------
Net Increase in Net Assets Resulting from Operations ............ $ 32,317
========

Fund OPERATIONS include:

o income earned from investments (dividends and interest)

o management fees and expenses

o gains or losses from selling investments (known as realized gains or losses)

o gains or losses on current fund holdings (known as unrealized gains or losses

See Notes to Financial Statements.

12 1-800-345-2021

Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
AND FOR THE PERIOD DECEMBER 26, 1996 (INCEPTION) THROUGH OCTOBER 31, 1997

Increase in Net Assets
1998 1997
OPERATIONS (In Thousands)

Net investment loss ............................ $ (1,455) $ (1,568)
Net realized gain (loss) on investments ........ 6,777 (3,751)
Change in net unrealized
appreciation on investments ................ 26,995 26,695
--------- ---------
Net increase in net assets
resulting from operations ...................... 32,317 21,376
--------- ---------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ...................... 27,392 220,830
Payments for shares redeemed ................... (18,030) (10,940)
--------- ---------
Net increase in net assets
from capital share transactions ................ 9,362 209,890
--------- ---------
Net increase in net assets ..................... 41,679 231,266
--------- ---------
NET ASSETS
Beginning of period ............................ 231,266 --
--------- ---------
End of period .................................. $ 272,945 $ 231,266
========= =========

Net investment loss ............................ $ (1,455) --
========= =========
TRANSACTIONS IN SHARES OF THE FUND
Sold ........................................... 5,227 45,726
Redeemed ....................................... (3,420) (2,197)
--------- ---------
Net increase ................................... 1,807 43,529
========= =========

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
the fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:

o performance

o shareholders investing or reinvesting distributions or withdrawing money

The changes are broken out into:

o or the most recent period

o share transactions--shareholders' purchases, reinvestment of distributions and
redemptions

The statement also takes net assets at the beginning of the period to the end of
the period.

See Notes to Financial Statements.

www.americancentury.com 13

Notes to Financial Statements
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century - Twentieth Century New
Opportunities Fund (the Fund) is one of the thirteen series of funds issued by
the Corporation. The Fund's investment objective is to seek capital growth by
investing primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation. The following significant
accounting policies, related to the Fund, are in accordance with accounting
policies generally accepted in the investment company industry.

REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure that the value, including accrued interest, of
the securities under each repurchase agreement is equal to or greater than
amounts owed to the Fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having management agreements with ACIM may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are declared and paid annually.

At October 31, 1997, accumulated net realized capital loss carryovers of
$3,542,313 (expiring in 2005) may be used to offset future taxable gains.

ADDITIONAL INFORMATION -- Effective January 15, 1998, Funds Distributor,
Inc. (FDI) became the Corporation's distributor. Certain officers of FDI are
also officers of the Corporation.

14 1-800-345-2021

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities, excluding short-term
investments, totaled $195,331,021 and $174,769,985, respectively.

As of April 30, 1998, accumulated net unrealized appreciation was
$53,480,824, based on the aggregate cost of investments for federal income tax
purposes of $222,965,722, which consisted of unrealized appreciation of
$56,537,782 and unrealized depreciation of $3,056,958.

www.americancentury.com 15

New Opportunities' Financial Highlights
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS ENDED OCTOBER 31, 1997
(EXCEPT AS NOTED)

1998(1) 1997(2)
PER-SHARE DATA

Net Asset Value, Beginning of Period ..... $ 5.31 $ 5.00
------------- -------------
Income From Investment Operations
Net Investment Loss
Net Realized and Unrealized ........... (0.03) (0.04)
Gain on Investment Transactions .......... 0.74 0.35
------------- -------------
Total From Investment Operations ......... 0.71 0.31
------------- -------------
Net Asset Value, End of Period ........... $ 6.02 $ 5.31
============= =============

Total Return(3) .......................... 13.37% 6.20%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets(4) ............... 1.50% 1.49%
Ratio of Net Investment Loss
to Average Net Assets(4) ............... (1.22)% (1.09)%
Portfolio Turnover Rate .................. 74% 118%
Average Commission Paid per
Share of Equity Security Traded ........ $ 0.0255 $ 0.0251
Net Assets, End of Period
(in thousands) ......................... $ 272,945 $ 231,266

(1) Six months ended April 30, 1998 (unaudited).

(2) December 26, 1996 (inception) through October 31, 1997.

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

(4) Annualized.

On a per-share basis, it includes:

o share price at the beginning of the period

o investment income and capital gains or losses

o distributions of income and capital gains paid to shareholders

o share price at the end of the period

It also includes some key statistics for the period:

o total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

o expense ratio--operating expenses as a percentage of average net assets

o net income ratio-- net investment income as a percentage of average net asset

o portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements.

16 1-800-345-2021

Retirement Account Information
- --------------------------------------------------------------------------------

As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at American Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.

When you plan to withdraw, you may make your election by completing our
Exchange/Redemption form or an IRS Form W-4P. Call American Century for either
form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.

Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.

www.americancentury.com 17

Background Information
- --------------------------------------------------------------------------------

INVESTMENT PHILOSOPHY AND POLICIES

The Twentieth Century Group offers 10 equity funds that invest in the
stocks of growing companies, both domestically and internationally. The
philosophy behind these growth funds focuses on three important principles.
First, the funds seek to own successful companies, which we define as those with
growing earnings and revenues. Second, we attempt to keep the funds fully
invested, regardless of short-term market activity. Experience has shown that
market gains can occur in unpredictable spurts and that missing those
opportunities can significantly limit the potential for gain. Third, the funds
are managed by teams rather than by one "star." We believe this allows us to
make better, more consistent management decisions.

In addition to these principles, each fund has its own investment policies.

TWENTIETH CENTURY NEW OPPORTUNITIES generally invests in the securities of
small companies that exhibit accelerating growth. The fund is subject to
significant price volatility, but offers high long-term growth potential.

COMPARATIVE INDICES

The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.

THE RUSSELL 2000 INDEX was created by the Frank Russell Company. It
measures the performance of the 2,000 smallest of the 3,000 largest publicly
traded U.S. companies based on total market capitalization. The Russell 2000
represents approximately 10% of the total market capitalization of the top 3,000
companies. The average market capitalization of the index is approximately $420
million. The RUSSELL 2000 GROWTH INDEX measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted growth
rates.

[left margin]

INVESTMENT TEAM LEADERS

NEW OPPORTUNITIES
PORTFOLIO MANAGER: CHRIS BOYD, CFA
PORTFOLIO MANAGER: JOHN SEITZER, CFA

18 1-800-345-2021

Glossary
- --------------------------------------------------------------------------------

RETURNS

o TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

PORTFOLIO STATISTICS

o NUMBER OF COMPANIES -- the number of different companies held by a fund on a
given date.

TYPES OF STOCKS

o VALUE STOCKS -- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

STATISTICAL TERMINOLOGY

www.americancentury.com 19

Notes
- --------------------------------------------------------------------------------

20 1-800-345-2021

[inside back cover]

[right margin]

[american century logo(reg.sm)]
American
Century(reg.tm)

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

INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-444-3485

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY MUTUAL FUNDS INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

[recycled logo]
Recycled

[back cover]

[40 Years]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES

9806 (c)1998 American Century Services Corporation
SH-BKT-12487 Funds Distributor, Inc.
<PAGE>
[front cover] April 30, 1998

SEMIANNUAL REPORT
- -----------------

AMERICAN CENTURY

[graphic of computer screen, eye glasses, keyboard]

AMERICAN CENTURY GROUP
- -----------------------

BALANCED
[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]

American Century Group
Balanced
(TWBIX)

A Note from the Founder
- -----------------------

I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.

Sincerely,

/s/James E. Stowers

About our New Report Design
- ---------------------------

Why We Changed.

What's New.

The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming. New features include:
* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.

The Bottom Line.

The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.

We believe we've come up with a more interesting, informative, and user-friendly
publication.

We hope you enjoy it.

[40 years logo]
Four Decades of Serving Investors
40 Years
American Century(reg.tm)
1958 * 1998

OUR MESSAGE TO YOU
- ------------------

[photo of James E. Stowers, Jr. and James E. Stowers III]
JAMES E. STOWERS, JR. WITH JAMES E. STOWERS III, SEATED

Stocks have posted historic returns over the last three calendar years
(1995-1997), and the first six months of our fiscal year, (October 31,
1997-April 30, 1998) did not interrupt the momentum. U.S. financial indices have
continued to soar. The generous market values accorded many large, high-profile
companies grew even more generous, and small to midsize stocks performed very
respectably, although lagging their large-cap brethern. The fixed-income markets
also have fared well. The decline in interest rates and the improving
creditworthiness of U.S. business have produced a strong market for fixed-income
securities.

We've been optimistic about the financial markets for many years, and today
is no exception. We believe both stocks and bonds should produce good real
returns (the net return after inflation). But there is one key provision:
Inflation and interest rates must remain low. Low inflation and interest rates
fuel economic growth and provide a healthy environment for financial assets. Our
capital markets should do well until that environment changes.

Corporate America is also in excellent condition. Many companies have
cleaned up their balance sheets, are highly productive, and are generating
historically strong returns on their investments.

Despite the robust economy, not every company is selling at record prices.
This remains a market of individual securities. There are plenty of attractive
opportunities, even by the standards of a less enthusiastic market--companies
whose earnings growth and profitability or credit quality has not been fully
appreciated by the market.

On the corporate front, the past six months have been eventful for American
Century. As many of you may know, we gained a powerful business partner in
January when J.P. Morgan became a substantial minority shareholder. The new
business partnership will allow both companies to offer investors a broad menu
of investment options and services.

We appreciate your investment with American Century.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
CHAIRMAN OF THE BOARD AND FOUNDER CHIEF EXECUTIVE OFFICE

[right margin]
TABLE OF CONTENTS

Report Highlights ...................................................... 2

Market Perspective ..................................................... 3

BALANCED

Performance Information ................................................ 5

Management Q & A ....................................................... 6

Top Ten Holdings .................................................... 6

Top Five Industries ................................................. 6

Types of Investments ................................................ 7

Fixed-Income Portfolio .............................................. 8

Schedule of Investments ................................................ 9

Statement of Assets and
Liabilities ............................................................ 13

Statement of Operations ................................................ 14

Statements of Changes
in Net Assets .......................................................... 15

Notes to Financial
Statements ............................................................. 16

Financial Highlights ................................................... 19

OTHER INFORMATION

Share Class and Retirement
Account Information .................................................... 21

Background Information

Investment Philosophy and
Policies ............................................................... 22

Comparative Indices ................................................. 22

Investment Team
Leaders ................................................................ 22

Glossary ............................................................... 23

www.americancentury.com 1

Report Highlights
- -----------------

MARKET PERSPECTIVE

* The U.S. stock market continued its powerful advance during the six months
ended April 30, 1998. The S&P 500, reflecting the strength of larger
companies, gained 22.47%.

* Bonds also have shown positive returns. As a result of increasing bond
prices, yields have decreased. Bond prices move in the opposite direction
from yield rate changes. The 30-year Treasury bond yield fell from 6.15% to
5.95%. The 10-year Treasury note yield went from 5.83% to 5.67%. The Lehman
Intermediate Government/Corporate Index returned 3.11%.

* A healthy economy has fueled both the stock and bond markets' performance.
Low inflation, low interest rates and continued corporate earnings growth
have contributed to economic strength.

* The U.S. government is projecting its first budget surplus in 30 years,
which means the government's borrowing needs will shrink if spending
doesn't increase. This will cause fewer Treasury securities to be issued,
which should help boost prices.

BALANCED

* Investor Class shares posted a return of 10.06% for the six months ended
April 30, 1998. Balanced's benchmark, a blended index, returned 14.74%.
(See total returns on page 5.)

* Bond returns didn't keep pace with stocks. The bond portfolio, which makes
up 40% of the fund, returned 2.52% while the stock portion, which makes up
60% of the fund, gained 15.19% for the six-month period.

* In an effort to increase diversification, the allocation to the technology
sector has been reduced.

* General Electric, the largest stock holding, gained impressively. The
company is reinvesting heavily in its diverse businesses and continues to
show fundamental earnings acceleration.

* We increased our holdings in AAA-rated corporate and asset-backed
securities and reduced our lower quality (A-rated) corporate exposure.
Asset-backed securities were attractive because they had good yields along
with the AAA rating.

[left margin]
BALANCED (TWBIX)(1)

TOTAL RETURNS: AS OF 4/30/98

6 Months ........................................ 10.06%(2)
1 Year .......................................... 25.61%

NET ASSETS: $967.8 million

INCEPTION DATE: 10/20/88

Low inflation, interest rates and continued corporate earnings growth have
contributed to economic strength.

(1) Investor Class.

(2) Not annualized.

Investment terms are defined in the Glossary on page 23.

2 1-800-345-2021

MARKET PERSPECTIVE FROM BOB PUFF
- --------------------------------

[Bob Puff photo]
Bob Puff, Chief Investment Officer of American Century Investments

A POWERFUL UPSLOPE IN STOCKS

Just how quickly has the stock market appreciated over the past few years?
It took approximately 16 years, from 1970-1985, for the Standard & Poor's 500 to
double. Only six years later, it had doubled again and roughly five years later,
in early 1997, it had doubled once more, to 800. At the end of April 1998, the
index had topped 1100. As the chart on page 4 illustrates, the S&P 500's recent
climb has been very steep.

Looked at another way, calendar 1995-1997 marked one of the best three-year
performance runs on record. It was, in fact, the most consistent performance
period ever for large-stock indices like the S&P 500. All three years saw
returns top 20%. During the six months ended April 30, the S&P 500 barely
stopped to catch its breath, gaining 22.47%.

Lower corporate earnings, a tight U.S. labor market, and economic and
currency problems in Asia slowed the index only briefly.

THE U.S. BOND MARKET

Bonds have performed well too. Low inflation and falling interest rates
have translated into positive returns. Between November 1, 1997 and April 30,
1998, the benchmark 30-year Treasury bond yield fell from 6.15% to 5.95%. The
10-year Treasury note yield, a benchmark for intermediate-term bonds, fell from
5.83% to 5.67%. When yields decline, bond prices normally increase. The Lehman
Intermediate Government/Corporate Index, a benchmark for intermediate-term U.S.
government and corporate bonds, returned 3.11%.

Bonds generally have continued to perform well despite short-term market
factors that affected sectors such as corporate and mortgage-backed bonds. The
Asian crisis affected the performance of corporate bonds as investors questioned
the financial health of companies that do business in the Far East. Falling
interest rates triggered a wave of mortgage refinancing, which had a negative
effect on mortgage-backed securities. When mortgages are refinanced, it shortens
the life of mortgage-backed securities and forces investors to reinvest in
lower-yielding securities.

A STRONG ECONOMY

Both stocks and bonds owe much of their success to a robust economy with
minimal inflation. The U.S. economy is currently demonstrating a vigor we
haven't seen in a generation.

* The economy grew at 3.8% in 1997, and 4.8% in the first quarter of 1998.

* Inflation was a mere 1.4% for the 12 months ended April 30, 1998.

* In 1997, prices rose at the slowest pace in 12 years.

* Real interest rates (after adjusting for inflation) are among the lowest
since the 1960s.

* Unemployment was the lowest its been in 28 years.

[right margin]

Bonds generally have continued to perform well despite short-term market factors
that affected sectors such as corporate and mortgage-backed bonds.

MARKET RETURNS

FOR THE SIX MONTHS ENDED APRIL 30, 1998

S&P 500 22.47%

BLENDED INDEX 14.74%

LEHMAN INTERMEDIATE GOVT./CORP. INDEX 3.11%

Source: Lipper Analytical Services, Inc.

[line graph - data below]

MARKET PERFORMANCE (GROWTH OF $1.00)

FOR THE SIX MONTHS ENDED APRIL 30, 1998

S&P 500 Blended Index Lehman Govt/Corp Int
Oct 31, 97 1 1 1
Nov 30, 97 1.05 1.03 1
Dec 31, 97 1.06 1.04 1.01
Jan 31, 98 1.08 1.05 1.02
Feb 28, 98 1.15 1.1 1.02
Mar 31, 98 1.21 1.14 1.03
Apr 30, 98 1.22 1.15 1.03

www.americancentury.com 3

MARKET PERSPECTIVE (CONTINUED)
- ------------------------------

* The U.S. government is projecting the first budget surplus in 30 years.

The budget surplus means the government's borrowing needs will shrink if
spending doesn't increase. The U.S. Treasury has already reduced the amount of
securities it will issue. The lower supply of Treasuries should boost prices.
Investors may also buy more bonds in other sectors of the U.S. market as
Treasuries become scarcer. At the same time, demand should remain strong. Global
investors often turn to U.S. bonds in times of political or financial unrest.
This is often referred to as a "flight to quality."

CORPORATE AMERICA IS HEALTHY

The success of financial assets is also tied to the success of individual
companies. Earnings growth has been annualizing at a double-digit rate for five
of the last six years. We are among the most technologically proficient and
productive industrial nations, and as a result, U.S. companies are enjoying
extraordinarily high internal returns. Return on equity, for example, which is
one measure of a company's value to its shareholders, is annualizing above 20%,
a heady number by historical standards.

Given the positive business climate, it's not surprising financial assets
remain popular investments, and that cash continues to flow into the stock
market at record volumes.

However, by some key measures, stock prices are very expensive. The average
stock in the S&P 500 now costs more than 25 times last year's earnings, a
historical high. The dividend yield on the average S&P 500 stock is less than
1.5%, another record.

INFLATION, INTEREST RATES, AND EARNINGS

What could derail the financial markets? Most probably, an upturn in
inflation or a substantial decline in earnings. The spike in oil prices last
year, combined with the deepening economic crisis in Southeast Asia, raised the
specter of higher inflation and lower earnings. If inflation picks up, interest
rates are likely to rise too, as the Federal Reserve adjusts interest rates to
slow the economy. Higher interest rates increase the cost of borrowing for
everyone, from corporations to prospective home buyers, and thus tend to slow
economic growth and dampen inflation. Our central bank, the Federal Reserve,
sets short-term interest rates, but market forces determine intermediate-and
long-term rates.

In 1997, inflation failed to take off. Oil prices went into a tailspin when
Asian demand fell. By early 1998, as crude oil prices hit a nine-year low,
interest rates declined and stocks soared even though the fallout from Asia
affected corporate earnings.

This remains a very resilient market, and we are optimistic about its
long-term prospects. The supply and demand factors for bonds are also favorable.
But expectations are running high, which is reflected in the stock market's
steep climb over the last three-plus years. Any uptick in inflation or interest
rates could lead to an increase in price volatility and perhaps to lower
returns. In the short-term, the market may need to digest its substantial gains.

[left margin]

Given the positive business climate, it's not surprising financial assets remain
popular investments, and that cash continues to flow into the stock market at
record volumes.

[mountain graph - data below]

S&P 500 PERFORMANCE

FROM DECEMBER 1970 TO DECEMBER 1997

DATE PRICE
12/97 970.43
12/96 740.74
12/95 615.93
12/94 459.27
12/93 466.45
12/92 435.71
12/91 417.09
12/90 330.22
12/89 353.40
12/88 277.72
12/87 247.08
12/86 242.17
12/85 211.28
12/84 167.24
12/83 164.93
12/82 140.64
12/81 122.55
12/80 135.76
12/79 107.94
12/78 96.11
12/77 95.10
12/76 107.46
12/75 90.19
12/74 68.56
12/73 97.55
12/72 118.05
12/71 102.09
12/70 92.15

Source: Bloomberg

4 1-800-345-2021

PERFORMANCE--BALANCED
- ---------------------

<TABLE>
<CAPTION>
TOTAL RETURNS AS OF APRIL 30, 1998

Investor Class (Inception 10/20/88) Advisor Class (Inception 1/6/97)
BALANCED BLENDED INDEX BALANCED BLENDED INDEX

<S> <C> <C> <C> <C>
6 MONTHS(1) ....................... 10.06% 14.74% 9.87% 14.74%

1 YEAR ............................ 25.61% 28.21% 25.33% 28.21%

AVERAGE ANNUAL RETURNS

3 YEARS ........................... 17.58% 22.27% -- --

5 YEARS ........................... 13.44% 16.38% -- --

LIFE OF FUND ...................... 13.10% 14.65%(2) 18.26% 23.60%(3)

(1) Returns for periods less than one year are not annualized.

(2) Return from 10/31/88, the date nearest the class's inception for which data
are available.

(3) Return from 1/31/97, the date nearest the class's inception for which data
are available.

See pages 21, 22 and 23 for information about share classes, the Blended Index
and returns.
</TABLE>

[mountain graph - data below]

GROWTH OF $10,000 OVER LIFE OF FUND

Balanced Blended Index
Date Acct Value Acct Value

Oct 31, 88 10000 10000
Jan 31, 89 10345 10471
Apr 30, 89 10620 10867
Jul 31, 89 11963 11992
Oct 31, 89 12095 11994
Jan 31, 90 11804 11839
Apr 30, 90 12059 11945
Jul 31, 90 13192 12802
Oct 31, 90 11840 11819
Jan 31, 91 13300 13010
Apr 30, 91 14585 13926
Jul 31, 91 15349 14375
Oct 31, 91 16924 14826
Jan 31, 92 18276 15425
Apr 30, 92 16991 15687
Jul 31, 92 17341 16293
Oct 31, 92 17033 16307
Jan 31, 93 17743 17040
Apr 30, 93 17345 17333
Jul 31, 93 18242 17709
Oct 31, 93 19357 18414
Jan 31, 94 19550 18891
Apr 30, 94 18749 17955
Jul 31, 94 18498 18324
Oct 31, 94 19178 18699
Jan 31, 95 18607 18853
Apr 30, 95 20026 20291
Jul 31, 95 21879 21803
Oct 31, 95 22319 22581
Jan 31, 96 23276 24232
Apr 30, 96 23534 24530
Jul 31, 96 23179 24424
Oct 31, 96 25451 26332
Jan 31, 97 27085 28338
Apr 30, 97 25944 28826
Jul 31, 97 29955 32665
Oct 31, 97 29611 32162
Jan 31, 98 30165 33931
Apr 30, 98 32584 36853

The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment in the fund's
Investor Class since inception, while the chart below shows the Investor Class'
year-by-year performance. The Blended Index is provided for comparison in each
chart. Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. Balanced's returns include operating expenses (such as
transaction costs and management fees) that reduce returns, while the returns of
the Blended Index do not.

[bar chart - data below]

ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING APRIL 30)

BALANCED BLENDED INDEX
4/89* 6.20% 8.72%
4/90 13.56% 9.85%
4/91 20.94% 16.02%
4/92 16.50% 12.62%
4/93 2.08% 10.48%
4/94 8.09% 3.59%
4/95 6.81% 13.07%
4/96 17.51% 21.24%
4/97 10.24% 17.64%
4/98 25.61% 28.21%

*Partial-year performance 10/31/88-4/30/89

www.americancentury.com 5

BALANCED--Q&A
- -------------

An interview with portfolio managers Jim Stowers III, Bruce Wimberly and
John Sykora of our equity staff, and Bud Hoops and Jeff Houston of our
fixed-income group. They all help to oversee the Balanced Fund.

HOW DID THE FUND PERFORM DURING THE FIRST SIX MONTHS OF ITS FISCAL YEAR?

American Century Balanced posted a return of 10.06%* for the six-month
period from October 31, 1997 through April 30, 1998. This represents the blended
performance of the portfolio's stock and bond components. Stocks were
approximately 60% of total assets, with the remainder invested in fixed-income
securities. The mix of stocks and bonds is designed to provide investors with
the potential for long-term capital growth and current income with lower
volatility than a pure stock fund.

HOW DID THE STOCK PORTFOLIO PERFORM?

The stock component returned 15.19% for the six months, compared with
22.47% for the S&P 500 Index. The stock portfolio returned 37.6% for the year
ended April 30, 1998, versus a 41% gain for the S&P 500.

HOW DID THE FUND PERFORM AGAINST ITS BENCHMARK PERFORMANCE INDEX?

American Century Balanced Fund's benchmark is a blended index that combines
the S&P 500 and the Lehman Intermediate Government/Corporate Index in proportion
to the 60% stock/40% bond asset mix of the fund.

For the six months, the fund's 10.06% return trailed the blended index's
14.74% return. For the 12 months ended April 30, the Fund's total return was
25.61%, compared with 28.21% for the blended index.

The fund trailed its benchmark in the most recent period primarily because
the stock portfolio didn't match returns of the S&P 500. It should be noted,
however, that the S&P 500 is dominated by large-cap companies while Balanced's
stock portfolio contained a significant number of mid-cap companies. Large-cap
stocks continued to outperform mid-cap stocks during the period.

WHICH STOCKS CONTRIBUTED MOST TO PERFORMANCE?

The ten largest holdings also were among the best performing stocks during
the six months. Companies like Tyco International, Gillette, Clear Channel
Communications, Bristol-Myers Squibb, Procter & Gamble, Pfizer and
Tele-Communications Inc. (TCI) contributed prominently to Balanced's overall
performance.

General Electric (GE), the largest holding, was up substantially. Looking
ahead, the earnings picture at GE appears favorable. Earnings per share
increased by 14% in the first quarter of 1998 alone. The company is pursuing an
aggressive share-buyback program and is reinvesting heavily in its diverse
businesses.

For example, GE has expanded its medical diagnostic equipment business by
purchasing Diasonics, a leading ultrasound imaging firm. In addition, GE is
boosting its investments in Asia at currently depressed asset prices.

Gillette also has provided impressive results. The company announced a 19%
dividend increase following the first quarter and has approved a 2-for-1 stock
split. The company is scheduled to introduce its new Mach3 razor later this
year. A substantial portion of Gillette's profits stem from its Duracell
operation where sales and operating profits have been growing steadily.

[left margin]

TOP TEN HOLDINGS
% OF EQUITY PORTFOLIO

AS OF AS OF
4/30/98 10/31/97

GENERAL
ELECTRIC CO. (U.S.) ............................... 5.9% 4.1%

TYCO INTERNATIONAL LTD ................................. 4.8% 6.6%

AMERICAN EXPRESS CO .................................... 3.7% --

GILLETTE COMPANY ....................................... 3.7% 1.7%

CLEAR CHANNEL
COMMUNICATIONS,
INC ............................................... 3.5% 3.4%

BRISTOL-MYERS
SQUIBB CO ......................................... 3.2% 4.0%

PROCTER & GAMBLE CO .................................... 3.2% --

SUNAMERICA, INC ........................................ 3.0% 2.2%

TELE-COMMUNICATIONS,
INC. CI A ......................................... 2.9% --

PFIZER, INC ............................................ 2.7% 3.0%

TOP FIVE INDUSTRIES

% OF EQUITY PORTFOLIO

AS OF AS OF
4/30/98 10/31/97

DIVERSIFIED COMPANIES 10.7% 12.1%

FINANCIAL SERVICES 10.0% 0.7%

PHARMACEUTICALS 9.8% 19.6%

COMMUNICATIONS
SERVICES 9.3% 0.4%

INSURANCE 9.1% 5.1%

* All fund returns referenced in this interview are for Investor Class shares.

6 1-800-345-2021

BALANCED--Q&A (CONTINUED)
- -------------------------

WHAT CHANGES HAVE YOU MADE IN THE STOCK PORTFOLIO?

We've taken steps in the last several months to both increase
diversification and reduce the overweighting in the technology sector relative
to the S&P 500. Technology stocks now have been reduced to just over 7% of
assets while holdings have been added or expanded in a wide range of industries,
including telecommunications, broadcasting, retail, media and cable companies.
As always, American Century's proprietary investment model, which identifies
companies with accelerating earnings and revenue growth was used to make
additions to the portfolio. Companies such as Comcast, TCI, and Viacom have
demonstrated increasing attention to improving their balance sheets and growing
earnings. Management in these groups has been placing added emphasis on prudent
spending practices and creating shareholder value.

More effective spending practices, rising prices for their products and low
interest rates have resulted in accelerating growth for most of these companies.

WHICH STOCKS IN THE PORTFOLIO DIDN'T PERFORM AS WELL AS EXPECTED?

Generally, holdings in the electric utility, banking and electronic
components industries were among the groups that underperformed.

Cendant Corp., a marketing and franchising business, dropped significantly
in value after the company discovered accounting irregularities in some of its
business units. Cendant owns such brand names as Ramada, Howard Johnson,
Coldwell Banker, Century 21 and Avis.

We were in contact with Cendant senior management shortly after the
announcement regarding its accounting difficulties. Although we were
disappointed by the findings, we felt the underlying businesses were capable of
continued growth and that concern over near-term problems had already been
reflected in the price of the stock.

HOW DID THE BOND PORTFOLIO PERFORM?

Though interest rates fell and bond prices rose, bond returns didn't keep
pace with stocks. Balanced's bond portfolio returned 2.52%, and its benchmark,
the Lehman Intermediate Government/Corporate Index, returned 3.11%. The
performance of the bond portfolio lagged its benchmark primarily because the
portfolio has a higher weighting of corporate bonds than the index. Corporate
bonds generally underperformed government and Treasury bonds because of the
corporate bond sell-off in the fourth quarter of 1997 in response to the Asian
crisis.

HOW WAS THE BOND PORTFOLIO POSITIONED?

In general, we take a conservative, no-frills approach designed to provide
a performance cushion for the stock portfolio. We typically invest in
intermediate-term corporate bonds, and we usually don't try to anticipate
interest rate movements, focusing instead on investing in undervalued,
higher-yielding bond sectors.

The corporate bond sell-off, while painful in the short term, provided a
window of opportunity to find good bonds with attractive yields relative to
Treasury securities. Corporate bonds have traditionally offered higher yields
than Treasuries to compensate for their greater credit risk. The spread, or
difference, between corporate and Treasury yields fluctuates as market
conditions change.

For most of the 1990s, the yield spreads between high-grade corporate

[right margin]

[pie charts]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF APRIL 30, 1998

Other 2%
U.S. Treasury Securities 7%
Mortgage- & Asset-Backed Securities 7%
Corporate Bonds 24%
Common Stocks 60%

AS OF OCTOBER 31, 1997

Other 5%
U.S. Treasury Securities 7%
Mortgage- & Asset-Backed Securities 6%
Corporate Bonds 24%
Common Stocks 58%

Technology stocks now have been reduced to just over 7% of assets.

www.americancentury.com 7

BALANCED--Q&A (CONTINUED)
- -------------------------

bonds and Treasuries of similar maturity have narrowed because corporates
generally benefited from improving economic conditions and strong investor
demand. This declining yield spread made finding attractive values among
corporate securities more difficult--until the fourth-quarter sell-off widened
the spread.

In late 1997 and early 1998, we bought bonds of what we considered to be
well-run businesses in sectors we favored. For example, we found value in
various AAA-rated, asset-backed securities. (Asset-backed securities are debt
securities that represent ownership in a pool of assets, such as credit card
debt, auto loans or home equity loans.) We liked asset-backed securities because
we found good values and yields along with AAA ratings.

WHAT'S YOUR OUTLOOK FOR U.S. BONDS AND THE BOND PORTFOLIO?

As long as inflation is low and economic growth remains moderate, the bond
market should continue to be an appealing place. Although unemployment is low
and wage pressures are mounting, inflation remains well behaved. The computer
revolution, corporate efficiency and global competition have helped to keep
prices in check. U.S. economic growth is strong and could pose an inflation
threat if it expands unfettered, but it has constraints -- the Asian economic
crisis is projected to reduce U.S. growth somewhat.

Furthermore, supply and demand fundamentals still appear favorable. The
federal government is projecting its first budget surplus in 30 years, which
should reduce bond supply and exert downward pressure on interest rates. Bond
demand also could build as investors grow more cautious--the stock market could
become more volatile as it attempts to scale new heights, possibly prompting
investors to buy bonds as a diversification vehicle.

We believe interest rates are likely to remain within a relatively narrow
range for the remainder of 1998. In this low interest rate environment, it's
important to identify and acquire securities with attractive yields and solid
financial backing. We'll work closely with our credit research staff to uncover
attractively valued securities with the potential to enhance returns.

FINALLY, WHAT ARE YOUR PLANS FOR BALANCED OVER THE NEXT SIX MONTHS?

The stock market's remarkable resiliency in recent months has occurred in
the context of a strong economy, low inflation and interest rates, and healthy
job growth. Investor confidence also is strong.

At American Century, earnings and revenue acceleration is the starting
point in selecting stocks. We will adhere to that strategy while seeking a lower
level of risk than in a pure equity fund with the goal of providing the best
return consistent with Balanced's objectives.

As mentioned earlier, the equity portfolio has slimmed down its technology
holdings while moving to increase diversification. We currently favor companies
in the telecommunications, media and cable businesses.

The bond sector of the portfolio will continue to enhance income and help
reduce the volatility of the overall portfolio.

[left margin]

BALANCED'S FIXED-INCOME PORTFOLIO

AS OF AS OF
4/30/98 10/31/97

PORTFOLIO SENSITIVITY TO INTEREST RATES

WEIGHTED AVERAGE MATURITY 6.76 YEARS 6.37 YEARS

DURATION 4.36 YEARS 4.31 YEARS

PORTFOLIO CREDIT QUALITY % OF FIXED INCOME PORTFOLIO
(S&P RATINGS)

AAA 43% 39%

AA 10% 10%

A 29% 34%

BBB 18% 17%
----- -----
100% 100%
===== =====

Supply and demand fundamentals (for bonds) still appear favorable. The federal
government is projecting its first budget surplus in 30 years . . .

Investment terms are defined in the Glossary on page 23.

8 1-800-345-2021

BALANCED SCHEDULE OF INVESTMENTS
- --------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS

AIRLINES--1.0%

80,000 Alaska Air Group, Inc.(1) $ 4,490

37,000 AMR Corp.(1) 5,638
--------------------

10,128
--------------------

BROADCASTING & MEDIA--4.9%

216,700 Clear Channel
Communications, Inc.(1) 20,424

105,000 Jacor Communications, Inc.(1) 5,969

472,000 Outdoor Systems, Inc.(1) 14,986

90,000 Time Warner Inc. 7,065
--------------------

48,444
--------------------

BUSINESS SERVICES & SUPPLIES--1.4%

545,000 Cendant Corp.(1) 13,625
-------------------

COMMUNICATION SERVICES--5.5%

106,000 Ameritech Corp. 4,512

115,000 AT&T Corp. 6,907

150,000 Bell Atlantic Corp. 14,034

525,000 Tele-Communications, Inc. Cl A(1) 16,948

275,000 WorldCom, Inc.(1) 11,765
--------------------

54,166
--------------------

COMPUTER PERIPHERALS--0.9%

120,000 Cisco Systems Inc.(1) 8,794
---------------------

COMPUTER SOFTWARE & SERVICES--3.8%

178,000 America Online Inc.(1) 14,240

90,000 BMC Software, Inc.(1) 8,418

190,000 Compuware Corp.(1) 9,280

85,000 HBO & Co. 5,081
---------------------

37,019
---------------------

COMPUTER SYSTEMS--1.0%

80,000 Hewlett-Packard Co. 6,025

33,000 International Business
Machines Corp. 3,824
--------------------

9,849
--------------------

CONSUMER PRODUCTS--4.1%

185,000 Gillette Company 21,356

225,000 Procter & Gamble Co. (The) 18,492
--------------------

39,848
--------------------

DIVERSIFIED COMPANIES--6.4%

403,000 General Electric Co. (U.S.) 34,305

515,000 Tyco International Ltd. 28,068
--------------------

62,373
-------------------

Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------

FINANCIAL SERVICES--6.0%

210,000 American Express Co. $ 21,420

240,000 CIT Group Holdings, Inc. (The) Cl A 8,505

215,000 Fannie Mae 12,873

65,000 Morgan Stanley Dean Witter,
Discover & Co. 5,127

173,000 Travelers Group, Inc. 10,585
----------------------

58,510
----------------------

FOOD & BEVERAGE--0.9%

115,000 Coca-Cola Company (The) 8,726
----------------------

HEALTHCARE--0.9%

88,000 Cardinal Health, Inc. 8,470
----------------------

INSURANCE--5.4%

100,000 Allstate Corp. 9,625

105,000 American International Group, Inc. 13,814

240,000 Conseco Inc. 11,910

350,000 SunAmerica, Inc. 17,478
-----------------------

52,827
-----------------------

LEISURE--1.0%

169,000 Viacom, Inc. Cl B(1) 9,802
-----------------------

MEDICAL EQUIPMENT & SUPPLIES--1.9%

61,000 Guidant Corp. 4,079

270,000 Medtronic, Inc. 14,209
-------------------------

18,288
-------------------------

PHARMACEUTICALS--5.8%

175,000 Bristol-Myers Squibb Co. 18,528

100,000 Lilly (Eli) & Co. 6,956

50,000 Merck & Co., Inc. 6,025

140,000 Pfizer, Inc. 15,934

50,000 Warner-Lambert Co. 9,459
------------------------

56,902
------------------------

PRINTING & PUBLISHING--1.7%

125,000 McGraw-Hill Companies, Inc. (The) 9,680

111,000 Tribune Co. 7,326
--------------------------

17,006
-------------------------

RETAIL (GENERAL MERCHANDISE)--5.1%

200,000 Costco Companies, Inc.(1) 11,162

130,000 Dayton Hudson Corp. 11,351

201,000 Sears, Roebuck & Co. 11,922

300,000 Wal-Mart Stores, Inc. 15,169
-------------------------

49,604
-------------------------

RETAIL (SPECIALTY)--0.7%

250,000 Pier 1 Imports, Inc. 6,594
---------------------------

RUBBER & PLASTICS--0.5%

75,000 Goodyear Tire & Rubber Co. (The) 5,250
---------------------------

See Notes to Financial Statements

www.americancentury.com 9

BALANCED SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares/Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
UTILITIES--0.6%

113,000 AES Corp. (The)(1) $ 6,236
---------------------------

TOTAL COMMON STOCKS--59.5% 582,461
---------------------------

(Cost $432,953)

U.S. TREASURY SECURITIES

$4,750 U.S. Treasury Notes,
5.375%, 1/31/00 4,734

1,000 U.S. Treasury Notes,
6.375%, 5/15/00 1,015

1,000 U.S. Treasury Notes,
5.75%, 11/15/00 1,003

2,500 U.S. Treasury Notes,
5.375%, 2/15/01 2,485

4,075 U.S. Treasury Notes,
7.75%, 2/15/01 4,297

2,000 U.S. Treasury Notes,
6.625%, 6/30/01 2,056

7,150 U.S. Treasury Notes,
6.25%, 8/31/02 7,307

9,000 U.S. Treasury Notes,
5.75%, 8/15/03 9,036

4,500 U.S. Treasury Notes,
5.875%, 2/15/04 4,542

5,800 U.S. Treasury Notes,
7.25%, 5/15/04 6,254

5,000 U.S. Treasury Notes,
7.25%, 8/15/04 5,401

4,200 U.S. Treasury Notes,
5.875%, 11/15/05 4,232

2,400 U.S. Treasury Notes,
7.00%, 7/15/06 2,591

9,400 U.S. Treasury Bonds,
6.375%, 8/16/27 9,923

1,675 U.S. Treasury Bonds,
6.125%, 11/15/27 1,715
----------------------------

TOTAL U.S. TREASURY SECURITIES--6.8% 66,591
----------------------------

(Cost $65,482)

U.S. GOVERNMENT AGENCY SECURITIES--0.4%

4,000 FNMA MTN,
7.49%, 5/22/07 4,100
-----------------------------

(Cost $4,019)

Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES(2)

$4,922 FHLMC Pool #C00578,
6.50%, 1/1/28 $ 4,888

2,000 FHLMC Series 77-HPAC REMIC,
8.50%, 9/15/20 2,138

538 FHLMC Series 106-EPAC REMIC,
6.95%, 12/15/20 539

215 FNMA 90 Series 98-HPAC REMIC,
7.50%, 10/25/19 215

6,428 FNMA Pool #050985,
6.00%, 3/1/00 6,366

7,331 FNMA Pool #411821,
7.00%, 1/1/28 7,424

4,036 FNMA Pool #413812,
6.50%, 1/1/28 4,003

6,681 GNMA Pool #002202,
7.00%, 4/20/26 6,759

3,957 GNMA Pool #458862,
7.50%, 2/15/28 4,069

2,982 GNMA Pool #467626,
7.00%, 2/15/28 3,022
--------------------

TOTAL MORTGAGE-BACKED SECURITIES--4.0% 39,423
--------------------

(Cost $39,010)

ASSET-BACKED SECURITIES(2)

5,000 First Merchants Auto Receivables
Corp., Series 1996-B, Class A2,
6.80%, 5/15/01 5,067

3,750 FNMA Whole Loan, Series
1995-W1, Class A6, 8.10%,
4/25/25 3,884

3,000 Money Store (The) Home Equity
Trust, Series 1997-C, Class
AF6 SEQ, 6.67%, 3/1/03 3,022

5,000 NationsBank Auto Owner Trust,
Series 1996-A, Class B1,
6.75%, 6/15/01 5,067

3,000 Union Acceptance Corp., Series
1996-D, Class A3, 6.30%, 1/8/04 3,024

4,350 United Companies Financial Corp.,
Home Equity Loan, Series 1996-D1,
Class A4, 6.78%, 2/15/16 4,404

2,100 United Companies Financial Corp.,
Home Equity Loan, Series 1996-D1,
Class A5, 6.92%, 10/15/18 2,138

3,200 United Companies Financial Corp.,
Home Equity Loan, Series 1997-C,
Class A7, 6.85%, 1/15/29 3,236
--------------------

TOTAL ASSET-BACKED SECURITIES--3.1% 29,842
--------------------

(Cost $29,403)

See Notes to Financial Statements

10 1-800-345-2021

BALANCED SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
CORPORATE BONDS

AUTOMOBILES & AUTO PARTS--1.2%

$5,000 General Motors Acceptance
Corp. MTN, 5.45%, 2/22/00 $ 4,952

7,000 General Motors Acceptance
Corp. MTN, 6.375%, 10/12/99 7,045
--------------------

11,997
--------------------

BANKING--1.1%

5,000 First Union Corp.,
8.77%, 11/15/99 5,205

5,000 NationsBank Corp.,
6.875%, 2/15/05 5,142
--------------------

10,347
--------------------

COMMUNICATION SERVICES--0.7%

3,900 Ameritech Capital Funding,
6.15%, 1/15/08 3,874

3,000 GTE South, 7.25%, 8/1/02 3,103
--------------------

6,977
--------------------

ELECTRICAL
& ELECTRONIC COMPONENTS--0.6%

6,000 Anixter International Inc.,
8.00%, 9/15/03 6,335
--------------------

FINANCIAL SERVICES--6.7%

2,800 Advanta Corp., MTN, Series B,
7.00%, 5/1/01 2,586

3,500 Associates Corp., N.A.,
6.375%, 10/15/02 3,523

4,000 Associates First Capital Corp.,
6.75%, 7/15/01 4,081

4,000 Comdisco, Inc.,
6.375%, 11/30/01 4,026

6,000 Dean Witter, Discover & Co.,
6.875%, 3/1/03 6,156

5,000 First USA, Inc.,
7.00%, 8/20/01 5,120

3,000 Ford Motor Credit Co.,
6.125%, 4/28/03 2,992

6,500 Ford Motor Credit Co.,
6.75%, 5/15/05 6,656

3,000 Greyhound Financial Corp.,
6.75%, 3/25/99 3,019

6,000 Lehman Brothers Holdings Inc.,
6.625%, 11/15/00 6,077

3,000 Money Store Inc. (The),
8.05%, 4/15/02 3,183

6,000 Norwest Financial, Inc.,
6.25%, 11/1/02 6,058

7,000 Salomon Inc.,
6.65%, 7/15/01 7,097

5,000 Travelers/Aetna Property
Casualty Corp., 6.75%, 4/15/01 5,096
--------------------

65,670
--------------------

Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
INSURANCE--1.9%

$5,000 Aetna Services, Inc.,
6.75%, 8/15/01 $ 5,109

3,750 Nationwide Mutual Insurance Co.,
6.50%, 2/15/04
(Acquired 2/9/96, Cost $3,782)(3) 3,755

5,000 Underwriters Reinsurance Co.,
7.875%, 6/30/06
(Acquired 8/6/96, Cost $5,156)(3) 5,409

4,000 Zurich Capital Trust I, 8.38%, 6/1/37
(Acquired 5/28/97-6/11/97,
Cost $4,039)(3) 4,375
--------------------

18,648
--------------------

LEISURE--1.2%

4,200 Hilton Hotels Corp., 7.00%, 7/15/04 4,227

4,000 Time Warner Inc., 7.75%, 6/15/05 4,255

2,750 Time Warner Inc., 6.85%, 1/15/26 2,849
--------------------

11,331
--------------------

MEDICAL EQUIPMENT & SUPPLIES--0.4%

4,250 United States Surgical Corp.,
7.25%, 3/15/08 4,249
--------------------

PRINTING & PUBLISHING--0.3%

3,000 News America Inc.,
6.625%, 1/9/08 (Acquired
2/12/98, Cost $2,987)(3) 2,967
--------------------

RAILROAD--0.2%

2,150 Wisconsin Central
Transportation Corp.,
6.625%, 4/15/08 2,137
--------------------

REAL ESTATE--1.8%

1,100 Chelsea GCA Realty Partners,
7.25%, 10/21/07 1,122

3,800 Price REIT, Inc. (The),
7.125%, 6/15/04 3,906

6,800 Price REIT, Inc. (The),
7.25%, 11/1/00 6,925

5,000 Spieker Properties, Inc.,
6.80%, 12/15/01 5,089
--------------------

17,042
--------------------

RETAIL (GENERAL MERCHANDISE)--0.4%

4,000 Sears, Roebuck & Co., MTN,
7.12%, 6/4/04 4,151
--------------------

TOBACCO--0.9%

3,500 Philip Morris Companies Inc.,
6.80%, 12/1/03 3,560

5,500 Philip Morris Companies Inc.,
6.95%, 6/1/06 5,640
--------------------

9,200
--------------------

See Notes to Financial Statements

www.americancentury.com 11

BALANCED SCHEDULE OF INVESTMENTS (CONTINUED)
--------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
UTILITIES--2.5%

$5,000 Avon Energy Partners Holdings,
7.05%, 12/11/07 (Acquired
1/20/98, Cost $5,198)(3) $ 5,151

9,000 CalEnergy Co. Inc.,
7.63%, 10/15/07 9,017

2,000 Kansas Power & Light Co.,
8.875%, 3/1/00 2,093

5,600 Public Service Electric & Gas Co.,
6.00%, 5/1/00 5,605

2,000 Texas Utilities Electric Co.,
8.125%, 2/1/02 2,124
--------------------

23,990
--------------------

TOTAL CORPORATE BONDS--19.9% 195,041
--------------------

(Cost $191,325)

FOREIGN CORPORATE BONDS (U.S. DOLLAR DENOMINATED)

AUTOMOBILES & AUTO PARTS--0.5%

5,000 Premier Auto Trust, Series 1996-4,
Class CTFS, 6.65%, 8/6/02 5,052
--------------------

BANKING--0.6%

5,000 ABN Amro Bank NV (Chicago),
7.125%, 6/18/07 5,247
--------------------

COMMUNICATIONS SERVICES--0.7%

6,600 Cable & Wireless Communications,
6.625%, 3/6/05 6,651
--------------------

Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------

ELECTRICAL & ELECTRONIC COMPONENTS--0.8%

$2,000 Hutchison Whampoa Financial,
Series A, 6.95%, 8/1/07 (Acquired
9/12/97, Cost $1,960)(3) $ 1,896

2,000 Hutchison Whampoa Financial,
Series B, 7.45%, 8/1/17 (Acquired
7/24/97, Cost $1,998)(3) 1,838

4,200 Yorkshire Power Finance,
6.15%, 2/25/03 (Acquired
2/19/98, Cost $4,200)(3) 4,169
--------------------

7,903
--------------------

METALS & MINING--1.0%

9,150 Barrick Gold Corp., 7.50%, 5/1/07 9,689
--------------------

PAPER & FOREST PRODUCTS--0.4%

4,100 Abitibi-Consolidated Inc.,
7.40%, 4/1/18 4,112
--------------------

TOTAL FOREIGN CORPORATE BONDS--4.0% 38,654
--------------------

(Cost $38,246)

SOVEREIGN GOVERNMENTS & AGENCIES--0.6%

6,000 Hydro-Quebec, MTN,
7.02%, 3/23/05 6,217
--------------------

(Cost $5,569)

TEMPORARY CASH INVESTMENTS--1.7%

Repurchase Agreement, BA Security Services,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.48%, dated 4/30/98,
due 5/1/98 (Delivery value $16,803) 16,800
--------------------
(Cost $16,800)

TOTAL INVESTMENT SECURITIES--100.0% $979,129
====================
(Cost $822,807)

NOTES TO SCHEDULE OF INVESTMENTS

FHLMC = Federal Home Loan Mortgage Corporation

GNMA = Government National Mortgage Association

FNMA = Federal National Mortgage Association MTN = Medium-Term Note

(1) Non-income producing.

(2) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.

(3) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may be sold
only to qualified institutional investors. The aggregate value of
restricted securities at April 30, 1998, was $29,560, which represented
3.0% of net assets

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS -- This schedule tells you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

* the percentage of total investments in each industry

* a list of each investment

* the number of shares of each stock or the principal (dollar) amount of each
bond

* the market value of each investment

* the percent and dollar breakdown of each investment category

* the dollar value of other short-term investments that are considered the
same as cash

See Notes to Financial Statements

12 1-800-345-2021

STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------

APRIL 30, 1998 (UNAUDITED)

ASSETS (IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

Investment securities,
at value (identified cost of $822,807)
(Note 3) ....................................................... $ 979,129

Cash ........................................................... 1,600

Receivable for investments sold ................................ 12,498

Dividends and interest receivable .............................. 6,789
-----------
1,000,016
-----------
LIABILITIES

Disbursements in excess of demand deposit cash ................. 1,045

Payable for investments purchased .............................. 23,283

Payable for capital shares redeemed ............................ 639

Accrued management fees (Note 2) ............................... 804

Distribution fees payable (Note 2) ............................. 1

Service fees payable (Note 2) .................................. 1

Accrued expenses and other liabilities ......................... 2
-----------
25,775
-----------

Net Assets ..................................................... $ 974,241
===========

NET ASSETS CONSIST OF:

Capital (par value and paid in surplus) ....................... $ 729,234

Undistributed net investment income ............................ 2,294

Accumulated undistributed net realized gain
on investment and foreign currency transactions .............. 86,391

Net unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies (Note 3) ..... 156,322
-----------
$ 974,241
===========
Investor Class, $0.01 Par Value ($ and shares in full)

Net assets ..................................................... $967,751,37

Shares outstanding ............................................. 49,580,808

Net asset value per share ...................................... $ 19.52

Advisor Class, $0.01 Par Value ($ and shares in full)

Net assets ..................................................... $ 6,489,365

Shares outstanding ............................................. 332,539

Net asset value per share ...................................... $ 19.51

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF ASSETS AND LIABILITIES --This page details what
the fund owns (assets), what it owes (liabilities), and its net assets as of the
last day of the period. If you subtract what the fund owes from what it owns,
you get the fund's NET assets. The net assets by class divided by the number of
shares outstanding by class gives you the price of an individual share, or the
NET ASSET VALUE PER SHARE --for each class of shares.

NET ASSETS are also broken out by capital (money invested by shareholders);
income (or loss) not yet paid to shareholders; gains earned but not yet paid to
shareholders, or losses (known as realized gains or losses); and gains or losses
on securities still owned by the fund (known as unrealized gains or losses).
This breakout tells you the value of net assets that are performance-related,
such as income and investment gains or losses, and the value of net assets that
are not related to performance, such as shareholder investments and redemptions.

See Notes to Financial Statements

www.americancentury.com 13

STATEMENT OF OPERATIONS
-----------------------

FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)

INVESTMENT INCOME (IN THOUSANDS)

Income:

Interest ......................................................... $ 12,969

Dividends ........................................................ 2,240
--------
15,209
--------
Expenses (Note 2):

Management fees .................................................. 4,703

Distribution fees -- Advisor Class ............................... 8

Service fees -- Advisor Class .................................... 8

Directors' fees and expenses ..................................... 5
--------
4,724
--------
Net investment income ............................................ 10,485
--------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY (NOTE 3

Net realized gain (loss) on:

Investments ...................................................... 87,429

Foreign currency transactions .................................... (94)
--------
87,335
--------
Change in net unrealized appreciation on:

Investments ...................................................... (6,595)

Translation of assets and liabilities in foreign currencies ...... 116
--------
(6,479)
--------
Net realized and unrealized gain on investments .................. 80,856
--------
Net Increase in Net Assets Resulting from Operations ............. $ 91,341
========

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF OPERATIONS --This statement breaks out how the
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.

Fund OPERATIONS include:

* income earned from investments (dividends and interest)

* management fees and expenses

* gains or losses from selling investments (known as realized gains or losses)

* gains or losses on current fund holdings (known as unrealized gains or losses

See Notes to Financial Statements

14 1-800-345-2021

STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------

SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 1997

Increase in Net Assets 1998 1997
- --------------------------------------------------------------------------------
OPERATIONS (IN THOUSANDS)

Net investment income ................................ $ 10,485 $ 19,451

Net realized gain on investments and
foreign currency transactions ...................... 87,335 75,936

Change in net unrealized appreciation on
investments and translation of assets and
liabilities in foreign currencies .................. (6,479) 41,356
--------- ---------

Net increase in net assets resulting
from operations .................................... 91,341 136,743
--------- ---------

DISTRIBUTIONS TO SHAREHOLDERS

From net investment income:

Investor Class ..................................... (10,689) (20,449)

Advisor Class ...................................... (64) (55)

From net realized gains from investment transactions:

Investor Class ..................................... (75,512) (64,787)

Advisor Class ...................................... (492) --
--------- ---------

Decrease in net assets from distributions ............ (86,757) (85,291)
--------- ---------

CAPITAL SHARE TRANSACTIONS (NOTE 4)

Net increase in net assets from
capital
share transactions ................................. 37,796 1,241
--------- ---------

Net increase in net assets ........................... 42,380 52,693

NET ASSETS

Beginning of period .................................. 931,861 879,168
--------- ---------

End of period ........................................ $ 974,241 $ 931,861
========= =========

Undistributed net investment income .................. $ 2,294 $ 2,562
========= =========

* performance

* distributions to shareholders

* shareholders either investing, reinvesting distributions, or withdrawing mone

The changes are broken out into:

* operations--a summary of the Statement of Operations from the previous page

* distributions--income and gains distributed to shareholders

* share transactions--shareholders' purchases, reinvestment of distributions,
and redemptions

The statement also includes the net assets at the beginning and end of the
period.

See Notes to Financial Statements

www.americancentury.com 15

NOTES TO FINANCIAL STATEMENTS
- -----------------------------

APRIL 30, 1998 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century Balanced Fund (the Fund) is one
of the thirteen series of funds issued by the Corporation. The Fund's investment
objective is to seek capital growth and current income. It is management's
intention to maintain approximately 60% of the Fund's assets in common stocks
and the remainder in bonds and other fixed income securities. The Fund is
authorized to issue three classes of shares: the Investor Class, the Advisor
Class, and the Institutional Class. The three classes of shares differ
principally in their respective shareholder servicing and distribution expenses
and arrangements. All shares of the Fund represent an equal pro rata interest in
the assets of the class to which such shares belong, and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
for class specific expenses and exclusive rights to vote on matters affecting
only individual classes. Sale of the Advisor Class commenced on January 6, 1997.
Sale of the Institutional Class had not commenced as of April 30, 1998. The
following significant accounting policies, related to all classes of the Fund,
are in accordance with accounting policies generally accepted in the investment
company industry.

SECURITY TRANSACTIONS --Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.

FOREIGN CURRENCY TRANSACTIONS -- The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.

Net realized foreign currency exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability amounts
initially stated in foreign currencies and the U.S. dollar value of the amounts
actually received or paid. Net unrealized foreign currency exchange gains or
losses arise from changes in the value of assets and liabilities, other than
portfolio securities, resulting from changes in the exchange rates.

Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of portfolio securities are a component of
realized gain (loss) on investments and unrealized appreciation (depreciation)
on investments, respectively.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Fund may enter into
forward foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Fund's exposure to foreign currency exchange rate fluctuations. When
required, the Fund will segregate assets in an amount sufficient to cover its
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of risk in excess
of the amount reflected in the Statement of Assets and Liabilities. The Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms. There were no open
forward foreign currency exchange contracts at April 30, 1998.

REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements with
institutions the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that collateral, represented by securities, received in
a repurchase transaction be transferred to the custodian in a manner sufficient
to enable the Fund to obtain those securities in the event of a default under
the repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than

16 1-800-345-2021

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -----------------------------------------

APRIL 30, 1998 (UNAUDITED)

amounts owed to the Fund under each repurchase agreement.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income are declared
and paid quarterly. Distributions from net realized gains are declared and paid
annually.

ADDITIONAL INFORMATION -- Effective January 15, 1998, Funds Distributor,
Inc. (FDI) became the Corporation's distributor. Certain officers of FDI are
also officers of the Corporation.

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The Corporation has entered into a Management Agreement with ACIM that
provides the Fund with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreement provides that all
expenses of the Fund, except brokerage commissions, taxes, interest, expenses of
those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on the Fund's average daily closing net assets during the previous month. The
annual management fee is 1.00% for the Investor Class and 0.75% for the Advisor
Class.

The Board of Directors has adopted the Advisor Class Master Distribution
and Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Plan provides that the Fund will pay ACIM an
annual distribution fee equal to 0.25% and annual service fee equal to 0.25%.
The fees are computed daily and paid monthly based on the Advisor Class's
average daily closing net assets during the previous month. The distribution fee
provides compensation for distribution expenses incurred by financial
intermediaries in connection with distributing shares of the Advisor Class
including, but not limited to, payments to brokers, dealers, and financial
institutions that have entered into sales agreements with respect to shares of
the Fund. The service fee provides compensation for shareholder and
administrative services rendered by ACIM, its affiliates or independent third
party providers. Fees incurred by the Fund under the Master Distribution and
Shareholder Services Plan during the six months ended April 30, 1998, were
$15,564.

www.americancentury.com 17

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------

APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------

3. INVESTMENT TRANSACTIONS

Purchases of investment securities, excluding short-term investments, for
the six months ended April 30, 1998, totaled $573,449,548, of which $87,218,370
represented U.S. Treasury and Agency obligations. Sales of investment
securities, excluding short-term investments, totaled $587,111,413, of which
$75,321,252 represented U.S. Treasury and Agency obligations.

As of April 30, 1998, accumulated net unrealized appreciation was
$155,374,308, based on the aggregate cost of investments of $823,755,119 for
federal income tax purposes, which consisted of unrealized appreciation of
$163,032,248 and unrealized depreciation of $7,657,940.

- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS

There are 100,000,000 shares of the Investor Class and 50,000,000 shares of
the Advisor Class authorized for issuance. Transactions in shares of the Fund
were as follows:
SHARES AMOUNT

INVESTOR CLASS (IN THOUSANDS)

Six months ended April 30, 1998

Sold ............................................. 4,563 $ 86,498

Issued in reinvestment of distributions .......... 4,711 84,322

Redeemed ......................................... (7,055) (133,744)
--------- ---------

Net increase ..................................... 2,219 $ 37,076
========= =========

Year ended October 31, 1997

Sold ............................................. 13,169 $ 242,933

Issued in reinvestment of distributions .......... 4,752 83,837

Redeemed ......................................... (17,963) (330,837)
--------- ---------

Net decrease ..................................... (42) $ (4,067)
========= =========
ADVISOR CLASS
(IN THOUSANDS)

Six months ended April 30, 1998

Sold ............................................. 48 $ 912

Issued in reinvestment of distributions .......... 31 556

Redeemed ......................................... (39) (748)
--------- ---------

Net increase ..................................... 40 $ 720
========= =========
January 6, 1997(1) through October 31, 1997

Sold ............................................. 296 $ 5,372

Issued in reinvestment of distributions .......... 3 55

Redeemed ......................................... (6) (119)
--------- ---------

Net increase ..................................... 293 $ 5,308
========= =========
(1) Commencement of sale of the Advisor Class.

18 1-800-345-2021

BALANCED FINANCIAL HIGHLIGHTS
- -----------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE
YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

Investor Class

1998(1) 1997 1996 1995 1994 1993

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period ........ $ 19.55 $ 18.55 $ 17.70 $ 15.94 $ 16.52 $ 14.89
--------- --------- --------- --------- --------- ---------

Income From
Investment Operations

Net Investment Income .... 0.21(2) 0.40(2) 0.44(2) 0.48(2) 0.42 0.38

Net Realized and
Unrealized Gain (Loss)
on Investment
Transactions ............. 1.58 2.41 1.88 2.03 (0.58) 1.62
--------- --------- --------- --------- --------- ---------

Total From Investment
Operations ............... 1.79 2.81 2.32 2.51 (0.16) 2.00
--------- --------- --------- --------- --------- ---------
Distributions

From Net
Investment Income ........ (0.22) (0.43) (0.46) (0.48) (0.42) (0.37)

From Net Realized Gains
on Investment
Transactions ............. (1.60) (1.38) (1.01) (0.27) -- --
--------- --------- --------- --------- --------- ---------

Total Distributions ...... (1.82) (1.81) (1.47) (0.75) (0.42) (0.37)
--------- --------- --------- --------- --------- ---------
Net Asset Value,
End of Period .............. $ 19.52 $ 19.55 $ 18.55 $ 17.70 $ 15.94 $ 16.52
========= ========= ========= ========= ========= =========

Total Return(3) .......... 10.06% 16.34% 14.04% 16.36% (0.93)% 13.64%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating
Expenses to Average
Net Assets ................. 1.00%(4) 1.00% 0.99% 0.98% 1.00% 1.00%

Ratio of Net
Investment Income
to Average
Net Assets ................. 2.22%(4) 2.15% 2.50% 2.90% 2.70% 2.40%

Portfolio Turnover Rate .... 62% 110% 130% 85% 94% 95%

Average Commission Paid
per Share of Equity
Security Traded ............ $ 0.0431 $ 0.0371 $ 0.0400 $ 0.0390 --(5) --(5)

Net Assets,
End of Period
(in millions) .............. $ 968 $ 926 $ 879 $ 816 $ 704 $ 706
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.

(5) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended October 31, 1995.

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS --This page itemizes what contributed to
the class's change in share price during the period, and compares this to
changes over the last five fiscal years (or less, if the class is not five years
old).

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* distributions of income and capital gains paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements

www.americancentury.com 19

BALANCED FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING FOR THE PERIODS INDICATED

Advisor Class

1998(1) 1997(2)

PER-SHARE DATA

<S> <C> <C>
Net Asset Value, Beginning of Period ............... $ 19.55 $ 17.46
----------- -----------

Income From Investment Operations

Net Investment Income(3) ......................... 0.18 0.29

Net Realized and Unrealized Gain on
Investment Transactions .......................... 1.58 2.04
----------- -----------

Total From Investment Operations ................. 1.76 2.33
.................................................... ----------- -----------

Distributions

From Net Investment Income ....................... (0.20) (0.24)

From Net Realized Gains on Investment Transactions (1.60) --
----------- -----------

Total Distributions .............................. (1.80) (0.24)
----------- -----------

Net Asset Value, End of Period ..................... $ 19.51 $ 19.55
=========== ===========

Total Return(4) .................................. 9.87% 13.42%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets .............................. 1.25%(5) 1.25%(5)

Ratio of Net Investment Income
to Average Net Assets .............................. 1.97%(5) 1.90%(5)

Portfolio Turnover Rate ............................ 62% 110%

Average Commission Paid per
Share of Equity Security Traded .................... $ 0.0431 $ 0.0371

Net Assets, End of Period (in thousands) ........... $ 6,489 $ 5,724

(1) Six months ended April 30, 1998 (unaudited).

(2) January 6, 1997 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.
</TABLE>

See Notes to Financial Statements

20 1-800-345-2021

SHARE CLASS AND RETIREMENT ACCOUNT INFORMATION
- ----------------------------------------------

SHARE CLASSES

Until September 3, 1996, Balanced issued one class of fund shares,
reflecting the fact that most investors bought their shares directly from
American Century. All investors paid the same annual unified management fee and
did not pay any commissions or other fees to purchase shares from American
Century.

Now, an increased amount of share purchases are made by investors through
financial intermediaries (who ordinarily are compensated for the additional
services they provide), or by very large institutional investors who expect
lower costs because of their size. In September 1996, American Century began to
offer three classes of shares for Balanced. One class is for investors who buy
directly from American Century, one is for investors who buy through financial
intermediaries and the third is for large institutional customers.

The original class of Balanced shares is called the INVESTOR CLASS. All
shares issued and outstanding before September 3, 1996, have been designated as
Investor Class shares. Investor Class shares may also be purchased after
September 3, 1996. Investor Class shareholders do not pay any commissions or
other fees for purchase of fund shares directly from American Century. Investors
who buy Investor Class shares through a broker-dealer may be required to pay the
broker-dealer a transaction fee. THE PRICE AND PERFORMANCE OF THE INVESTOR CLASS
SHARES ARE LISTED IN NEWSPAPERS. NO OTHER CLASS IS CURRENTLY LISTED.

In addition, there is an ADVISOR CLASS, which is sold through banks,
broker-dealers, insurance companies and financial advisors. Advisor Class shares
are subject to a 0.50% Rule 12b-1 service and distribution fee. Half of that fee
is available to pay for recordkeeping and administrative services, and half is
available to pay for distribution services provided by the financial
intermediary through which the Advisor Class shares are purchased. The total
expense ratio of the Advisor Class is 0.25% higher than the total expense ratio
of the Investor Class.

An INSTITUTIONAL CLASS also is available to endowments, foundations,
defined-benefit pension plans or financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million in an American
Century fund or at least $10 million in multiple funds. In recognition of the
larger investments and account balances and comparatively lower transaction
costs, the total expense ratio of the Institutional Class is 0.20% less than the
total expense ratio of the Investor Class shares.

The Institutional Class had not commenced as of April 30, 1998.

All classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.

RETIREMENT ACCOUNT INFORMATION

When you plan to withdraw, you may make your election by completing our
Exchange/Redemption form or an IRS Form W-4P. Call American Century to obtain
either form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.

www.americancentury.com 21

BACKGROUND INFORMATION
----------------------

INVESTMENT PHILOSOPHY AND POLICIES

The American Century Group consists of mostly moderate-risk and specialty
funds including conservative equity, balanced, asset allocation, gold, natural
resources, utilities and real estate funds. In general, aside from the specialty
funds, which have unique risks, this fund group is for investors seeking core
portfolio holdings in the middle ground between aggressive stock funds and money
market and bond funds.

BALANCED seeks capital growth and current income. The fund keeps about 60%
of its assets in the stocks of firms with accelerating growth rates. Under
normal market conditions, the remaining assets are held in quality
intermediate-term bonds.

We attempt to keep the fund fully invested at all times, regardless of
short-term market activity. Experience has shown that market gains can occur in
unpredictable spurts and that missing even some of those opportunities may
significantly limit the potential for gain.

For the equity portfolio, the management team seeks to own companies whose
earnings and revenues are growing at accelerating rates.

For the fixed-income portfolio, "quality first" is the rule. The management
team seeks only investment-grade bonds--those rated in the top four quality
categories by nationally recognized rating organizations.

Each portfolio is managed by a team, rather than by one "star" manager. We
believe this allows us to make better, more consistent management decisions.

COMPARATIVE INDICES

The indices listed below are used in the report for fund performance
comparisons. They are not investment products available for purchase.

The BLENDED INDEX is considered the benchmark for Balanced. It combines two
widely known indices in proportion to the asset mix of the fund. Accordingly,
60% of the index is represented by the S&P 500, which reflects the 60% of the
fund's assets invested in equity securities. The remaining 40% of the index is
represented by the Lehman Intermediate Government/Corporate Index, which
reflects the 40% of the fund's assets invested in intermediate-term bonds and
other fixed-income securities.

The LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE INDEX is considered to
represent the performance of a portfolio of intermediate-term U.S. government
and corporate bonds. The index includes the Lehman Government and Corporate Bond
indices, which are composed of U.S. government, Treasury and agency securities
with one- to 10-year maturities, as well as corporate and Yankee bonds with one-
to 10-year maturities.

The S&P 500 is a capitalization-weighted index of the stocks of 500
publicly traded U.S. companies that are considered to be leading firms in
dominant industries. Created by Standard & Poor's Corporation, the index is
viewed as a broad measure of U.S. stock market performance.

[left margin]

INVESTMENT TEAM LEADERS

EQUITY PORTFOLIO

PORTFOLIO MANAGER: JIM STOWERS III

PORTFOLIO MANAGER: BRUCE WIMBERLY

PORTFOLIO MANAGER: JOHN SYKORA, CFA

FIXED-INCOME PORTFOLIO

PORTFOLIO MANAGER: BUD HOOPS

PORTFOLIO MANAGER: JEFF HOUSTON, CFA

22 1-800-345-2021

GLOSSARY
- --------

FIXED-INCOME TERMS

*CREDIT QUALITY reflects the financial strength of a debt security issuer and
the likelihood of timely payment of interest and principal.

*DURATION is a measure of the sensitivity of a fixed income portfolio to changes
in interest rates. As the duration of a portfolio increases, the impact of a
change in interest rates on the value of the portfolio also increases.

*STANDARD & POOR'S (S&P) is an independent rating company, one of the two best
known in the United States (the other is Moody's). The credit ratings issued by
S&P and Moody's reflect the perceived financial strength (credit quality) of
debt issuers. Debt securities rated "investment grade" (deemed to be of high
enough credit quality to be appropriate investments for banks and other
institutions) by S&P are those rated BBB or higher (the highest rating is AAA).

*WEIGHTED AVERAGE MATURITY (WAM), another measurement of the sensitivity of a
fixed-income portfolio to interest rate changes, indicates the average time
until the securities in the portfolio mature, weighted by dollar amount. The
longer the WAM, the more interest rate exposure and interest rate sensitivity
the portfolio has.

RETURNS

*TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

*AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as year-by-year results.
For fiscal year-by-year total returns, please refer to the "Financial
Highlights" on pages 19 and 20.

EQUITY TERMS

*BLUE-CHIP STOCKS--generally considered to be the stocks of the most established
companies in American industry. They are generally large, fairly stable
companies that have demonstrated consistent earnings and usually have long-term
growth potential. Examples include General Electric and Coca-Cola.

*CYCLICAL STOCKS--generally considered to be stocks whose price and earnings
fluctuations tend to follow the ups and downs of the business cycle. Examples
include the stocks of automobile manufacturers, steel producers and textile
operators.

*GROWTH STOCKS--generally considered to be the stocks of companies that have
experienced above-average earnings growth and appear likely to continue such
growth. These stocks often sell at high P/E ratios. Examples can include the
stocks of high-tech, healthcare and consumer staple companies.

*VALUE STOCKS--generally considered to be stocks that are purchased because they
are relatively inexpensive. These stocks are typically characterized by low P/E
ratios.

*LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS--generally considered to be the
stocks of companies with a market capitalization (the total value of a company's
outstanding stock) of more than $5 billion. These tend to be the stocks that
make up the Dow Jones Industrial Average and the S&P 500.

*MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS--generally considered to be the stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P MidCap 400.

*SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS--generally considered to be the
stocks of companies with a market capitalization (the total value of a company's
outstanding stock) of less than $1 billion. These tend to be the stocks that
make up the Russell 2000 Index.

*PRICE/EARNINGS (P/E) RATIO--a stock value measurement calculated by dividing a
company's stock price by its earnings per share, with the result expressed as a
multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)

www.americancentury.com 23

NOTES
- -----

24 1-800-345-2021

[inside back cover]

[american century logo(reg.sm)]
American
Century(reg.tm)

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

Investor Services:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-444-3485

Fax: 816-340-7962

Internet: www.americancentury.com

American Century Mutual Funds Inc.

Investment Manager
American Century Investment Management, Inc.
Kansas City, Missouri

This report and the statements it contains are submitted for the general
information of our shareholders. The report is not authorized for distribution
to prospective investors unless preceded or accompanied by an effective
prospectus.

[recycled logo]
Recycled

[back cover]

[40 years logo]
Four Decades of Serving Investors
40 Years
American Century(reg.tm)
1958 * 1998

American Century Investments Bulk Rate
P.O.Box 419200 U.S.Postage Paid
Kansas City, MO 64141-6200 American Century
www.americancentury.com Companies

9806 (C)1998 American Century Services Corporation
SH-BKT-12486 Funds Distributor, Inc.
<PAGE>
[front cover] April 30, 1998

SEMIANNUAL REPORT
- -----------------
AMERICAN CENTURY

[graphic of U.S. currency and two individuals walking up stairs]

BENHAM GROUP
- ------------
Cash Reserve

[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]

A Note from the Founder
- --------------------------------------------------------------------------------

I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.

Sincerely,
/s/James E. Stowers

About our New Report Design
- --------------------------------------------------------------------------------

WHY WE CHANGED.

WHAT'S NEW.

The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming.

New features include:

* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.

THE BOTTOM LINE.

The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.

We believe we've come up with a more interesting, informative, and user-friendly
publication.

We hope you enjoy it.

[left margin]

BENHAM GROUP CASH RESERVE
(TWCXX)

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

Our Message to You
- -----------------------------------------------------------------------------

[photo of James E. Stowers, Jr and James E. Stowers III]
JAMES E. STOWERS, JR. WITH JAMES E. STOWERS III, SEATED

During the six months ended April 30, 1998, the Federal Reserve held
short-term interest rates steady against a backdrop of low inflation, an
improving federal budget and a healthy economy. As a result, money market yields
were relatively stable. Shareholders in Cash Reserve continued to enjoy
better-than-average money market returns.

By now, you should have received a proxy statement and ballot that includes
a proposal to merge Cash Reserve into Benham Prime Money Market Fund. The two
funds have virtually identical investment objectives and policies, and they are
managed by the same investment team.

This consolidation will eliminate duplication among our fund offerings and
enable the management team to achieve greater efficiencies. The proxy statement
contains more details about this proposal; we strongly encourage you to read it
carefully and take part in the proxy vote if you have not already done so.

On the corporate front, American Century gained a powerful business partner
in January when J.P. Morgan, one of the oldest, largest and most respected
financial service institutions in the U.S., became a substantial minority
shareholder. The new business partnership will allow both companies to offer
investors a highly diverse menu of investment options and services.

Another significant event was the retirement of Jim Benham, founder of the
Benham Group, in December. With the integration of Benham and Twentieth Century
successfully completed, Jim felt it was time to step back from the business.
Much of the Benham culture has become part of American Century, including the
educational investor seminar program Jim created. Two of his sons, Jim A. Benham
and Tim Benham, remain with the company to carry on the Benham tradition.

We hope you like the new design of this report. Our annual and semiannual
reports contain a wealth of information about fund strategies and holdings. The
new design is intended to make this information more accessible and should
encourage readers to take a closer look.

Finally, we are proud to note that 1998 is our 40th anniversary. Few fund
companies have been around that long, and not many offer nearly 70 stock, bond,
money market and blended (stock and bond) funds that provide investors such a
wide range of choice and flexibility.

We appreciate your investment with American Century.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
CHAIRMAN OF THE BOARD AND FOUNDER CHIEF EXECUTIVE OFFICER

[right margin]

Table of Contents

Report Highlights ...................................................... 2
Services Update ........................................................ 3
Credit Review .......................................................... 4
CASH RESERVE
Performance Information ................................................ 5
Management Q & A ....................................................... 6
Schedule of Investments ................................................ 8
FINANCIAL STATEMENTS
Statement of Assets and
Liabilities ......................................................... 11
Statement of Operations ................................................ 12
Statements of Changes
in Net Assets ....................................................... 13
Notes to Financial
Statements .......................................................... 14
Financial Highlights ................................................... 17
OTHER INFORMATION
Share Class and Retirement
Account Information ................................................. 19
Background Information
Investment Philosophy
and Policies ..................................................... 20
Comparative Indices ................................................. 20
Lipper Rankings ..................................................... 20
Investment Team
Leaders .......................................................... 20
Glossary ............................................................... 21

www.americancentury.com 1

Report Highlights
- --------------------------------------------------------------------------------

CREDIT REVIEW

* Corporate credit conditions remained healthy during the past six months.

* Thanks to our credit research team, Cash Reserve avoided Japanese banks,
whose credit quality continued to deteriorate as a result of the Asian
financial meltdown.

* Our credit team has doubled in size over the past year; a larger and more
diverse group will give us a better opportunity to add value to our funds.

MANAGEMENT Q&A

* Cash Reserve's 2.61% return (Investor Class shares) for the six months ended
April 30, 1998, beat the 2.43% return of the average money market fund. (See
Total Returns on page 5.)

* We left the portfolio in a neutral position for most of the six-month
period, reflecting the prevailing uncertainty about the future direction of
interest rates.

* The financial crisis in Asia had little impact on Cash Reserve. We reduced
our modest Japanese industrial holdings and replaced them with higher-
quality U.S. securities.

* To enhance the fund's yield, we maintained our investment in variable-rate
notes, whose yields are typically higher than those of fixed-rate
securities.

* We believe interest rates should remain stable in the near term, especially
while U.S. economic strength and Asian economic weakness continue to offset
each other.

* As long as interest rates are stable, we plan to maintain the portfolio's
neutral positioning. In addition, we'll look to diversify our holdings with
commercial paper issued by U.S. industrial companies.

[left margin]

CASH RESERVE(1) (TWCXX)

TOTAL RETURNS: AS OF 4/30/98
6 Months 2.61%(2)
1 Year 5.26%

NET ASSETS: $1.1 billion

7-DAY CURRENT YIELD: 5.16%

INCEPTION DATE: 3/1/85

Our credit team has doubled in size over the past year; a larger and more
diverse group will give us a better opportunity to add value to our funds.

(1) Investor Class.
(2) Not annualized.

Investment terms are defined in the Glossary on page 21.

2 1-800-345-2021

Services Update
- -----------------------------------------------------------------------------

We get many questions from money market investors about our services. Here
are answers to several frequently asked questions.

IS THERE A FEE FOR WRITING CHECKS AGAINST MY MONEY MARKET FUND?

No. You can write as many checks as you want at no charge, as long as each
one is for $100 or more.

BESIDES WRITING A CHECK, HOW ELSE CAN I ACCESS MY MONEY?

There are a couple of easy ways. First, we can send a check directly to you
at your address of record. All you need to do is give us a call or write us a
letter requesting the check, and we'll send it right out to you.

We can also make automatic deposits from your money market fund to your
bank account. Just make sure we have all of your bank information on file, and
then give us a call to request a direct transfer to your bank account.

IS THERE A LIMIT TO THE NUMBER OF EXCHANGES I CAN MAKE OUT OF MY MONEY MARKET
FUND?

No. Exchanges involve moving money from one American Century fund to
another. Although there is a limit of six exchanges per calendar year out of our
bond and stock funds, there is no limit for money market funds.

Exchanges can be made by:

* calling an Investor Services representative (1-800-345-2021)

* dialing into our Automated Information Line (1-800-345-8765)

* writing us a letter

* connecting to our Web site
(www.americancentury.com)

You can also make exchanges through our Automatic Exchange plan or Open
Order service.

HOW DO OPEN ORDERS WORK?

Open Orders enable you to buy or sell shares in a mutual fund automatically
at a price you designate. Here's how it works:

* TO BUY--select a fund in which you wish to invest and specify a price at
which you'd like to buy shares. Because the object is to buy low, the price
you specify must be at or below the fund's last closing price. If the fund's
price closes at or below your specified price, we will automatically move
the amount you designated from your money market fund into an account in the
fund you selected.

* TO SELL--select a fund in which you own shares and specify a price at which
you'd like to sell them. Because the object is to sell high, the price you
specify must be at or above the fund's last closing price (we can't place
stop-loss orders). If the fund's price closes at or above your specified
price, we'll sell the number of shares you designated and move the proceeds
into your money market fund.

Some other notes about Open Orders:

* Open Orders last for a maximum of 90 days and may be canceled or extended
whenever you choose.

* Once you've placed, canceled, or modified your Open Order, we'll send a
letter confirming your decision to your address of record.

IF YOU HAVE ANY QUESTIONS ABOUT OUR SERVICES, CALL US TOLL FREE AT
1-800-345-2021 OR E-MAIL US AT OUR WEB SITE (WWW.AMERICANCENTURY.COM).

[right margin]
ACCESSING YOUR MONEY. . .
We can send a check directly to you at your address of record. All you need to
do is give us a call or write us a letter requesting the check. We can also make
automatic deposits from your money market fund to your bank account.

www.americancentury.com 3

Credit Review
- -----------------------------------------------------------------------------

CREDIT CONDITIONS STILL STRONG OVERALL

During the six months ended April 30, 1998, corporate credit conditions in
the U.S. remained healthy. The U.S. economy continued its strong growth rate,
which boosted earnings growth for many businesses and helped keep corporate
credit quality at its highest level this decade.

ASIAN FLU

We've written before about the domestic problems facing Japanese banks,
from overcapacity to weak underwriting to bad real estate loans. The financial
meltdown in Asia has broadened the scope of their problems and further weakened
credit quality. By repeating domestic lending mistakes across Asia, Japanese
banks have become more vulnerable than ever.

American Century's credit research team anticipated the Japanese banking
system's problems some time ago. Our money market funds have not invested in any
securities issued or backed by Japanese banks over the past year, and there are
no Japanese banks currently on our "approved list"--the list of money market
security issuers that meet our stringent internal credit requirements.

It is clear that the Japanese government needs to take some corrective
action to reform its banking system, but instead it is simply pouring money into
the system just to keep it afloat. Until serious reform occurs (if it ever
does), our funds will continue to stay away from the Japanese banking sector.

In contrast, there are a number of non-financial Japanese companies on our
approved list. These companies have several similar characteristics that we
like:

* WORLDWIDE FOCUS--they do business on a global scale, and by exporting to
other regions, they've been able to offset economic weakness at home.

* MARKET DOMINATION--they are among the top companies in their respective
industries worldwide.

* DEEP POCKETS--all have the financial resources to survive challenges like
the Asian economic downturn.

CREDIT TEAM EXPANSION

Our corporate credit research team continued to expand over the past six
months, bringing the total number of analysts to ten.

A larger and more diverse credit team gives us a better opportunity to add
value to our funds. For example, we've expanded our international expertise,
which gives our fund managers more investment alternatives without compromising
our high credit standards.

In addition, we are able to look into and get comfortable in complex areas
that others are not as familiar with, such as asset-backed securities. As a
result, we believe our management teams can get better value out of their
investments in these areas.

[left margin]

American Century's credit research team anticipated the Japanese banking
system's problems some time ago.

CORPORATE CREDIT RESEARCH TEAM

DIRECTOR: GREG AFIESH

CORPORATE CREDIT ANALYSTS:
DANIEL BAKER
KALPESH DADBHAWALA
MICHAEL DIFLEY
TANYA FLEISCHER
ED GRANT
KRISTINE IWAFUCHI
LYNDA LOWRY
SUDHA MANI
GINA SANCHEZ
TOM VAIANA

Our corporate credit research team continued to expand over the past six months.

4 1-800-345-2021

Performance--Cash Reserve
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS AS OF APRIL 30, 1998

INVESTOR CLASS (INCEPTION 3/1/85) ADVISOR CLASS (INCEPTION 4/1/97)
90-DAY 90-DAY
TREASURY MONEY MARKET INSTRUMENT FUNDS(2) CASH TREASURY
CASH RESERVE BILL INDEX AVERAGE RETURN FUND'S RANKING RESERVE BILL INDEX
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) 2.61% 2.57% 2.43% -- 2.48% 2.57%
1 YEAR 5.26% 5.16% 4.98% 71 OUT OF 303 4.99% 5.16%
- -----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 5.14% 5.23% 4.98% 96 OUT OF 254 -- --
5 YEARS 4.47% 4.80% 4.47% 98 OUT OF 188 --
10 YEARS 5.30% 5.49% 5.35% 70 OUT OF 115 -- --
LIFE OF FUND 5.59% 5.70%(3) 5.64%(3) 53 OUT OF 87(3) 4.97% 5.16%(4)

(1) Returns for periods less than one year are not annualized.

(2) According to Lipper Analytical Services.

(3) Since 3/31/85, the date nearest the class' inception for which data are
available.

(4) Since 4/30/97, the date nearest the class' inception for which data are
available.
</TABLE>

See pages 19-21 for more information about share classes, returns, the
comparative index and Lipper fund rankings.

PORTFOLIO AT A GLANCE

4/30/98 10/31/97

NUMBER OF SECURITIES 84 87

WEIGHTED AVERAGE
MATURITY 65 DAYS 50 DAYS

EXPENSE RATIO (FOR
INVESTOR CLASS) 0.55%* 0.68%

* Annualized.

YIELDS AS OF APRIL 30, 1998
INVESTOR CLASS

7-DAY CURRENT YIELD 5.16%

7-DAY EFFECTIVE YIELD 5.29%

Past performance does not guarantee future results.

Money market funds are neither insured nor guaranteed by the U.S. government.

Yields will fluctuate, and there can be no assurance that the fund will be able
to maintain a stable $1.00 share price.

www.americancentury.com 5

Cash Reserve--Q&A
- -----------------------------------------------------------------------------

An interview with Denise Tabacco and John Walsh, portfolio managers on the
Cash Reserve fund investment team.

HOW DID THE FUND PERFORM DURING THE PAST SIX MONTHS?

Cash Reserve performed well, providing a higher level of income than the
average money market fund. For the six-month period ended April 30, 1998, the
fund's Investor Class shares had a total return of 2.61%, compared with the
2.43% average return of the 313 "Money Market Instrument Funds" tracked by
Lipper Analytical Services. (See the Total Returns table on the previous page
for other fund performance comparisons).

HOW WAS THE FUND POSITIONED DURING THE PERIOD?

We were mostly neutral, reflecting the relatively stable interest rate
environment. We consider a weighted average maturity of 50-60 days to be a
neutral position, which we take when we're unsure about the future direction of
interest rates. After beginning the period at 50 days, the fund's average
maturity dipped closer to 40 days in December because of a temporary scarcity of
attractively priced, longer-maturity paper.

When supply bounced back in early 1998, we extended the average maturity
back out to around 55-65 days, where it remained until the end of the period.

IN THE LAST REPORT, YOU TALKED A LITTLE ABOUT THE IMPACT OF THE FINANCIAL
PROBLEMS IN SOUTHEAST ASIA. HOW HAS THIS SITUATION PLAYED OUT FOR THE FUND?

The Asian crisis has had a significant negative impact on Japanese banks,
but our credit group spotted the Japanese banking sector's deterioration quite
some time ago (see page 4). As a result, Cash Reserve's Japanese holdings were
minimal and limited to the securities of a handful of strong Japanese industrial
companies, like Toyota.

As the problems in Southeast Asia intensified, our conservative investment
approach led us to further reduce our Japanese industrial holdings. Our credit
analysis team continues to closely monitor events in Southeast Asia and Japan to
anticipate the impact of continued Asian weakness on other sectors and
economies.

To offset the reduction in Japanese industrial holdings, we added
high-quality asset-backed commercial paper (short-term securities backed by a
pool of loans or other debt). We were also able to enhance the fund's yield by
maintaining our investment in variable-rate notes (VRNs).

[left margin]

Cash Reserve performed well, providing a higher level of income than the average
money market fund.

[pie charts]

PORTFOLIO COMPOSITION BY SECURITY TYPE

AS OF APRIL 30, 1998

Commercial Paper 64%
Variable-Rate Notes 22%
Asset-Backed 8%
Certificates of
Deposit 5%
Other 1%

AS OF OCTOBER 31, 1997

Commercial Paper 68%
Variable-Rate Notes 22%
Asset-Backed 6%
Certificates of
Deposit 4%

6 1-800-345-2021

Cash Reserve--Q&A (continued)
- -----------------------------------------------------------------------------

HOW DO VRNS HELP ENHANCE THE FUND'S YIELD?

VRNs are debt securities whose interest rates change when a designated base
rate changes. Because of their fluctuating rates, VRNs have yields that are
typically higher than those of fixed-rate securities. When choosing VRNs, a
primary factor we consider is how the market anticipates interest rate changes
by the Federal Reserve and how that affects different types of VRNs.

For example, some VRNs are tied to the London Interbank Offered Rate
(LIBOR), a money market rate that most banks and corporations track when
determining the rate they'll pay to investors on short-term debt. Others are
tied to the federal funds rate, the lending rate targeted by the Fed for large
overnight loans between commercial banks.

The yields on LIBOR-related securities tend to anticipate Fed actions,
rising before interest rate hikes and falling in advance of rate cuts. When we
believe the Fed is poised to raise interest rates, we typically choose
securities tied to LIBOR in an effort to capture the higher yields as early as
possible. Conversely, when we think that the Fed is poised to reduce rates, we
lean toward VRNs tied to the federal funds rate because their yields typically
stay higher longer than the yields of LIBOR-related securities.

WHAT'S YOUR OUTLOOK FOR INTEREST RATES GOING FORWARD?

We believe rates should remain stable over the near term, though market
sentiment is currently divided. On one hand, the strength of the U.S.
economy--as evidenced by very low unemployment, strong retail sales and low
inventories--has the potential to re-ignite inflationary pressures and force the
Fed to raise rates. On the other hand, we don't know if the economic slowdown in
Southeast Asia has had its full impact on the U.S. economy. If problems in Asia
translate into slower U.S. economic growth, the Fed could cut rates.

GIVEN THAT OUTLOOK, HOW WILL YOU MANAGE THE FUND OVER THE NEXT SIX MONTHS?

We plan to maintain the fund's average maturity around our neutral position
of 50-60 days until there is definitive and sustained evidence of the direction
of U.S. economic growth, inflation and interest rates. Additionally, we'll look
for attractively priced commercial paper backed by U.S. industrial companies to
diversify away from financial services and bank holdings.

[right margin]

We believe interest rates should remain stable over the near term.

PORTFOLIO COMPOSITION BY CREDIT RATING

% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

A1 34% 21%

A1+ 66% 77%

A2 -- 2%

A1 and A1+ are Standard & Poor's highest credit ratings for short-term
commercial debt.

www.americancentury.com 7

Cash Reserve's Schedule of Investments
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ IN THOUSANDS) Value
- -----------------------------------------------------------------------------

COMMERCIAL PAPER(1)

BANKING--6.6%

$10,000 Bankers Trust New York Corp.,
5.48%, 10/13/98 $ 9,749

10,000 Banco De Galicia Y Buenos Aires
S.A., 5.47%, 9/11/98 (LOC:
Bayerische Vereinsbank A.G.) 9,798

4,210 Chase Manhattan Bank USA,
N.A., 5.40%, 5/26/98 4,195

15,000 Garanti Funding Corporation,
5.51%-5.52%,
7/29/98-7/30/98 (LOC:
Bayerische Vereinsbank A.G.) 14,795

25,000 National Australia Funding
(Delaware), Inc., 5.41%-5.43%,
5/6/98-5/26/98 24,951

10,000 Unibanco Uniao De Bancos
Brasileiros S.A., 5.48%,
4/15/99 (LOC: Bayerische
Vereinsbank A.G.) 9,469
----------------

72,957
----------------

BUILDING & HOME IMPROVEMENTS--0.9%

10,000 Cemex, S.A. de C.V., 5.46%,
5/14/98 (LOC: Credit Suisse
First Boston) 9,980
----------------

CREDIT CARD & TRADE RECEIVABLES--7.5%

15,050 Charta Corporation, 5.53%-5.55%,
5/11/98 (AMBAC) (Acquired
3/12/98-4/29/98,
Cost $14,985)(2) 15,027

15,000 Corporate Receivables Corp.,
5.51%-5.52%,
5/20/98-5/27/98 (LOC:
Citibank, N.A.) (Acquired
3/12/98-3/17/98,
Cost $14,859)(2) 14,952

18,200 Dakota Certificates (Citibank),
Series 1995-7, 5.52%,
5/18/98 (Acquired 3/3/98,
Cost $17,988)(2) 18,153

35,000 WCP Funding Inc., 5.45%-5.53%,
5/14/98-5/28/98 (AMBAC)
(Acquired 2/5/98-3/17/98,
Cost $34,575)(2) 34,877
----------------

83,009
----------------

DIVERSIFIED COMPANIES--3.4%

38,000 Mitsubishi International Corp.,
5.50%, 5/4/98-7/20/98 37,771
----------------

ELECTRICAL PRODUCTS--2.1%

23,500 Siemans Corp., 5.50%, 6/19/98 23,324
----------------

Principal Amount ($ IN THOUSANDS) Value
- -----------------------------------------------------------------------------

ENERGY--1.3%

$15,000 Statoil Den Norske Stats
Oljeselskap A.S., 5.50%,
5/18/98 $ 14,961
----------------

FINANCIAL SERVICES--18.7%

14,500 American Express Credit, 5.67%,
5/12/98 14,475

27,500 Countrywide Home Loan, Inc.,
5.54%-5.57%,
5/1/98-5/19/98 27,471

33,000 Falcon Asset Securities
Corporation, 5.49%-5.54%,
6/4/98-7/14/98 (Acquired
4/8/98-4/28/98,
Cost $32,703)(2) 32,770

21,000 Ford Motor Credit Co., 5.47%,
7/7/98 20,786

9,000 General Electric Capital Corp.,
5.37%, 6/5/98 8,953

28,000 General Electric Capital Services,
Inc., 5.40%-5.51%,
5/29/98-7/1/98 27,780

49,400 General Motors Acceptance Corp.,
5.49%-5.54%,
5/5/98-7/31/98 49,049

26,500 Hitachi Credit America Corp.,
5.54%, 6/19/98-6/26/98 26,287
----------------

207,571
----------------

INSURANCE--5.2%

35,000 Prudential Funding Corp.,
5.47%-5.51%,
7/2/98-7/9/98 34,648

23,000 SAFECO Corp., 5.55%,
5/21/98-6/23/98
(Acquired 3/16/98-4/8/98,
Cost $22,761)(2) 22,914
----------------

57,562
----------------

METALS & MINING--2.0%

22,000 Rio Tinto America Inc., 5.46%,
5/15/98-9/2/98 21,786
----------------

RETAIL--1.5%

17,000 Southland Corp., 5.42%-5.50%,
6/11/98-8/18/98 (LOC:
Ito-Yokado Co. Ltd.) 16,873
----------------

RUBBER & PLASTICS--1.8%

20,000 Formosa Plastics Corp. USA,
5.54%, 6/25/98 (LOC: Bank of
America N.T. & S.A.) 19,831
----------------

SECURITY BROKERS & DEALERS--11.3%

28,000 BT Alex Brown Inc.,
5.39%-5.46%,
7/15/98-8/26/98 27,555

See Notes to Financial Statements

8 1-800-345-2021

Cash Reserve's Schedule of Investments (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ IN THOUSANDS) Value
- -----------------------------------------------------------------------------

$37,000 Credit Suisse First Boston, Inc.,
5.45%-5.47%,
5/4/98-7/16/98 $ 36,727

8,000 Goldman Sachs Group L.P.,
5.42%, 5/14/98 7,984

17,500 Merrill Lynch & Co., Inc., 5.51%,
6/12/98 17,388

35,800 Morgan Stanley Dean Witter,
Discover & Co., 5.43%-5.47%,
5/8/98-5/26/98 35,710
----------------

125,364
----------------

UTILITIES--1.3%

15,000 National Rural Utilities Cooperative
Finance Corp., 5.48%, 7/16/98 14,826
----------------

TOTAL COMMERCIAL PAPER--63.6% 705,815
----------------

OTHER CORPORATE DEBT

BANKING--6.0%

20,000 American Express Centurion Bank,
VRN, 5.60%, 5/11/98,
resets monthly off the 1-month LIBOR
minus 0.06% with no caps 20,000

20,000 First Bank, N.A., VRN, 5.56%,
5/20/98, resets monthly off the
1-month LIBOR minus 0.95%
with no caps 19,999

12,000 Key Bank N.A., VRN, 5.40%, 5/1/98,
resets daily off the
Federal Funds rate plus 0.07%
with no caps 11,997

15,000 U.S. Bank N.A., Minnesota, VRN,
5.53%, 5/20/98, resets monthly
off the 1-month LIBOR minus
0.13% with no caps 14,996
----------------

66,992
----------------

FINANCIAL SERVICES--2.3%

25,000 Abbey National Treasury Services,
VRN, 5.78%, 5/15/98,
resets monthly off the 1-month LIBOR
minus 0.12% with no caps 24,998
----------------

INSURANCE--11.9%

40,000 General American Life, VRN,
5.89%, 5/1/98, resets
monthly off the 1-month LIBOR
plus 0.20% with no caps (Acquired
1/3/97, Cost $40,000)(2) 40,000

10,000 General American Life, VRN, 5.89%,
5/1/98, resets monthly off the 1-month
LIBOR plus 0.20% with no caps (Acquired
7/7/97, Cost $10,000)(2) 10,000

Principal Amount ($ IN THOUSANDS) Value
- -----------------------------------------------------------------------------

$47,000 Transamerica Occidental Life
Insurance Co., VRN, 5.69%,
5/1/98, resets monthly off
the 1-month LIBOR with no
caps (Acquired 6/30/97,
Cost $47,000)(2) $ 47,000

11,700 Travelers Insurance Company (The),
VRN, 5.71%, 5/11/98, resets
monthly off the 1-month
LIBOR plus 0.05% with no caps
(Acquired 6/9/97,
Cost $11,700)(2) 11,700

23,500 Travelers Insurance Company (The),
VRN, 5.71%, 5/26/98, resets
monthly off the 1-month LIBOR
plus 0.05% with no caps
(Acquired 5/23/97,
Cost $23,500)(2) 23,500
----------------

132,200
----------------

SECURITY BROKERS & DEALERS--2.3%

15,000 Credit Suisse First Boston, VRN,
5.44%, 5/1/98, resets daily off
the Federal Funds rate plus
0.11% with no caps 15,000

10,000 Merrill Lynch & Co., Inc. MTN,
Series B, VRN, 5.85%, 7/5/98,
resets quarterly off the 3-month
LIBOR plus 0.25% with no caps 10,019
----------------

25,019
----------------

TOTAL OTHER CORPORATE DEBT--22.5% 249,209
----------------

ASSET-BACKED SECURITIES

23,500 ABSIT, VRN, Series 1997 C,
Class N, 5.66%, 5/15/98, resets
monthly off the 1-month LIBOR
with no caps (LOC: Goldman
Sachs Group L.P.) (Acquired
6/11/97, Cost $23,500)(2) 23,500

2,325 Americredit Automobile Receivables
Trust, Series 1997 C, Class A1,
5.66%, 9/5/98 (FSA) 2,325

5,180 Americredit Automobile Receivables
Trust, Series 1997 D, Class A1,
5.80%, 11/5/98 (FSA) 5,180

362 Barnett Auto Trust, Series 1997 A,
Class A1, 5.65%, 10/15/98
(Acquired 9/18/97, Cost $362)(2) 362

7,213 Capital Equipment Receivables
Trust, Series 1997-1, Class A1,
5.79%, 12/15/98 7,213

6,182 Chase Manhattan Auto Owner
Trust, Series 1998 A, Class A1,
5.55%, 3/12/99 6,182

See Notes to Financial Statements

www.americancentury.com 9

Cash Reserve's Schedule of Investments (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ IN THOUSANDS) Value
- -----------------------------------------------------------------------------

$10,000 Chase Manhattan Auto Owner
Trust, Series 1998 B, Class A1,
5.58%, 5/10/99 $ 10,000

5,151 Contimortgage Home Equity Loan
Trust, Series 1998-1, Class A1,
5.65%, 3/15/99 (MBIA) 5,151

2,828 Ford Credit Auto Owner Trust,
Series 1997 B, Class A1,
5.75%, 10/15/98 2,828

14,786 Ford Credit Auto Owner Trust,
Series 1998 A, Class A1,
5.55%, 2/15/99 14,786

15,000 Racers, Series 1997-MM-8-5, VRN,
5.67%, 5/29/98, resets
monthly off the 1-month
LIBOR minus 0.02% with no caps
(LOC: National Westminster
Bank PLC) (Acquired 8/29/97,
Cost $15,000)(2) 15,000
----------------

TOTAL ASSET-BACKED SECURITIES--8.3% 92,527
----------------

Principal Amount ($ IN THOUSANDS) Value
- -----------------------------------------------------------------------------

CERTIFICATES OF DEPOSIT

$10,000 ABN Amro Bank N.V., 5.79%,
3/26/99 $ 10,003

10,000 Bayerische Landesbank
Girozentrale, 5.66%, 2/22/99 10,000

10,000 Caisse Nationale de Credit
Agricole, 5.90%, 8/11/98 10,000

10,000 Deutsche Bank, A.G., 5.70%,
3/5/99 9,996

11,000 Royal Bank of Canada -
New York, 5.55%, 2/11/99 10,995
----------------

TOTAL CERTIFICATES OF DEPOSIT--4.6% 50,994
----------------

BANK NOTES--1.0%

11,000 BankBoston N.A., 5.59%, 7/8/98 11,000
----------------

TOTAL INVESTMENT SECURITIES--100.0% $1,109,545
================

NOTES TO SCHEDULE OF INVESTMENTS

AMBAC = AMBAC Indemnity Assurance Corporation

FSA = Financial Security Assurance

LIBOR = London Interbank Offered Rate

LOC = Letter of Credit

MBIA = MBIA Insurance Corp.

MTN = Medium Term Note

VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Rate shown is effective
April 30, 1998.

resets = The frequency with which a security's coupon changes, based on current
market conditions or an underlying index. The more frequently a security resets,
the less risk the investor is taking that the coupon will vary significantly
from current market rates.

(1) The rates for commercial paper are the yield to maturity at purchase.

(2) Security was purchased under Rule 144A or Section 4(2) of the Securities Act
of 1933 or is otherwise restricted as to resale and, unless registered under
the Act or exempted from registration, may only be sold to qualified
institutional investors. The aggregate value of restricted securities at
April 30, 1998, was $309,755, which represented 27.9% of net assets.
Restricted securities which were illiquid represented 6.6% of net assets.

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

* a list of each investment

* the principal (dollar) amount of each investment

* the market value of each investment

* the percentage of total investments in each industry

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

10 1-800-345-2021

Statement of Assets and Liabilities
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

ASSETS (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)

Investment securities, at value
(amortized cost and cost for
federal income tax purposes)
(Note 1) .............................................. $ 1,109,545

Cash .................................................... 4,597

Interest receivable ..................................... 2,057
-----------

1,116,199
-----------
LIABILITIES

Disbursements in excess of
demand deposit cash ................................... 3,236

Payable for capital shares
redeemed .............................................. 1,805

Accrued management fees
(Note 2) .............................................. 474

Dividends payable ....................................... 947

Accrued expenses and
other liabilities ..................................... 5
-----------

6,467
-----------

Net Assets .............................................. $ 1,109,732
===========
NET ASSETS CONSIST OF:

Capital (par value and
paid in surplus) ...................................... $ 1,109,817

Accumulated net realized
loss from investment
transactions .......................................... (85)
-----------

$ 1,109,732
===========

Investor Class,
$0.01 Par Value

Net assets .............................................. $ 1,107,501

Shares outstanding ...................................... 1,107,586

Net asset value per share ............................... $ 1.00

Advisor Class,
$0.01 Par Value

Net assets .............................................. $ 2,231

Shares outstanding ...................................... 2,231

Net asset value per share ............................... $ 1.00

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF ASSETS AND LIABILITIES--This page details what
the fund owns (assets), what it owes (liabilities), and its net assets as of the
last day of the period. If you subtract what the fund owes from what it owns,
you get the fund's NET assets. The net assets by class divided by the total
number of fund shares outstanding by class gives you the price of an individual
share, or the NET ASSET VALUE PER SHARE, for each class of shares.

NET ASSETS are also broken out by capital (money invested by shareholders);
income not yet paid to shareholders; and gains earned from investment activity
but not yet paid to shareholders or net losses from investment activity (known
as realized gains or losses). This breakout tells you the value of assets that
are performance-related, such as income and investment gains or losses, and the
value of assets that are not related to performance, such as shareholder
investment and redemptions.

See Notes to Financial Statements

www.americancentury.com 11

Statement of Operations
- -----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)

INVESTMENT INCOME (IN THOUSANDS)

Income:

Interest ................................................... $ 33,243
--------

Expenses (Note 2):

Management fees ............................................ 3,462

Distribution fees -- Advisor Class ......................... 3

Service fees -- Advisor Class .............................. 3

Directors' fees and expenses ............................... 6
--------

3,474

Fees waived by manager ..................................... (280)
--------

Net expenses ........................................... 3,194
--------

Net investment income ...................................... 30,049
--------

NET REALIZED LOSS ON INVESTMENTS

Net realized loss on investments ........................... (1)
--------

Net Increase in Net Assets
Resulting from Operations .................................. $ 30,048
========

Fund OPERATIONS include:

* interest income earned from investments

* management fees and expenses

* gains or losses from selling investments (known as realized gains or losses)

See Notes to Financial Statements

12 1-800-345-2021

Statements of Changes in Net Assets
- -----------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
AND YEAR ENDED OCTOBER 31, 1997

Decrease in Net Assets
1998 1997
OPERATIONS (IN THOUSANDS)

Net investment income ...................... $ 30,049 $ 62,169

Net realized loss on investments ........... (1) (6)
----------- -----------

Net increase in net assets
resulting from operations .................. 30,048 62,163
----------- -----------

DISTRIBUTIONS TO SHAREHOLDERS

From net investment income:

Investor Class ........................... (29,997) (62,154)

Advisor Class ............................ (52) (15)
----------- -----------

Decrease in net assets
from distributions ......................... (30,049) (62,169)
----------- -----------

CAPITAL SHARE TRANSACTIONS (Note 3)

Net decrease in net assets from
capital share transactions ................. (66,849) (170,512)
----------- -----------

Net decrease in net assets ................. (66,850) (170,518)

Net Assets

Beginning of period ........................ 1,176,582 1,347,100
----------- -----------

End of period .............................. $ 1,109,732 $ 1,176,582
=========== ===========

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
the fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:

* performance (operations)

* distributions to shareholders

* shareholders either investing, reinvesting distributions or withdrawing money

The changes are broken out into:

* operations--a summary of the Statement of Operations from the previous page
for the current period

* distributions--income distributed to shareholders

* share transactions--shareholders' purchases, reinvestment of distributions and
redemptions

The statement also includes the net assets at the beginning and end of the
period.

See Notes to Financial Statements

www.americancentury.com 13

Notes to Financial Statements
- --------------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--American Century Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century - Benham Cash Reserve Fund (the
Fund) is one of the thirteen series of funds issued by the Corporation. The
Fund's investment objective is 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. The Fund is authorized to issue two classes
of shares: the Investor Class and the Advisor Class. The two classes of shares
differ principally in their respective shareholder servicing and distribution
expenses and arrangements. All shares of the Fund represent an equal pro rata
interest in the assets of the class to which such shares belong, and have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except for class specific expenses and exclusive rights to vote on
matters affecting only individual classes. The following significant accounting
policies, related to all classes of the Fund, are in accordance with accounting
policies generally accepted in the investment company industry.

SECURITY VALUATIONS--Securities are valued at amortized cost, which
approximates current value. When valuations are not readily available,
securities are valued at fair value as determined in accordance with procedures
adopted by the Board of Directors.

SECURITY TRANSACTIONS--Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.

INVESTMENT INCOME--Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums. Discounts and
premiums are accreted/amortized daily on a straight-line basis.

REPURCHASE AGREEMENTS--The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors the securities
transferred, on a daily basis, to ensure the value, including accrued interest,
of the securities under each repurchase agreement is equal to or greater than
amounts owed to the Fund under each repurchase agreement.

JOINT TRADING ACCOUNT--Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS--It is the policy of the Fund to distribute all taxable
income and net capital gains to shareholders and to otherwise qualify as a
regulated investment company under provisions of the Internal Revenue Code.
Accordingly, no provision has been made for federal or state income taxes.

DISTRIBUTIONS-- Distributions from net investment income are declared daily
and distributed monthly. The Fund does not expect to realize any long-term
capital gains, and accordingly, does not expect to pay any long-term capital
gains distributions. At October 31, 1997, accumulated net realized capital loss
carryovers of $84,216 (expiring 2002 through 2004) may be used to offset future
taxable gains.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.

ADDITIONAL INFORMATION--Effective January 15, 1998, Funds Distributor, Inc.
(FDI) became the Corporation's distributor. Certain officers of FDI are also
officers of the Corporation.

14 1-800-345-2021

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The Corporation has entered into a Management Agreement with ACIM that
provides the Fund with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreement provides that all
expenses of the Fund, except brokerage commissions, taxes, interest, expenses of
those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on each classes' average daily closing net assets during the previous month. The
annual management fee is 0.60% for the Investor Class and 0.35% for the Advisor
Class. The annual management fee for the period February 1, 1998 through May 31,
1998 was 0.50% for the Investor Class and 0.25% for the Advisor Class due to a
temporary fee waiver.

The Board of Directors has adopted the Advisor Class Master Distribution
and Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Plan provides that the Fund will pay ACIM an
annual distribution fee equal to 0.25% and an annual service fee equal to 0.25%.
The fees are computed daily and paid monthly based on the Advisor Class's
average daily closing net assets during the previous month. The distribution fee
provides compensation for distribution expenses incurred by financial
intermediaries in connection with distributing shares of the Advisor Class
including, but not limited to, payments to brokers, dealers, and financial
institutions that have entered into sales agreements with respect to shares of
the Fund. The service fee provides compensation for shareholder and
administrative services rendered by ACIM, its affiliates or independent third
party providers. Fees incurred by the Fund under the Plan during the six months
ended April 30, 1998 were $5,337.

www.americancentury.com 15

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

3. CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
There are 2,000,000,000 and 1,000,000,000 shares of the Investor Class and
Advisor Class authorized for issuance, respectively. Transactions in shares of
the Fund were as follows:

SHARES AMOUNT

INVESTOR CLASS (IN THOUSANDS)

Six Months ended April 30, 1998

Sold ......................................... 1,167,596 $ 1,167,596

Issued in reinvestment of distributions ...... 28,106 28,106

Redeemed ..................................... (1,264,175) (1,264,175)
----------- -----------

Net decrease ................................. (68,473) $ (68,473)
=========== ===========

Year ended October 31, 1997

Sold ......................................... 2,379,108 $ 2,379,108

Issued in reinvestment of distributions ...... 61,040 61,040

Redeemed ..................................... (2,611,267) (2,611,267)
----------- -----------

Net decrease ................................. (171,119) $ (171,119)
=========== ===========

ADVISOR CLASS (IN THOUSANDS)
- --------------------------------------------------------------------------------
Six Months ended April 30, 1998

Sold ......................................... 3,625 $ 3,625

Issued in reinvestment of distributions ...... 49 49

Redeemed ..................................... (2,050) (2,050)
----------- -----------

Net increase ................................. 1,624 $ 1,624
=========== ===========

April 1, 1997(1) through October 31, 1997

Sold ......................................... 1,551 $ 1,551

Issued in reinvestment of distributions ...... 14 14

Redeemed ..................................... (958) (958)
----------- -----------

Net increase ................................. 607 $ 607
=========== ===========

(1) Commencement of sale of the Advisor Class.

16 1-800-345-2021

<TABLE>
<CAPTION>
Cash Reserve's Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

Investor Class
1998(1) 1997 1996 1995 1994 1993(2)
PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- ------------- ------------- -------------

Income From
Investment Operations

Net Investment Income ...... 0.03 0.05 0.05 0.05 0.03 0.02
------------- ------------- ------------- ------------- ------------- -------------

Distributions

From Net
Investment Income .......... (0.03) (0.05) (0.05) (0.05) (0.03) (0.02)
------------- ------------- ------------- ------------- ------------- -------------

Net Asset Value,
End of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= ============= ============= =============

Total Return(3) ............ 2.61% 5.04% 4.99% 5.38% 3.21% 2.30%

RATIOS/SUPPLEMENTAL
RATIOS

Ratio of Expenses
to Average Net Assets ........ 0.55%(4)(5) 0.68% 0.70% 0.70% 0.80% 1.00%

Ratio of Net
Investment Income
to Average Net Assets ........ 5.20%(4)(5) 4.93% 4.88% 5.27% 3.18% 2.30%

Net Assets End of Period
(in thousands) ............... $ 1,107,501 $ 1,175,975 $ 1,347,106 $ 1,469,546 $ 1,298,982 $ 1,256,012

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.

(5) American Century Investment Management, Inc. voluntarily waived a portion
of its management fee effective February 1, 1998 through May 31, 1998. In
absence of the fee waiver, the annualized ratios of expenses to average net
assets and net investment income to average net assets would have been
0.60% and 5.15%, respectively, for the period ended April 30, 1998.
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These pages itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

See Notes to Financial Statements

www.americancentury.com 17

Cash Reserve's Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED

Advisor Class
1998(1) 1997(2)
PER-SHARE DATA

Net Asset Value,
Beginning of Period ................... $ 1.00 $ 1.00
--------- ---------

Income From Investment
Operations

Net Investment Income ................. 0.02 0.03
--------- ---------

Distributions

From Net Investment Income ............ (0.02) (0.03)
--------- ---------

Net Asset Value, End of Period .......... $ 1.00 $ 1.00
========= =========

Total Return(3) ....................... 2.48% 2.83%

RATIOS/SUPPLEMENTAL RATIOS

Ratio of Expenses to Average
Net Assets ............................ 0.80%(4)(5) 0.91%(4)

Ratio of Net Investment Income
to Average Net Assets ................. 4.95%(4)(5) 4.81%(4)

Net Assets End of Period
(in thousands) ....................... $ 2,231 $ 607

(1) Six months ended April 30, 1998 (unaudited).

(2) April 1, 1997 (commencement of sale) through October 31, 1997.

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

(4) Annualized.

(5) American Century Investment Management, Inc. voluntarily waived a portion
of its management fee effective February 1, 1998 through May 31, 1998. In
absence of the fee waiver, the annualized ratios of expenses to average net
assets and net investment income to average net assets would have been
0.85% and 4.90%, respectively, for the period ended April 30, 1998.

See Notes to Financial Statements

18 1-800-345-2021

Share Class and Retirement Account Information
- -----------------------------------------------------------------------------

SHARE CLASS

Until September 3, 1996, Cash Reserve issued one class of fund shares,
reflecting the fact that most investors bought their shares directly from
American Century. All investors paid the same annual unified management fee and
did not pay any commissions or other fees.

Now more shares are purchased through financial intermediaries (who
ordinarily are compensated for the services they provide). In September 1996,
American Century began to offer two classes of shares for Cash Reserve. One
class is for investors buying directly from American Century, the other is for
investors buying through financial intermediaries.

The original class of shares is called the INVESTOR CLASS. All shares
issued and outstanding before September 3, 1996, have been designated as
Investor Class shares. Investor Class shares may also be purchased after
September 3, 1996. Investor Class shareholders pay no commissions or other fees
for purchase of fund shares directly from American Century. Investors who buy
Investor Class shares through a broker-dealer may be required to pay the
broker-dealer a transaction fee. THE PRICE AND PERFORMANCE OF THE INVESTOR CLASS
SHARES ARE LISTED IN NEWSPAPERS. NO OTHER CLASS IS CURRENTLY LISTED.

In addition, there is an ADVISOR CLASS, sold through banks, broker-dealers,
insurance companies and financial advisors. Advisor Class shares are subject to
a 0.50% Rule 12b-1 service and distribution fee. Half of that fee is available
to pay for recordkeeping and administrative services, and half is available to
pay for distribution services provided by the financial intermediary through
which the Advisor Class shares are purchased. The total expense ratio of the
Advisor Class is 0.25% higher than that of the Investor Class.

Both classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.

RETIREMENT ACCOUNT INFORMATION

When you plan to withdraw, you may make your election by completing our
Exchange/ Redemption form or an IRS Form W-4P. Call American Century for either
form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.

www.americancentury.com 19

Background Information
- -----------------------------------------------------------------------------

INVESTMENT PHILOSOPHY AND POLICIES

The Benham Group offers 39 fixed-income funds, ranging from money market
funds to long-term bond funds and including both taxable and tax-exempt funds.
Each fund is managed to provide a "pure play" on a specific sector of the
fixed-income market. To ensure adherence to this principle, the basic structure
of each fund's portfolio is tied to a specific market index. Fund managers
attempt to add value by making modest portfolio adjustments based on their
analysis of prevailing market conditions. Investment decisions are made by
management teams, which meet regularly to discuss market analysis and investment
strategies.

In addition to these principles, each fund has its own investment policies:

CASH RESERVE is a money market fund that seeks to provide interest income
by investing in a diversified portfolio of short-term money market securities.
The fund must maintain a weighted average maturity of 90 days or less.

An investment in Cash Reserve is neither insured nor guaranteed by the U.S.
government. Yields will fluctuate, and there can be no assurance that the fund
will be able to maintain a stable net asset value of $1 per share.

COMPARATIVE INDICES

The following index is used in the report for fund performance comparisons.
It is not an investment product available for purchase.

The 90-DAY TREASURY BILL INDEX is derived from secondary market interest
rates as published by the Federal Reserve Bank.

LIPPER RANKINGS

LIPPER ANALYTICAL SERVICES, INC. is an independent mutual fund ranking
service that groups funds according to their investment objectives. Rankings are
based on average annual returns for each fund in a given category for the
periods indicated. Rankings are not included for periods less than one year.

The Lipper category for Cash Reserve is:

MONEY MARKET INSTRUMENT FUNDS--funds that intend to maintain a stable net
asset value and that invest in high-quality financial instruments rated in the
top two grades with dollar-weighted average maturities of less than 90 days.

[left margin]

INVESTMENT TEAM LEADERS

CASH RESERVE

PORTFOLIO MANAGERS:
DENISE TABACCO
JOHN WALSH

CREDIT RESEARCH MANAGER:
GREG AFIESH

20 1-800-345-2021

Glossary
- -----------------------------------------------------------------------------

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year returns, please refer to the "Financial
Highlights" on pages 17-18.

YIELDS

* 7-DAY CURRENT YIELD is calculated based on the income generated by an
investment in the fund over a seven-day period and is expressed as an annual
percentage rate.

* 7-DAY EFFECTIVE YIELD is calculated similarly, although this figure is
slightly higher than the fund's 7-Day Current Yield because of the effects of
compounding. The 7-Day Effective Yield assumes that income earned from the
fund's investments is reinvested and generating additional income.

PORTFOLIO STATISTICS

* NUMBER OF SECURITIES--the number of different securities held by a fund on a
given date.

* WEIGHTED AVERAGE MATURITY (WAM)--a measure of the sensitivity of a
fixed-income portfolio to interest rate changes. WAM indicates the average time
until the securities in the portfolio mature, weighted by dollar amount. The
longer the WAM, the more interest rate exposure and sensitivity the portfolio
has.

* EXPENSE RATIO--the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)

TYPES OF MONEY MARKET SECURITIES

* ASSET-BACKED SECURITIES--debt securities that represent ownership in a pool of
receivables, such as credit card debt, auto loans or mortgages.

* CERTIFICATES OF DEPOSIT (CDS)--CDs represent a bank's obligation to repay
money deposited with it for a specified period of time. Different types of CDs
have different issuers. For example, Yankee CDs are issued by U.S. branches of
foreign banks, and Eurodollar CDs are issued in London by Canadian, European and
Japanese banks.

* COMMERCIAL PAPER (CP)--short-term debt issued by large corporations to raise
cash and to cover current expenses in anticipation of future revenues. The
maximum maturity for CP is 270 days, although most CP is issued in a one- to
50-day maturity range. CP rates generally track those of other widely traded
money market instruments, such as Treasury bills and certificates of deposit,
but they are also influenced by the maturity date and the size and credit rating
of the issuer.

* VARIABLE-RATE NOTES (VRNS)--debt securities whose interest rates change when a
designated base rate changes. The base rate is often the federal funds rate, the
90-day Treasury bill rate or the London Interbank Offered Rate (LIBOR).

* U.S. GOVERNMENT AGENCY SECURITIES-- debt securities issued by U.S. government
agencies (such as the Federal Farm Credit Bank and the Federal Home Loan Bank).
Some agency securities are backed by the full faith and credit of the U.S.
government, while most are guaranteed only by the issuing agency. These
securities are issued with maturities ranging from three months to 30 years. The
fund invests in these securities when they have remaining maturities of 13
months or less.

www.americancentury.com 21

Notes
- -----------------------------------------------------------------------------

22 1-800-345-2021

Notes
- -----------------------------------------------------------------------------

www.americancentury.com 23

Notes
- --------------------------------------------------------------------------------

24 1-800-345-2021

[inside back cover]

[right margin]

[american century logo(reg.sm)]
American
Century(reg.tm)

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

INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-444-3485

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY MUTUAL FUNDS INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

[recycled logo]
Recycled

[back cover]

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES

9806 (c)1998 American Century Services Corporation
SH-BKT-12669 Funds Distributor, Inc.
<PAGE>
[front cover] April 30, 1998

SEMIANNUAL REPORT
- -----------------
AMERICAN CENTURY

[graphic of U.S. currency and two individuals walking up stairs]

BENHAN GROUP
- ------------
Limited-Term Bond
Intermediate-Term Bond
Benham Bond

[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]

A Note from the Founder
- --------------------------------------------------------------------------------

I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.

Sincerely,
/s/James E. Stowers

About our New Report Design
- --------------------------------------------------------------------------------

WHY WE CHANGED.

WHAT'S NEW.

The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming.

New features include:

* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.

THE BOTTOM LINE.

The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.

We believe we've come up with a more interesting, informative, and user-friendly
publication.

We hope you enjoy it.

[left margin]

BENHAM GROUP
LIMITED-TERM BOND
(ABLIX)

BENHAM GROUP
INTERMEDIATE-TERM BOND
(TWITX)

BENHAM GROUP
BENHAM BOND
(TWLBX)

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

Our Message to You
- -----------------------------------------------------------------------------

[photo of James E. Stowers, Jr. with James E. Stowers III, seated]
James E. Stowers, Jr. with James E. Stowers III, seated

The U.S. bond market rallied during the six-month period ended April 30,
1998. Low inflation, an improving federal budget and a healthy economy created
an ideal environment for bonds. Against a backdrop of stock market volatility
and overseas financial crises,shareholders in American Century's Limited-Term,
Intermediate-Term and Benham Bond funds enjoyed competitive bond market returns.

We appreciate your investment with American Century.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
CHAIRMAN OF THE BOARD AND FOUNDER CHIEF EXECUTIVE OFFICER

[right margin]

Table of Contents
Report Highlights ....................................................... 2
Market Perspective ...................................................... 3
LIMITED-TERM BOND
Performance Information ................................................. 4
Management Q & A ........................................................ 5
Schedule of Investments ................................................. 8
INTERMEDIATE-TERM BOND
Performance Information ................................................. 10
Management Q & A ........................................................ 11
Schedule of Investments ................................................. 14
BENHAM BOND
Performance Information ................................................. 17
Management Q & A ........................................................ 18
Schedule of Investments ................................................. 21
FINANCIAL STATEMENTS
Statements of Assets and
Liabilities .......................................................... 24
Statements of Operations ................................................ 25
Statements of Changes
in Net Assets ........................................................ 26
Notes to Financial
Statements ........................................................... 27
Financial Highlights .................................................... 30
OTHER INFORMATION
Share Class and Retirement
Account Information ..................................................... 36
Background Information
Investment Philosophy
and Policies ...................................................... 37
Comparative Indices .................................................. 37
Lipper Rankings ...................................................... 37
Investment Team
Leaders ........................................................... 37
Glossary ................................................................ 38

www.americancentury.com 1

Report Highlights
- -----------------------------------------------------------------------------

MARKET PERSPECTIVE

* Tame inflation and falling interest rates led to favorable returns for
fixed-income securities during the six months ended April 30, 1998.

* The low inflation was especially surprising because it was accompanied by
impressive U.S. economic growth.

* The shrinking federal budget deficit played a pivotal role in supporting the
bond market by limiting the amount of available Treasury securities.

* Periodic volatility in global equity markets and economic turmoil in
Southeast Asia increased the allure of U.S. fixed-income securities as a
safe haven

* Long-term Treasurys were the best-performing fixed-income sector, followed
by mortgage-backeds, corporates, and shorter-term Treasurys.

LIMITED-TERM BOND

* Limited-Term Bond performed in line with the average short investment-grade
debt fund.

* We kept duration (a measure of the portfolio's price sensitivity to changes
in interest rates) conservatively positioned within a narrow range around
1.7 years--roughly neutral compared with Limited-Term Bond's peers.

* As long as inflation stays low and economic growth remains moderate, the
bond market should continue to be an appealing place to invest.

* We will probably maintain the portfolio's neutral positioning in the near
term and will continue to take a conservative approach to managing duration.

INTERMEDIATE-TERM BOND

* Intermediate-Term Bond underperformed the average intermediate
investment-grade debt fund.

* The fund's tendency to hold more corporates and less Treasurys than its
peers was the main cause of the performance disparity.

* We kept duration (a measure of the portfolio's price sensitivity to changes
in interest rates) conservatively positioned within a narrow range around
4.0 years--roughly neutral compared with Intermediate-Term Bond's peers.

* We will probably maintain the portfolio's neutral positioning in the near
term and will continue to take a conservative approach to managing duration.

BENHAM BOND

* Benham Bond slightly underperformed the average A-rated corporate debt fund.

* Although we added slightly to the portfolio's Treasurys and pared some of
its corporates, the disparity in returns between these two types of
securities was the driving factor behind the portfolio's performance
relative to its peers.

* We kept duration (a measure of the portfolio's price sensitivity to changes
in interest rates) conservatively positioned within a narrow range around
5.0 years--roughly neutral compared with Benham Bond's peers.

* We will probably maintain the portfolio's neutral positioning in the near
term and will continue to take a conservative approach to managing duration.

[left margin]

LIMITED-TERM BOND(1)
(ABLIX)

TOTAL RETURNS: AS OF 4/30/98
6 Months 2.64%(2)
1 Year 6.76%

NET ASSETS: $16.8 million

30-DAY SEC YIELD: 5.50%

INCEPTION DATE: 3/1/94

INTERMEDIATE-TERM BOND(1)
(TWITX)

TOTAL RETURNS: AS OF 4/30/98
6 Months 2.88%(2)
1 Year 9.26%

NET ASSETS: $20.7 million

30-DAY SEC YIELD: 5.76%

INCEPTION DATE: 3/1/94

BENHAM BOND(1)
(TWLBX)

TOTAL RETURNS: AS OF 4/30/98
6 Months 2.89%(2)
1 Year 10.12%

NET ASSETS: $132.7 million

30-DAY SEC YIELD: 5.83%

INCEPTION DATE: 3/2/87

(1) Investor Class.
(2) Not annualized.

See Total Returns on pages 4, 10 and 17.

Investment terms are defined in the Glossary on page 38.

2 1-800-345-2021

Market Perspective from Randall W. Merk
- -----------------------------------------------------------------------------

[photo of Randall W. Merk, Director of Fixed-Income Investing at American
Century.]
Randall W. Merk, Director of Fixed-Income Investing at American Century

SOLID RETURNS

Tame inflation and falling interest rates led to favorable returns for
fixed-income securities during the six months ended April 30, 1998. As yields
fell across the maturity spectrum (see the accompanying graph), the greater
sensitivity of longer-term securities to interest rate changes allowed them to
outperform shorter-maturity issues. For example, the 30-year Treasury bond
returned 5.9%, compared with the 5.7% return of the 10-year Treasury note and
the 3.0% return of the two-year Treasury note.

AN UNEXPECTED COMBINATION

Low inflation--and low inflation expectations caused by Asian turmoil--were
the biggest factors behind the bond gains and were especially surprising because
they were accompanied by solid U.S. economic growth. As represented by the
consumer price index, inflation rose only 1.4% during the year ended April 30,
1998.

After growing at the fastest pace in nine years during 1997, the U.S.
economy has continued to expand in 1998. According to the government's second
estimate, the U.S. economy grew at a 4.8% annual rate during the first quarter
of this year. Early tax refunds, unseasonably warm weather and a flourishing
housing market were some of the reasons behind the continued economic strength.

SUPPLY AND DEMAND

From the supply side, the shrinking federal budget deficit played a pivotal
role in supporting the bond market by limiting the amount of available
securities. The economic prosperity of the last several years has provided good
news for the U.S. government in the form of increased tax revenues.

Higher tax revenues helped decrease the amount of new securities the
Treasury department had to issue to finance government expenditures. For
example, in 1997, six 10-year note auctions were scheduled, while only four are
slated for 1998. The Treasury Department also plans only three auctions of
30-year Treasury bonds this year, compared with four auctions in 1997. The
amount of short-term Treasurys issued has also been decreasing. With the supply
of Treasurys decreasing, the value of existing securities has risen.

From the demand side, periodic volatility in global equity markets and
economic turmoil in Asia increased the allure of U.S. fixed-income securities as
a safe haven. A strong U.S. dollar also made U.S. bonds more attractive to
investors overseas by increasing potential returns.

LONG-TERM TREASURYS RECEIVED
TOP HONORS

Long-term Treasurys were the best-performing fixed-income sector during the
period thanks to the favorable supply and demand imbalance. Corporate bonds
finished in the middle of fixed-income security returns because of intermittent
equity-market volatility. Shorter-term Treasurys finished last because they
appreciated the least.

[right margin]

With the supply of Treasurys decreasing, the value of existing securities has
risen.

[line graph - data below]
FALLING TREASURY YIELD CURVE

Years to Maturity 9/30/97 4/30/98
1 5.43% 5.37%
2 5.77% 5.56%
3 5.84% 5.60%
4 5.94% 5.66%
5 5.98% 5.63%
6 6.03% 5.68%
7 6.08% 5.73%
8 6.09% 5.71%
9 6.09% 5.69%
10 6.10% 5.67%
11 6.14% 5.71%
12 6.17% 5.74%
13 6.21% 5.78%
14 6.24% 5.81%
15 6.28% 5.85%
16 6.32% 5.88%
17 6.35% 5.92%
18 6.39% 5.95%
19 6.42% 5.99%
20 6.46% 6.02%
21 6.45% 6.01%
22 6.45% 6.01%
23 6.44% 6.00%
24 6.44% 5.99%
25 6.43% 5.98%
26 6.42% 5.98%
27 6.42% 5.97%
28 6.41% 5.96%
29 6.41% 5.96%
30 6.40% 5.95%

Source: Bloomberg Financial Markets

From the demand side, periodic volatility in global equity markets and economic
turmoil in Asia increased the allure of U.S. fixed-income securities as a safe
haven.

www.americancentury.com 3

Performance--Limited-Term Bond
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL RETURNS AS OF APRIL 30, 1998

INVESTOR CLASS (INCEPTION 3/1/94) ADVISOR CLASS (INCEPTION 11/12/97)

LIMITED-TERM MERRILL LYNCH 1-5-YR. SHORT INVESTMENT-GRADE DEBT FUNDS(2) LIMITED-TERM MERRILL LYNCH 1-5-YR.
BOND GOVT./CORP. INDEX AVERAGE RETURN FUND'S RANKING BOND GOVT./CORP. INDEX
<S> <C> <C> <C> <C> <C> <C>

6 MONTHS(1) ...... 2.64% 2.98% 2.66% -- -- --

1 YEAR ........... 6.76% 7.88% 6.67% 48 OUT OF 103 -- --
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS

3 YEARS .......... 6.41% 7.18% 6.38% 34 OUT OF 78 -- --

LIFE OF FUND ..... 5.55% 6.61%(3) 5.83%(3) 27 OUT OF 59(3) 2.43% 2.79%(4)

(1) Returns for periods less than one year are not annualized.

(2) According to Lipper Analytical Services.

(3) Since 3/31/94, the date nearest the class's inception for which data are
available.

(4) Since 11/30/97, the date nearest the class's inception for which data are
available.
</TABLE>

See pages 36-38 for more information about share classes, returns, the
comparative index and Lipper fund rankings.

[mountain chart - data below]
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 3/31/94

Value on 4/30/98
Merrill Lynch
Limited-Term 1- to 5-Yr
Bond Govt./Corp. Index
3/31/94 $10,000 $10,000
6/30/94 $9,973 $9,976
9/30/94 $10,057 $10,066
12/31/94 $10,047 $10,053
3/31/95 $10,360 $10,443
6/30/95 $10,692 $10,863
9/30/95 $10,867 $11,029
12/31/95 $11,146 $11,356
3/31/96 $11,169 $11,346
6/30/96 $11,268 $11,440
9/30/96 $11,440 $11,635
12/31/96 $11,638 $11,880
3/31/97 $11,716 $11,925
6/30/97 $11,966 $12,222
9/30/97 $12,197 $12,500
12/31/97 $12,383 $12,730
3/31/98 $12,543 $12,927
4/30/98 $12,607 $12,989

[bar chart - data below]
ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING APRIL 30)

Merrill Lynch
Limited-Term 1- to 5-Year
Bond Govt./Corp. Index
4/94 -0.45% -0.59%
4/95 5.11% 6.12%
4/96 6.69% 7.43%
4/97 5.78% 6.23%
4/98 6.76% 7.88%

The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment over the life
of the fund, while the chart below shows the fund's year-by-year performance.
The Merrill Lynch 1- to 5-Year Govt./Corp. Index is provided for comparison in
each chart. Past performance does not guarantee future results. Investment
return and principal value will fluctuate, and redemption value may be more or
less than original cost. Limited Term Bond's total returns include operating
expenses (such as transaction costs and management fees) that reduce returns,
while the total returns of the index do not.

* From 3/31/94 (the date nearest the fund's inception for which index data are
available).

4 1-800-345-2021

Limited-Term Bond--Q&A
- -----------------------------------------------------------------------------

An interview with Jeff Houston and Bud Hoops, portfolio managers on the
Limited-Term Bond fund investment team.

HOW DID THE FUND PERFORM FOR THE SIX MONTHS?

Limited-Term Bond's Investor Class shares returned 2.64% for the period
ended April 30, 1998, compared with the 2.66% average return of the 103 "Short
Investment-Grade Debt Funds" tracked by Lipper Analytical Services and the 2.98%
return of the fund's benchmark, the Merrill Lynch 1- to 5-Year
Government/Corporate Index. (See the Total Returns table on the previous page
for other fund performance comparisons.)

WHAT MARKET FACTORS INFLUENCED LIMITED-TERM BOND'S PERFORMANCE?

The biggest positives for the fund, and the bond market in general, were
falling interest rates and low inflation. The Asian currency crisis also had a
pronounced effect on the fixed-income market, benefiting Treasurys but hurting
corporates.

Treasury securities were in demand as investors sought a safe haven from
global equity-market volatility. "Real" yields (adjusted for inflation) were
around twice their historical averages and gave Treasurys a boost. The strength
of the U.S. dollar versus other world currencies also helped make Treasurys
attractive to overseas investors. This combination allowed Treasurys to perform
well and enhanced fund returns.

However, the Asian crisis negatively impacted the performance of corporates
as investors questioned the financial health of companies that do business in
the Far East. That caused intermittent turmoil in the U.S. stock market and led
to mediocre performance by corporate securities during the latter part of 1997,
dampening returns.

A few of the portfolio's corporate holdings were directly affected by the
meltdown in Asia. However, the negative impact was limited to a small handful of
issues thanks in part to our credit team.

HOW DID YOU MANAGE THE PORTFOLIO?

We kept duration conservatively positioned within a narrow range around 1.7
years--roughly neutral compared with Limited-Term Bond's peers. Duration
measures a portfolio's sensitivity to changes in interest rates. The longer a
portfolio's duration, the more the share price appreciates when rates fall, and
the more the share price falls when rates rise. Conversely, a shorter duration
means a bond portfolio's price fluctuates less when rates change.

We chose a conservative position because of market volatility and interest
rate uncertainty. Accurately predicting the short-term direction of rates is
extremely difficult, so we prefer to avoid making aggressive duration bets.
Instead, we manage the portfolio conservatively and look to add return by
adjusting the mix of securities and by finding undervalued bonds with the
potential to appreciate.

[right margin]

Accurately predicting the short-term direction of rates is extremely difficult,
so we prefer to avoid making aggressive duration bets.

PORTFOLIO AT A GLANCE

4/30/98 10/31/97

NUMBER OF SECURITIES 47 43

WEIGHTED AVERAGE
MATURITY 2.0 YRS 3.2 YRS

AVERAGE DURATION 1.8 YRS 1.7 YRS

EXPENSE RATIO (FOR
INVESTOR CLASS) 0.70%* 0.69%

* Annualized.

YIELD AS OF APRIL 30, 1998

INVESTOR ADVISOR

30-DAY SEC YIELD 5.50% 5.25%

Investment terms are defined in the Glossary on page 38.

www.americancentury.com 5

Limited-Term Bond--Q&A (continued)
- -----------------------------------------------------------------------------

WHAT WERE SOME BETTER-PERFORMING SECURITIES THAT YOU FAVORED?

We found several issues that we liked among asset-backed securities.
Asset-backeds are debt securities that represent ownership in a pool of assets.
Auto loans and credit cards are good examples of types of debt that are commonly
packaged as asset-backeds. Asset-backed securities generally have very high
credit quality because they usually carry credit enhancements that provide AAA
ratings.

These securities are also often overcollateralized--they contain more
assets than are required to pay off the debt. We have added specialists in
asset-backeds to our credit research team, which has made it easier to find
attractive values.

During the six months, we were able to find some asset-backeds with yields
30-60 basis points (a basis point equals 0.01%) higher than like-maturity
Treasurys. The AAA ratings on these securities also made them attractive from a
credit-quality standpoint.

WHAT ROLE DOES THE CREDIT TEAM PLAY?

Overall, our credit team adds value by providing more investment
alternatives without compromising our high credit standards. In addition, we are
able to look into and get comfortable in complex areas that some others are not
as familiar with, such as asset-backeds.

We believe this gives us a better opportunity to find undervalued
securities and avoid ones that are at greater risk of being devalued. Also, the
team gives us more flexibility when market conditions change. For example,
because we maintain a large number of corporates in the portfolio, monitoring
exposure to developments like the ongoing Asian crisis is vital.

WHAT'S YOUR OUTLOOK FOR U.S. BONDS?

As long as inflation stays low, the bond market should continue to be an
appealing place to invest. Although unemployment is low and wage pressures are
mounting, inflation remains well behaved. The computer revolution, corporate
efficiency and global competition have helped keep prices in check. U.S.
economic growth is strong and could pose an inflation threat if it expands
unfettered, but it has constraints--the Asian economic crisis is projected to
reduce U.S. growth somewhat.

[left margin]

Asset-backed securities are also often overcollateralized--they contain more
assets than are required to pay off the debt.

[pie charts]
PORTFOLIO COMPOSITION BY SECURITY TYPE

AS OF APRIL 30, 1998

Corporate Bonds 39%
U.S. Treasury 26%
Asset-Backed 20%
Cash 10%
Mortgage-Backed 5%

AS OF OCTOBER 31, 1997

Corporate Bonds 40%
U.S. Treasury 35%
Asset-Backed 17%
Mortgage-Backed 4%
Other 3%
Cash 1%

6 1-800-345-2021

Limited-Term Bond--Q&A (continued)
- -----------------------------------------------------------------------------

Furthermore, supply and demand fundamentals remain favorable. The federal
government is running its first budget surplus in 30 years, which reduces bond
supply and exerts downward pressure on interest rates (see page 3). Bond demand
could continue to build as investors grow more cautious--the stock market could
become more volatile as it attempts to scale new heights, possibly prompting
investors to buy bonds as a diversification vehicle.

We believe interest rates are likely to remain within a relatively low
range. In this low interest rate environment, it's important to identify and
acquire securities with attractive yields and solid financial backing.

WHAT ARE YOUR PLANS FOR THE PORTFOLIO GOING FORWARD?

We will probably maintain the portfolio's neutral positioning in the near
term and will continue to take a conservative approach to managing its duration.
Leveraging our credit research team, we will work to uncover high-yielding,
attractively valued securities with the potential to enhance returns.

[right margin]

Leveraging our credit research team, we will work to uncover high-yielding,
attractively valued securities with the potential to enhance returns.

PORTFOLIO COMPOSITION BY CREDIT RATING

% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

AAA 58% 57%
AA 1% 1%
A 17% 17%
BBB 23% 25%
BB 1% --

The ratings are provided by Standard & Poor's. (See page 38 for more
information.)

www.americancentury.com 7

Limited-Term Bond's Schedule of Investments
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

U.S. TREASURY SECURITIES

$ 100 U.S. Treasury Notes, 5.00%,
2/15/99 $ 100

2,000 U.S. Treasury Notes, 5.75%,
9/30/99 2,005

500 U.S. Treasury Notes, 5.625%,
12/31/99 501

1,000 U.S. Treasury Notes, 5.50%,
3/31/00 999

500 U.S. Treasury Notes, 6.375%,
5/15/00 508

500 U.S. Treasury Notes, 6.00%,
8/15/00 504

250 U.S. Treasury Notes, 6.50%,
5/31/02 257
----------------

TOTAL U.S. TREASURY SECURITIES--26.0% 4,874
----------------
(Cost $4,855)

MORTGAGE-BACKED SECURITIES(1)

476 FNMA Pool #313224, 7.00%,
12/1/11 485

446 FNMA Pool #378698, 8.00%,
5/1/12 461

33 FNMA REMIC, Series 1991-21,
Class G PAC, 6.00%,
12/25/19 33
----------------

TOTAL MORTGAGE-BACKED
SECURITIES--5.2% 979
----------------
(Cost $977)

ASSET-BACKED SECURITIES(1)

500 California Infrastructure,
Series 1997-1, Class A3 SEQ,
6.17%, 3/25/03 503

500 CIT RV Trust, Series 1997 A,
Class A5 SEQ, 6.25%,
11/17/08 502

200 First Merchants Auto
Receivables Corp., Series
1996 B, Class A2, 6.80%, 5/15/01 203

250 FNMA Whole Loan, Series
1995-W1, Class A6, 8.10%,
4/25/25 259

500 Green Tree Financial Corp.,
Series 1995-7, Class A3,
6.35%, 11/15/26 502

376 Money Store (The) Home Equity
Trust, Series 1994 B, Class A4
SEQ, 7.60%, 7/15/21 388

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

$ 161 Money Store (The) Home Equity
Trust, Series 1996 D, Class A3
SEQ, 6.295%, 11/15/11 $ 161

200 NationsBank Auto Owner Trust,
Series 1996 A, Class B1,
6.75%, 6/15/01 203

385 Textron Financial Corp. Receivables
Trust, Series 1997 A, Class A,
6.05%, 3/16/09 (Acquired
9/18/97, Cost $384)(2) 385

130 United Companies Financial Corp.,
Home Equity Loan, Series
1996 B1, Class A2, 7.08%,
4/15/10 130

150 United Companies Financial Corp.,
Home Equity Loan, Series
1996 D1, Class A4, 6.78%,
2/15/16 152

299 World Omni Automobile Lease
Securitization, Series 1996 B,
Class A2, 6.20%, 11/15/02 300
----------------

TOTAL ASSET-BACKED SECURITIES--19.7% 3,688
----------------
(Cost $3,664)

CORPORATE BONDS

AUTOMOBILES & AUTO PARTS--1.8%

300 General Motors Corp. Global
Notes, 9.625%, 12/1/00 325
----------------

BANKING--3.2%

200 Capital One Bank, 6.74%,
5/31/99 201

200 Golden West Financial Corp.,
9.15%, 5/23/98 200

200 MBNA Corp., 6.875%, 10/1/99 202
----------------

603
----------------

COMMUNICATIONS SERVICES--6.9%

200 TCI Communications, Inc.,
6.375%, 9/15/99 200

500 TKR Cable Inc., 10.50%,
10/30/99 551

500 WorldCom Inc., 8.875%,
1/15/01 545
----------------

1,296
----------------

ENERGY (PRODUCTION & MARKETING)--2.2%

400 Oryx Energy Co., 9.50%,
11/1/99 417
----------------

FINANCIAL SERVICES--19.0%

300 Advanta Corp., MTN, Series B,
7.00%, 5/1/01 277

500 Caterpillar Financial Services, MTN,
6.49%, 10/15/99 504

See Notes to Financial Statements

8 1-800-345-2021

Limited Term Bond's Schedule of Investments (cont.)
- ------------------------------------------------------------- ----------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

$ 300 CIT Group Holdings, MTN,
6.625%, 9/13/99 $ 302

350 Comdisco Inc., 7.75%, 9/1/99 357

200 Franchise Finance Corp., 7.00%,
11/30/00 204

300 International Lease Finance Corp.,
6.375%, 1/18/00 302

250 Lehman Brothers Holdings Inc.,
6.625%, 11/15/00 253

250 Lehman Brothers Holdings Inc.,
MTN, Series 1998 E, 6.00%,
2/26/01 249

385 Paine Webber Group Inc., MTN,
6.65%, 10/15/02 387

200 Paine Webber Group Inc., MTN,
7.96%, 4/28/00 207

500 Salomon Inc., 6.65%, 7/15/01 507
----------------

3,549
----------------

REAL ESTATE--3.3%

300 Price REIT, Inc. (The), 7.25%,
11/1/00 306

300 Spieker Properties, Inc., 6.80%,
12/15/01 305
----------------

611
----------------

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

TOBACCO--2.7%

$ 500 Philip Morris Companies Inc.,
7.75%, 5/1/99 $ 508
----------------

TOTAL CORPORATE BONDS--39.1% 7,309
----------------
(Cost $7,270)

TEMPORARY CASH INVESTMENTS

128 FHLMC Discount Notes, 5.43%,
5/1/98(3) 128

Repurchase Agreement, Merrill Lynch & Co., Inc.,
(U.S. Treasury obligations), in a joint trading
account at 5.375%, dated 4/30/98, due
5/1/98 (Delivery value $875) 875

875,000 Units of Participation in Chase Vista
Prime Money Market Fund (Institutional
Shares) 875
----------------

TOTAL TEMPORARY CASH
INVESTMENTS--10.0% 1,878
----------------
(Cost $1,878)

TOTAL INVESTMENT SECURITIES-- 100.0% $18,728
================
(Cost $18,644)

NOTES TO SCHEDULE OF INVESTMENTS

FHLMC = Federal Home Loan Mortgage Corporation

FNMA = Federal National Mortgage Association

MTN = Medium Term Note

(1) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.

(2) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may only be
sold to qualified institutional investors. The aggregate value of
restricted securities at April 30, 1998, was $385, which represented 2.2%
of net assets

(3) The rate disclosed is the yield to maturity at purchase.

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

* a list of each investment

* the principal amount of each investment

* the market value of each investment

* the dollar value of other short-term investments that are considered the same
as cash

* the percentage of investments in each industry, as applicable

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

www.americancentury.com 9

Performance--Intermediate-Term Bond
- -----------------------------------------------------------------------------

<TABLE>
TOTAL RETURNS AS OF APRIL 30, 1998

INVESTOR CLASS (INCEPTION 3/1/94) ADVISOR CLASS (INCEPTION 8/14/97)

INTERMEDIATE-TERM LEHMAN INTERM. INTERM. INVESTMENT-GRADE DEBT FUNDS(2) INTERMEDIATE-TERM LEHMAN INTERM.
BOND GOVT./CORP. INDEX AVERAGE RETURN FUND'S RANKING BOND GOVT./CORP. INDEX
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) ..... 2.88% 3.11% 3.21% -- 2.75% 3.11%

1 YEAR .......... 9.26% 8.94% 9.84% 132 OUT OF 209 -- --
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS

3 YEARS ......... 7.71% 7.73% 8.04% 91 OUT OF 158 -- --

LIFE OF FUND .... 6.41% 7.09%(3) 7.19%(3) 66 OUT OF 119(3) 5.15% 5.46%(4)

(1) Returns for periods less than one year are not annualized.

(2) According to Lipper Analytical Services.

(3) Since 3/31/94, the date nearest the class's inception for which data are
available.

(4) Since 8/31/97, the date nearest the class's inception for which data are
available.
</TABLE>

See pages 36-38 for more information about share classes, returns, the
comparative index and Lipper fund rankings.

[mountain chart - data below]

GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 3/31/94

Value on 4/30/98
Intermediate-Term Lehman Intermediate
Bond Govt./Corp. Index
3/31/94 $10,000 $10,000
6/30/94 $9,944 $9,876
9/30/94 $10,027 $9,925
12/31/94 $10,025 $9,962
3/31/95 $10,414 $10,458
6/30/95 $10,911 $11,137
9/30/95 $11,110 $11,350
12/31/95 $11,540 $11,879
3/31/96 $11,381 $11,601
6/30/96 $11,419 $11,655
9/30/96 $11,618 $11,860
12/31/96 $11,917 $12,223
3/31/97 $11,886 $12,118
6/30/97 $12,266 $12,559
9/30/97 $12,651 $12,999
12/31/97 $12,893 $13,416
3/31/98 $13,095 $13,620
4/30/98 $13,145 $13,688

[bar chart - data below]

ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING APRIL 30)

Intermediate-Term Lehman Intermediate
Bond Govt./Corp. Index
4/94 -0.73% -2.32%
4/95 5.98% 6.51%
4/96 7.57% 7.84%
4/97 6.30% 6.41%
4/98 9.26% 8.94%

The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment over the life
of the fund, while the chart below shows the fund's year-by-year performance.
The Lehman Intermediate Govt./Corp. Index is provided for comparison in each
chart. Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. Intermediate-Term Bond's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.

* From 3/31/94 (the date nearest the fund's inception for which index data are
available).

10 1-800-345-2021

Intermediate-Term Bond--Q&A
- -----------------------------------------------------------------------------

An interview with Jeff Houston and Bud Hoops, portfolio managers on the
Intermediate-Term Bond fund investment team.

HOW DID THE FUND PERFORM FOR THE SIX MONTHS?

Intermediate-Term Bond's Investor Class shares returned 2.88% for the
period ended April 30, 1998, compared with the 3.21% average return of the 223
"Intermediate Investment-Grade Debt Funds" tracked by Lipper Analytical
Services. The fund's benchmark, the Lehman Intermediate Government/ Corporate
Index, returned 3.11%. Fund returns are reduced by management expenses and
transaction costs, while benchmark returns are not. (See the Total Returns table
on the previous page for other fund performance comparisons.)

WHAT MARKET FACTORS INFLUENCED INTERMEDIATE-TERM BOND'S PERFORMANCE?

Treasury securities were in demand as investors sought a safe haven from
global equity-market volatility. "Real" yields (adjusted for inflation) were
around twice their historical averages also gave Treasurys a boost. The strength
of the U.S. dollar versus other world currencies also helped make Treasurys
attractive to overseas investors. This combination allowed Treasurys to perform
well and enhanced fund returns.

A few of the portfolio's corporate holdings were directly affected by the
meltdown in Asia. However, the negative impact was limited to a small handful of
issues thanks in part to our credit team.

WHY DID INTERMEDIATE-TERM BOND UNDERPERFORM ITS LIPPER PEERS?

Our tendency to hold more corporates and less Treasurys than the average
intermediate investment-grade debt fund was the main cause. As just discussed,
the Asian currency crisis helped Treasurys generally outperform corporates.
That's because corporate securities didn't rally as much as like-maturity
Treasurys when interest rates fell.

HOW DID YOU MANAGE THE PORTFOLIO?

We kept duration conservatively positioned within a narrow range around
four years--roughly neutral compared with Intermediate-Term Bond's peers.
Duration measures a portfolio's sensitivity to changes in interest rates. The
longer a portfolio's duration, the more the share price appreciates when rates
fall, and the more the share price falls when rates rise. Conversely, a shorter
duration means a bond portfolio's price fluctuates less when rates change.

[right margin]

The biggest positives for the fund, and the bond market in general, were falling
interest rates and low inflation.

PORTFOLIO AT A GLANCE

4/30/98 10/31/97

NUMBER OF SECURITIES 69 58

WEIGHTED AVERAGE
MATURITY 6.5 YRS 6.7 YRS

AVERAGE DURATION 4.3 YRS 4.1 YRS

EXPENSE RATIO (FOR
INVESTOR CLASS) 0.75%* 0.75%

* Annualized.

YIELD AS OF APRIL 30, 1998

INVESTOR ADVISOR

30-DAY SEC YIELD 5.76% 5.51%

Investment terms are defined in the Glossary on page 38.

www.americancentury.com 11

Intermediate-Term Bond--Q&A (continued)
- -----------------------------------------------------------------------------

WHAT WERE SOME BETTER-PERFORMING SECURITIES THAT YOU FAVORED?

WHAT ROLE DOES THE CREDIT TEAM PLAY IN FUND PERFORMANCE?

We believe this gives us a better opportunity to find undervalued
securities and avoid ones that are at greater risk of being devalued. Also, the
team gives us more flexibility when conditions change. For example, because we
maintain a large number of corporates in the portfolio, monitoring exposure to
developments like the ongoing Asian crisis is vital.

[left margin]

Asset-backed securities generally have very high credit quality because they
usually carry credit enhancements that provide AAA ratings.

[pie charts]

PORTFOLIO COMPOSITION BY SECURITY TYPE

AS OF APRIL 30, 1998

Corporate Bonds 42%
U.S. Treasury 16%
Foreign Corp. Bonds 10%
Mortgage-Backed 10%
Asset-Backed 9%
Other 13%

AS OF OCTOBER 31, 1997

Corporate Bonds 56%
U.S. Treasury 17%
Asset-Backed 9%
Mortgage-Backed 7%
Foreign Corp. Bonds 4%
Other 7%

12 1-800-345-2021

Intermediate-Term Bond--Q&A (continued)
- -----------------------------------------------------------------------------

WHAT'S YOUR OUTLOOK FOR U.S. BONDS?

As long as inflation stays low, the bond market should continue to be an
appealing place. Although unemployment is low and wage pressures are mounting,
inflation remains well behaved. The computer revolution, corporate efficiency
and global competition have helped to keep prices in check. U.S. economic growth
is strong and could pose an inflation threat if it expands unfettered, but it
has constraints--the Asian economic crisis is projected to reduce U.S. growth
somewhat.

WHAT ARE YOUR PLANS FOR THE PORTFOLIO GOING FORWARD?

[right margin]

As long as inflation stays low and economic growth remains moderate, the bond
market should continue to be an appealing place.

PORTFOLIO COMPOSITION BY CREDIT RATING

% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

AAA 48% 45%
AA 6% 4%
A 20% 30%
BBB 25% 21%
BB 1% --

The ratings are provided by Standard & Poor's. (See page 38 for more
information.)

Leveraging our credit research team, we will work to uncover high-yielding,
attractively valued securities with the potential to enhance returns.

www.americancentury.com 13

Intermediate-Term's Schedule of Investments
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

U.S. TREASURY SECURITIES

$800 U.S. Treasury Notes, 6.00%,
9/30/98 $ 802

250 U.S. Treasury Notes, 5.375%,
1/31/00 249

500 U.S. Treasury Notes, 5.50%,
3/31/00 499

300 U.S. Treasury Notes, 5.375%,
2/15/01 298

100 U.S. Treasury Notes, 7.75%,
2/15/01 105

300 U.S. Treasury Notes, 6.50%,
5/31/02 309

300 U.S. Treasury Notes, 5.875%,
2/15/04 303

600 U.S. Treasury Notes, 7.25%,
5/15/04 647

400 U.S. Treasury Bonds, 6.375%,
8/16/27 422

225 U.S. Treasury Bonds, 6.125%,
11/15/27 230
----------------

TOTAL U.S. TREASURY SECURITIES--15.5% 3,864
----------------
(Cost $3,838)

U.S. GOVERNMENT AGENCY SECURITIES-1.4%

350 FNMA, MTN, 7.49%, 5/22/07 359
----------------
(Cost $352)

MORTGAGE-BACKED SECURITIES(1)

622 FHLMC Pool #E00279, 6.50%,
2/1/09 627

295 FHLMC Pool #C00578, 6.50%,
1/1/28 293

252 FNMA Pool #413812, 6.50%,
1/1/28 250

382 FNMA Pool #411821, 7.00%,
1/1/28 387

445 GNMA Pool #002202, 7.00%,
4/20/26 451

299 GNMA Pool #467626, 7.00%,
2/15/28 303

247 GNMA Pool #458862, 7.50%,
2/15/28 254
----------------

TOTAL MORTGAGE-BACKED
SECURITIES--10.3% 2,565
----------------
(Cost $2,241)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

ASSET-BACKED SECURITIES(1)

$400 California Infrastructure SCE-1,
Series 1997-1, Class A6,
6.38%, 4/27/05 $ 405

300 First Merchants Auto
Receivables Corp., Series
1996 B, Class A2, 6.80%, 5/15/01 304

300 NationsBank Auto Owner Trust,
Series 1996 A, Class B1,
6.75%, 6/15/01 304

195 United Companies Financial Corp.,
Home Equity Loan, Series
1996 B1, Class A2, 7.08%,
4/15/10 196

250 United Companies Financial Corp.,
Home Equity Loan, Series
1996 D1, Class A4, 6.78%,
2/15/16 253

400 United Companies Financial Corp.,
Home Equity Loan, Series
1996 D1, Class A5, 6.92%,
10/15/18 407

300 United Companies Financial Corp.,
Home Equity Loan, Series
1997 C, Class A7, 6.85%,
1/15/29 303
----------------

TOTAL ASSET-BACKED SECURITIES--8.7% 2,172
----------------
(Cost $2,143)

CORPORATE BONDS

BANKING--4.3%

500 BankAmerica Corp., 7.75%,
7/15/02 528

300 Capital One Bank, 5.95%,
2/15/01 297

250 Corestates Capital Corp., 5.875%,
10/15/03 246
----------------

1,071
----------------

COMMUNICATIONS SERVICES--4.3%

250 Ameritech Capital Funding, 6.15%,
1/15/08 248

250 TKR Cable Inc., 10.50%,
10/30/99 276

500 WorldCom Inc., 8.875%, 1/15/01 545
----------------

1,069
----------------

ELECTRICAL & ELECTRONIC
COMPONENTS--1.3%

300 Anixter International Inc., 8.00%,
9/15/03 317
----------------

See Notes to Financial Statements

14 1-800-345-2021

Intermediate-Term's Schedule of Investments (cont.)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

ENERGY (PRODUCTION & MARKETING)--2.8%

$500 Enron Corp., 6.625%, 11/15/05 $ 506

200 Seagull Energy Corp., 7.50%,
9/15/27 205
----------------

711
----------------

FINANCIAL SERVICES--9.2%

400 Advanta Corp., MTN, Series B,
7.00%, 5/1/01 369

300 Dean Witter, Discover & Co.,
6.875%, 3/1/03 308

200 Ford Motor Credit Co., 6.125%,
4/28/03 199

250 Ford Motor Credit Co., 6.75%,
5/15/05 256

300 Franchise Finance Corp., 7.00%,
11/30/00 305

250 Norwest Financial, Inc., 6.25%,
11/1/02 253

300 Paine Webber Group Inc., MTN,
7.96%, 4/28/00 310

300 Salomon Inc., 6.65%, 7/15/01 304
----------------

2,304
----------------

INSURANCE--3.5%

300 Aetna Services, Inc., 6.75%,
8/15/01 307

250 Nationwide Mutual Insurance Co.,
6.50%, 2/15/04 (Acquired
2/9/96, Cost $252)(2) 250

300 Zurich Capital Trust I, 8.38%,
6/1/37 (Acquired 5/28/97-
6/11/97, Cost $304)(2) 328
----------------

885
----------------

LEISURE--1.0%

250 Time Warner Inc., 6.85%,
1/15/26 259
----------------

MEDICAL EQUIPMENT & SUPPLIES--1.2%

300 United States Surgical Corp.,
7.25%, 3/15/08 300
----------------

PRINTING & PUBLISHING--1.0%

250 News America Inc., 6.625%,
1/9/08 (Acquired 2/12/98,
Cost $249)(2) 247
----------------

RAILROAD--1.4%

350 Wisconsin Central Transportation
Corp., 6.625%, 4/15/08 348
----------------

REAL ESTATE--5.1%

400 Chelsea GCA Realty Partners,
7.25%, 10/21/07 408

350 Price REIT, Inc. (The), 7.25%,
11/1/00 357

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

$200 Price REIT, Inc. (The), 7.125%,
6/15/04 $ 206

300 Spieker Properties, Inc., 6.80%,
12/15/01 305
----------------

1,276
----------------

RETAIL (GENERAL MERCHANDISE)--0.9%

200 Sears, Roebuck & Co., Inc., MTN,
8.29%, 6/10/02 215
----------------

TOBACCO--1.0%

250 Philip Morris Companies Inc.,
6.95%, 6/1/06 256
----------------

UTILITIES--4.9%

300 Avon Energy Partners Holdings,
7.05%, 12/11/07 (Acquired
1/20/98, Cost $312)(2) 309

350 CalEnergy Co. Inc., 7.63%,
10/15/07 351

250 Idaho Power Co., 8.65%, 1/1/00 261

300 PG&E Corp., Series 93C, 6.25%,
8/1/03 302
----------------

1,223
----------------

TOTAL CORPORATE BONDS--41.9% 10,481
----------------
(Cost $10,625)

FOREIGN CORPORATE BONDS (U.S. $ DENOMINATED)

BANKING--1.3%

300 ABN Amro Bank NV (Chicago),
7.125%, 6/18/07 315
----------------

COMMUNICATIONS SERVICES--2.0%

500 Cable & Wireless Communications,
6.625%, 3/6/05 504
----------------

ELECTRICAL & ELECTRONIC
COMPONENTS--2.3%

300 Hutchison Whampoa Financial,
Series A, 6.95%, 8/1/07
(Acquired 8/21/97-9/12/97,
Cost $294)(2) 285

300 Yorkshire Power Finance, 6.15%,
2/25/03 (Acquired 2/19/98,
Cost $300)(2) 298
----------------

583
----------------

FINANCIAL SERVICES--1.3%

350 Wharf International Finance Ltd.,
7.625%, 3/13/07 315
----------------

METALS & MINING--2.1%

500 Barrick Gold Corp., 7.50%,
5/1/07 530
----------------

See Notes to Financial Statements

www.americancentury.com 15

Intermediate-Term's Schedule of Investments (cont.)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

PAPER & FOREST PRODUCTS--1.2%

$300 Abitibi-Consolidated Inc., 7.40%,
4/1/18 $ 301
----------------

TOTAL FOREIGN CORPORATE BONDS--10.2% 2,548
----------------
(Cost $2,552)

TEMPORARY CASH INVESTMENTS

690 FHLMC Discount Notes, 5.43%,
5/1/98(3) 690

Repurchase Agreement, Merrill Lynch & Co., Inc.,
(U.S. Treasury obligations), in a joint trading
account at 5.375%, dated 4/30/98, due
5/1/98 (Delivery value $1,161) 1,161

1,161,000 Units of Participation in Chase Vista
Prime Money Market Fund (Institutional
Shares) 1,161
----------------

TOTAL TEMPORARY CASH
INVESTMENTS--12.0% 3,012
----------------
(Cost $3,012)

TOTAL INVESTMENT SECURITIES--100.0% $25,001
================
(Cost $24,763)

NOTES TO SCHEDULE OF INVESTMENTS

FHLMC = Federal Home Loan Mortgage Corporation

FNMA = Federal National Mortgage Association

GNMA = Government National Mortgage Association

MTN = Medium Term Note

(1) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.

(2) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may only be
sold to qualified institutional investors. The aggregate value of restricted
securities at April 30, 1998 was $1,717, which represented 7.4% of net
assets.

(3) The rate disclosed is the yield to maturity at purchase.

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

* a list of each investment

* the principal amount of each investment

* the market value of each investment

* the dollar value of other short-term investments that are considered the same
as cash

* the percentage of investments in each industry, as applicable

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

16 1-800-345-2021

Performance--Benham Bond
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL RETURNS AS OF APRIL 30, 1998

INVESTOR CLASS (INCEPTION 3/2/87) ADVISOR CLASS (INCEPTION 8/8/97)

BENHAM LEHMAN AGGREGATE A-RATED CORPORATE DEBT FUNDS(2) BENHAM LEHMAN AGGREGATE
BOND BOND INDEX AVERAGE RETURN FUND'S RANKING BOND BOND INDEX
<S> <C> <C> <C> <C> <C> <C>

6 MONTHS(1) ..... 2.89% 3.59% 3.26% -- 2.76% 3.59%

1 YEAR .......... 10.12% 10.91% 10.63% 83 OUT OF 140 -- --
- ----------------------------------------------------------------------------------------------------------------

AVERAGE ANNUAL RETURNS

3 YEARS ......... 8.55% 8.87% 8.40% 42 OUT OF 115 -- --

5 YEARS ......... 6.46% 6.91% 6.64% 31 OUT OF 63 -- --

10 YEARS ........ 8.46% 9.06% 8.83% 24 OUT OF 35 -- --

LIFE OF FUND .... 7.69% 8.55%(3) 8.31%(3) 23 OUT OF 28(3) 6.13% 6.64%(4)

(1) Returns for periods less than one year are not annualized.

(2) According to Lipper Analytical Services.

(3) Since 3/31/87, the date nearest the class's inception for which data are
available.

(4) Since 8/31/97, the date nearest the class's inception for which data are
available.
</TABLE>

See pages 36-38 for more information about share classes, returns, the
comparative index and Lipper fund rankings.

[mountain chart - data below]

GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made 4/30/88

Value on 4/30/98
Benham Bond Lehman Aggregate Bond Index
4/88 $10,000 $10,000
4/89 $10,699 $10,794
4/90 $11,269 $11,769
4/91 $13,026 $13,556
4/92 $14,594 $15,048
4/93 $16,468 $17,043
4/94 $16,511 $17,188
4/95 $17,604 $18,444
4/96 $19,173 $20,038
4/97 $20,448 $21,456
4/98 $22,521 $23,797

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING APRIL 30)

Benham Bond Lehman Aggregate Bond Index
4/89 6.96% 7.94%
4/90 5.38% 9.03%
4/91 15.59% 15.19%
4/92 12.04% 11.00%
4/93 12.84% 13.26%
4/94 0.26% 0.85%
4/95 6.62% 7.31%
4/96 8.92% 8.64%
4/97 6.65% 7.08%
4/98 10.12% 10.91%

The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment in the fund
over 10 years, while the chart below shows the fund's year-by-year performance.
The Lehman Aggregate Bond Index is provided for comparison in each chart. Past
performance does not guarantee future results. Investment return and principal
value will fluctuate, and redemption value may be more or less than original
cost. Benham Bond's total returns include operating expenses (such as
transaction costs and management fees) that reduce returns, while the total
returns of the index do not.

www.americancentury.com 17

Benham Bond--Q&A
- -----------------------------------------------------------------------------

An interview with Bud Hoops and Jeff Houston, portfolio managers on the
Benham Bond fund investment team.

HOW DID THE FUND PERFORM FOR THE SIX MONTHS?

Benham Bond's Investor Class shares returned 2.89% for the period ended
April 30, 1998, compared with the 3.26% average return of the 146 "A-Rated
Corporate Debt Funds" tracked by Lipper Analytical Services. The fund's
benchmark, the Lehman Aggregate Bond Index, returned 3.59%. Fund returns are
reduced by management expenses and transaction costs, while benchmark returns
are not. (See the Total Returns table on the previous page for other fund
performance comparisons.)

WHAT MARKET FACTORS INFLUENCED BENHAM BOND'S PERFORMANCE?

The biggest positives for Benham Bond, and the bond market in general, were
falling interest rates and low inflation. The Asian currency crisis also had a
pronounced effect on the fixed-income market, benefiting Treasurys but hurting
corporates.

Treasury securities were in demand as investors sought a safe haven from
global equity-market volatility. "Real" yields (adjusted for inflation) were
around twice their historical averages gave Treasurys a boost. The strength of
the U.S. dollar versus other world currencies also helped make Treasurys
attractive to overseas investors. The combination allowed Treasurys to perform
well and enhanced returns.

A few of the portfolio's corporate holdings were directly affected by the
meltdown in Asia. However, the negative impact was limited to a small handful of
issues thanks in part to our credit team.

WHY DID BENHAM BOND UNDERPERFORM ITS LIPPER PEERS?

Benham Bond's tendency to hold more corporates and less Treasurys than its
Lipper peers was the main cause. Although we added slightly to the portfolio's
Treasurys and pared some of its corporates, the disparity in returns between
these two types of securities had a negative impact on performance. That's
because, as just discussed, overseas developments and corresponding
equity-market volatility kept corporate securities from rallying as much as
Treasurys during the six months.

[left margin]

The biggest positives for Benham Bond, and the bond market in general, were
falling interest rates and low inflation.

PORTFOLIO AT A GLANCE

4/30/98 10/31/97

NUMBER OF SECURITIES 53 46

WEIGHTED AVERAGE
MATURITY 10.8 YRS 10.8 YRS

AVERAGE DURATION 5.2 YRS 5.0 YRS

EXPENSE RATIO (FOR
INVESTOR CLASS) 0.80%* 0.80%

* Annualized.

YIELD AS OF APRIL 30, 1998

INVESTOR ADVISOR

30-DAY SEC YIELD 5.83% 5.58%

Investment terms are defined in the Glossary on page 38.

18 1-800-345-2021

Benham Bond--Q&A (continued)
- -----------------------------------------------------------------------------

HOW DID YOU MANAGE DURATION?

We kept duration conservatively positioned within a narrow range around 5.0
years--roughly neutral compared with Benham Bond's peers. Duration measures a
portfolio's sensitivity to changes in interest rates. The longer a portfolio's
duration, the more the share price appreciates when rates fall, and the more the
share price falls when rates rise. Conversely, a shorter duration means a bond
portfolio's price fluctuates less when rates change.

WHAT WERE SOME BETTER PERFORMING SECURITIES THAT YOU FAVORED?

WHAT ROLE DOES THE CREDIT TEAM PLAY IN FUND PERFORMANCE?

We believe this gives us a better opportunity to find undervalued
securities, and avoid ones that are at greater risk of being devalued. Also, the
team gives us more flexibility when conditions change. For example, because we
maintain a large amount of corporates in the portfolio, monitoring exposure to
developments like the ongoing Asian crisis is vital.

[right margin]

Accurately predicting the short-term direction of rates is extremely difficult,
so we prefer to avoid making aggressive duration bets.

[pie charts]
PORTFOLIO COMPOSITION BY SECURITY TYPE

AS OF APRIL 30, 1998

Corporate Bonds 56%
Foreign Corp. Bonds 14%
U.S. Treasury 13%
Mortgage-Backed 9%
Asset-Backed 4%
Other 4%

AS OF OCTOBER 31, 1997

Corporate Bonds 62%
U.S. Treasury 10%
Mortgage-Backed 10%
Asset-Backed 6%
Foreign Govt.
& Agencies 5%
Other 7%

www.americancentury.com 19

Benham Bond--Q&A (continued)
- -----------------------------------------------------------------------------

WHAT'S YOUR OUTLOOK FOR U.S. BONDS?

As long as inflation stays low and economic growth remains moderate, the
bond market should continue to be an appealing place. Although unemployment is
low and wage pressures are mounting, inflation remains well-behaved. The
computer revolution, corporate efficiency and global competition have helped
keep prices in check. U.S. economic growth is strong and could pose an inflation
threat if it expands unfettered, but it has constraints--the Asian economic
crisis is projected to reduce U.S. growth somewhat.

WHAT ARE YOUR PLANS FOR THE PORTFOLIO GOING FORWARD?

[left margin]

Although unemployment is low and wage pressures are mounting, inflation remains
well-behaved. The computer revolution, corporate efficiency and global
competition have helped keep prices in check.

PORTFOLIO COMPOSITION BY CREDIT RATING

% OF FUND INVESTMENTS

AS OF AS OF
4/30/98 10/31/97

AAA 32% 34%
AA 3% 4%
A 35% 41%
BBB 28% 21%
BB 2% --

The ratings are provided by Standard & Poor's. (See page 38 for more
information.)

20 1-800-345-2021

Benham Bond's Schedule of Investments
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

U.S. TREASURY SECURITIES

$1,500 U.S. Treasury Notes, 5.875%,
1/31/99 $ 1,504

3,500 U.S. Treasury Notes, 5.50%,
12/31/00 3,490

2,000 U.S. Treasury Notes, 6.25%,
6/30/02 2,042

4,000 U.S. Treasury Notes, 5.625%,
12/31/02 3,994

2,500 U.S. Treasury Notes, 5.50%,
1/31/03 2,483

3,000 U.S. Treasury Bonds, 6.125%,
11/15/27 3,073
----------------

TOTAL U.S. TREASURY SECURITIES--12.5% 16,586
----------------
(Cost $16,601)

U.S. GOVERNMENT AGENCY SECURITIES--1.5%

2,000 Tennesse Valley Authority, 6.875%,
12/15/43 2,021
----------------
(Cost $1,854)

MORTGAGE-BACKED SECURITIES(1)

4,904 FHLMC Pool #E68681, 6.00%,
1/1/13 4,846

409 FHLMC REMIC, Series 19,
Class E PAC, 8.00%, 8/15/19 413

647 FHLMC REMIC, Series 116,
Class F PAC, 8.50%, 2/15/20 660

4,309 FNMA Pool #250452, 6.50%,
1/1/26 4,283

832 FNMA REMIC, Series 1989-35,
Class G, 9.50%, 7/25/19 883

79 FNMA REMIC, Series 1990-88,
Class H PAC, 7.75%, 9/25/19 79

160 FNMA REMIC, Series 1991-21,
Class G PAC, 6.00%,
12/25/19 160
----------------

TOTAL MORTGAGE-BACKED
SECURITIES--8.6% 11,324
----------------
(Cost $11,137)

ASSET-BACKED SECURITIES(1)

2,414 Money Store (The) Home Equity Trust,
Series 1996 D, Class A3 SEQ,
6.30%, 11/15/11 2,417

2,820 United Companies Financial Corp.,
Home Equity Loan, Series
1995 D1, Class A2, 6.20%,
3/1/14 2,828
----------------

TOTAL ASSET-BACKED SECURITIES--4.0% 5,245
----------------
(Cost $5,213)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

CORPORATE BONDS

AEROSPACE & DEFENSE--1.6%

$2,000 Lockheed Martin Corp., 7.25%,
5/15/06 $ 2,109
----------------

AIRLINES--2.6%

3,232 Delta Air Lines, Inc., 7.54%,
10/11/11 3,393
----------------

BANKING--13.2%

5,000 Citicorp Euro, 7.00%, 1/2/04 5,171

2,000 Corestates Capital Corp., 5.875%,
10/15/03 1,965

3,000 First Union Corp., 8.77%,
11/15/99 3,123

3,000 Mellon Financial Co., 6.00%,
3/1/04 2,972

2,000 Nationsbank Capital Trust II,
7.83%, 12/15/26 2,141

2,000 Wells Fargo Capital, 7.96%,
12/15/26 2,132
----------------

17,504
----------------

CHEMICALS & RESINS--5.0%

5,000 ARCO Chemical Co., 10.25%,
11/1/10 6,664
----------------

COMMUNICATION SERVICES--1.6%

2,000 WorldCom Inc., 8.875%, 1/15/01 2,180
----------------

COMPUTER SYSTEMS--1.2%

1,500 International Business Machines
Corp., 7.125%, 12/1/96 1,574
----------------

ENERGY (PRODUCTION)--6.7%

3,000 Columbia Gas Systems, 7.42%,
11/28/15 3,151

2,500 Enron Corp., 6.625%, 11/15/05 2,530

3,000 Oryx Energy Co., 8.125%,
10/15/05 3,205
----------------

8,886
----------------

FINANCIAL SERVICES--9.2%

2,000 Comdisco, Inc., 6.375%, 11/30/01 2,013

3,000 Ford Motor Credit Co., 6.50%,
2/28/02 3,038

4,000 Lehman Brothers Holdings Inc.,
6.625%, 11/15/00 4,051

3,000 Paine Webber Group Inc., MTN,
7.96%, 4/28/00 3,101
----------------

12,203
----------------

See Notes to Financial Statements

www.americancentury.com 21

Benham Bond's Schedule of Investments (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

INSURANCE--5.3%

$1,000 Delphi Financial Group, Inc.,
9.31%, 3/25/27 $ 1,123

3,000 Lincoln National Corp., 9.125%,
10/1/04 3,657

2,000 Zurich Capital Trust I, 8.38%,
6/1/37 (Acquired 6/11/97,
Cost $2,059)(2) 2,187
----------------

6,967
----------------

LEISURE--1.6%

2,000 Time Warner Inc., 6.85%,
1/15/26 2,072
----------------

REAL ESTATE--4.7%

1,000 Chelsea GCA Realty Partners,
7.25%, 10/21/07 1,020

2,000 Price REIT, Inc. (The), 7.125%,
6/15/04 2,056

3,000 Spieker Properties Inc., MTN,
7.58%, 12/17/01 3,128
----------------

6,204
----------------

TOBACCO--1.1%

1,500 Philip Morris Companies Inc.,
6.80%, 12/1/03 1,526
----------------

UTILITIES--2.3%

3,000 CalEnergy Co. Inc., 7.63%,
10/15/07 3,006
----------------

TOTAL CORPORATE BONDS--56.1% 74,288
----------------
(Cost $74,212)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

FOREIGN CORPORATE BONDS (U.S. $ DENOMINATED)

BANKING--5.6%

$5,000 National Bank of Canada,
8.125%, 8/15/04 $ 5,445

2,000 Santander Financial Issuances
Ltd., 6.375%, 2/15/11 1,951
----------------

7,396
----------------

COMMUNICATIONS SERVICES--2.6%

2,000 Cable & Wireless
Communications, 6.375%,
3/6/03 2,002

1,350 Cable & Wireless Communications,
6.625%, 3/6/05 1,361
----------------

3,363
----------------

METALS & MINING--2.6%

2,000 Barrick Gold Corp., 7.50%,
5/1/07 2,118

1,500 Wharf International Finance Ltd.,
7.625%, 3/13/07 1,350
----------------

3,468
----------------

PAPER & FOREST PRODUCTS--1.0%

1,350 Abitibi-Consolidated Inc., 7.40%,
4/1/18 1,354
----------------

PRINTING & PUBLISHING--2.5%

3,000 News America Holdings Inc.,
8.50%, 2/15/05 3,314
----------------

TOTAL FOREIGN CORPORATE BONDS--14.3% 18,895
----------------
(Cost $15,733)

See Notes to Financial Statements

22 1-800-345-2021

Benham Bond's Schedule of Investments (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ in Thousands) Value
- -----------------------------------------------------------------------------

SOVEREIGN GOVERNMENTS & AGENCIES--1.6%

$2,000 Province of Quebec Bonds,
7.125%, 2/9/24 $ 2,088
----------------
(Cost $1,837)

TEMPORARY CASH INVESTMENTS--1.4%

Repurchase Agreement, Bank of America N.T.
& S.A., (U.S. Treasury obligations), in a joint
trading account at 5.48%, dated 4/30/98,
due 5/1/98 (Delivery value $1,886) 1,886
----------------
(Cost $1,886)

TOTAL INVESTMENT SECURITIES--100.0% $132,333
================
(Cost $128,473)

NOTES TO SCHEDULE OF INVESTMENTS

FHLMC = Federal Home Loan Mortgage Corporation

FNMA = Federal National Mortgage Association

MTN = Medium Term Note

(1) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.

(2) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may only be
sold to qualified institutional investors. The aggregate value of
restricted securities at April 30,1998, was $2,187, which represented 1.6%
of net assets.

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

* a list of each investment

* the principal amount of each investment

* the market value of each investment

* the dollar value of other short-term investments that are considered the same
as cash

* the percentage of investments in each industry, as applicable

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

www.americancentury.com 23

Statements of Assets and Liabilities
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)
<TABLE>

LIMITED-TERM INTERMEDIATE-TERM BENHAM BOND

ASSETS (In Thousands Except Per-Share Amounts)
<S> <C> <C> <C>
Investment securities, at value
(identified cost of
$18,644, $24,763 and
$128,473, respectively) (Note 3) .... $ 18,728 $ 25,001 $ 132,333

Cash .................................. -- 2 50

Receivable for investments sold ....... -- -- 96

Interest receivable ................... 230 336 2,362
------------- ------------- -------------

18,958 25,339 134,841
------------- ------------- -------------

LIABILITIES

Disbursements in excess
of demand deposit cash .............. 541 1,473 287

Payable for capital shares redeemed ... -- 2 232

Payable for investments purchased ..... 887 501 --

Dividends payable ..................... 16 22 130

Distribution and service
fees payable (Note 2) ............... -- 1 1

Accrued management fees (Note 2) ...... 10 14 89
------------- ------------- -------------

1,454 2,013 739
------------- ------------- -------------

Net Assets ............................ $ 17,504 $ 23,326 $ 134,102
============= ============= =============

NET ASSETS CONSIST OF:

Capital (par value and paid in surplus) $ 17,345 $ 22,962 $ 130,335

Accumulated undistributed
net realized gain (loss)
from investment transactions ........ 75 126 (93)

Net unrealized appreciation
on investments (Note 3) ............. 84 238 3,860
------------- ------------- -------------

$ 17,504 $ 23,326 $ 134,102
============= ============= =============

Investor Class ($ and shares in full)

Net assets ............................ $ 16,817,096 $ 20,691,182 $ 132,681,754

Shares outstanding .................... 1,689,513 2,056,730 13,695,759

Net asset value per share ............. $ 9.95 $ 10.06 $ 9.69

Advisor Class ($ and shares in full)

Net assets ............................ $ 686,718 $ 2,634,772 $ 1,420,363

Shares outstanding .................... 69,009 261,802 146,613

Net asset value per share ............. $ 9.95 $ 10.06 $ 9.69
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF ASSETS AND LIABILITIES--This page details what
the fund owns (assets), what it owes (liabilities), and its net assets as of the
last day of the period. If you subtract what the fund owes from what it owns,
you get the fund's net assets. The net assets by class divided by the total
number of fund shares outstanding by class gives you the price of an individual
share, or the net asset value per share, for each class of shares.

NET ASSETS are also broken out by capital (money invested by shareholders); net
gains earned on investment activity but not yet paid to shareholders or net
losses on investment activity (known as realized gains or losses); and gains or
losses on securities still owned by the fund (known as unrealized gains or
losses). This breakout tells you the value of assets that are
performance-related, such as investment gains or losses, and the value of assets
that are not related to performance, such as shareholder investments and
redemptions.

See Notes to Financial Statements

24 1-800-345-2021

Statements of Operations
- -----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)

<TABLE>
LIMITED-TERM INTERMEDIATE-TERM BENHAM BOND

INVESTMENT INCOME (In Thousands)

Income:
<S> <C> <C> <C>
Interest .............................. $ 602 $ 719 $ 4,471
------- ------- -------

Expenses (Note 2):

Management fees ....................... 67 78 524

Distribution fees - Advisor Class ..... -- 3 2

Service fees - Advisor Class .......... -- 3 2

Directors' fees and expenses .......... -- -- 1
------- ------- -------

67 84 529
------- ------- -------

Net investment income ................. 535 635 3,942
------- ------- -------

REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 3)

Net realized gain (loss) on investments 76 112 (68)

Change in net unrealized
appreciation on investments ........... (44) (154) (196)
------- ------- -------

Net realized and unrealized
gain (loss) on investments ............ 32 (42) (264)
------- ------- -------

Net Increase in Net Assets
Resulting from Operations ............. $ 567 $ 593 $ 3,678
======= ======= =======
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF OPERATIONS--This statement breaks out how each
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.

Fund OPERATIONS include:

* interest income earned from investments

* management fees and other expenses

* gains or losses from selling investments (known as realized gains or losses)

* gains or losses on current fund holdings (known as unrealized gains or losses

See Notes to Financial Statements

www.americancentury.com 25

Statements of Changes in Net Assets
- -----------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED) AND OCTOBER 31, 1997

<TABLE>
LIMITED-TERM INTERMEDIATE-TERM BENHAM BOND
1998 1997 1998 1997 1998 1997

OPERATIONS (In Thousands)

<S> <C> <C> <C> <C> <C> <C>
Net investment income ......... $ 535 $ 634 $ 635 $ 1,058 $ 3,942 $ 8,276

Net realized gain (loss)
on investments .............. 76 26 112 19 (68) 350

Change in net unrealized
appreciation (depreciation)
on investments .............. (44) 76 (154) 316 (196) 2,059
--------- --------- --------- --------- --------- ---------

Net increase in net assets
resulting from operations ... 567 736 593 1,393 3,678 10,685
--------- --------- --------- --------- --------- ---------

DISTRIBUTIONS TO
SHAREHOLDERS

From net investment income:

Investor Class .............. (529) (634) (568) (1,052) (3,907) (8,273)

Advisor Class ............... (6) -- (67) (6) (35) (3)

From net realized gains
from investment transactions:

Investor Class .............. (29) -- -- -- (368) (1,310)

Advisor Class ............... -- -- (1)
--------- --------- --------- --------- --------- ---------

Decrease in net assets
from distributions .......... (564) (634) (635) (1,058) (4,311) (9,586)
--------- --------- --------- --------- --------- ---------

CAPITAL SHARE
TRANSACTIONS (NOTE 4)

Net increase (decrease) in
net assets from capital
share transactions .......... 2,232 7,075 3,225 4,182 7,692 (16,623)
--------- --------- --------- --------- --------- ---------

Net increase (decrease)
in net assets ............... 2,235 7,177 3,183 4,517 7,059 (15,524)

NET ASSETS

Beginning of period ........... 15,269 8,092 20,143 15,626 127,043 142,567
--------- --------- --------- --------- --------- ---------

End of period ................. $ 17,504 $ 15,269 $ 23,326 $ 20,143 $ 134,102 $ 127,043
========= ========= ========= ========= ========= =========
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
each fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:

* performance (operations)

* distributions to shareholders

* shareholders either investing, reinvesting distributions, or withdrawing mone

The changes are broken out into:

* operations--a summary of the Statement of Operations from the previous page
for the most recent period

* distributions--income and gains distributed to shareholders

* share transactions--shareholders' purchases, reinvestments, and redemptions

The statements also includes net assets at the beginning and end of the period.

See Notes to Financial Statements

26 1-800-345-2021

Notes to Financial Statements
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--American Century Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century - Benham Limited-Term Bond Fund
(Limited-Term), American Century - Benham Intermediate-Term Bond Fund
(Intermediate-Term), and American Century - Benham Bond Fund (Benham Bond) (the
Funds) are three of the thirteen series of funds issued by the Corporation. The
investment objective of Limited-Term is to seek income. The investment objective
of Intermediate-Term is to seek a competitive level of income. The investment
objective of Benham Bond is to seek a high level of income. The Funds pursue
their objectives by investing primarily in bonds and other debt obligations with
maturities based on each Funds' investment objective. The Funds are authorized
to issue two classes of shares: the Investor Class and the Advisor Class. The
two classes of shares differ principally in their respective shareholder
servicing and distribution expenses and arrangements. All shares of the Fund
represent an equal pro rata interest in the assets of the class to which such
shares belong, and have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except for class specific expenses and
exclusive rights to vote on matters affecting only individual classes. The
following significant accounting policies, related to both classes of the Funds,
are in accordance with accounting policies generally accepted in the investment
company industry.

SECURITY VALUATIONS--Portfolio securities are valued through valuations
obtained through a commercial pricing service or at the mean of the most recent
bid and asked prices. When valuations are not readily available, securities are
valued at fair value as determined in accordance with procedures adopted by the
Board of Directors.

SECURITY TRANSACTIONS--Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.

INVESTMENT INCOME--Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums.

REPURCHASE AGREEMENTS--The Funds may enter into repurchase agreements with
institutions the Funds' investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Funds require that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Funds to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to the Funds under each repurchase agreement.

JOINT TRADING ACCOUNT--Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Funds, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS--It is the Funds' policy to distribute all taxable income
and capital gains to shareholders and to otherwise qualify as a regulated
investment company under provisions of the Internal Revenue Code. Accordingly,
no provision has been made for federal or state income taxes.

DISTRIBUTIONS TO SHAREHOLDERS--Distributions from net investment income are
declared daily and distributed monthly. Distributions from net realized gains
are declared and paid annually.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the period. Actual results could differ from
these estimates.

ADDITIONAL INFORMATION--Effective January 15, 1998, Funds Distributor, Inc.
(FDI) became the Corporation's distributor. Certain officers of FDI are also
officers of the Corporation.

www.americancentury.com 27

Notes to Financial Statements (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The Corporation has entered into a Management Agreement with ACIM that
provides the Funds with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreements provide that all
expenses of the Funds, except brokerage commissions, taxes, interest, expenses
of those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will by paid by ACIM. The fee is computed daily and paid monthly based
on each Fund's class average daily closing net assets during the previous month.
The annual management fee for the Investor Class of Limited-Term,
Intermediate-Term and Benham Bond is 0.70%, 0.75% and 0.80%, respectively. The
annual management fee for the Advisor Class of Limited-Term, Intermediate-Term
and Benham Bond is 0.45%, 0.50% and 0.55%, respectively.

The Board of Directors has adopted the Advisor Class Master Distribution
and Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Plan provides that the Funds will pay ACIM
an annual distribution fee equal to 0.25% and service fee equal to 0.25%. The
fees are computed daily and paid monthly based on the Advisor Class's average
daily closing net assets during the previous month. The distribution fee
provides compensation for distribution expenses incurred by financial
intermediaries in connection with distributing shares of the Advisor Class
including, but not limited to, payments to brokers, dealers, and financial
institutions that have entered into sales agreements with respect to shares of
the Funds. The service fee provides compensation for shareholder and
administrative services rendered by ACIM, its affiliates or independent third
party providers. Fees incurred by the Advisor Class under the Plan for the six
months ended April 30, 1998 for Limited-Term, Intermediate-Term and Benham Bond
were $531, $5,917 and $3,033, respectively.

Certain officers and directors of the Corporation are also officers and/or
directors, and as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, the
Corporation's transfer agent, American Century Services Corporation, and the
registered broker-dealer, American Century Investment Services, Inc.

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Investment transactions, exluding short-term investments, for the six months
ended April 30, 1998, were as follows:

<TABLE>
LIMITED-TERM INTERMEDIATE-TERM BENHAM BOND

PURCHASES (In Thousands)

<S> <C> <C> <C>
U.S. Treasury & Agency Obligations ... $13,630 $5,983 $27,799

Other Debt Obligations ............... 3,505 4,907 24,346

PROCEEDS FROM SALES (In Thousands)

U.S. Treasury & Agency Obligations ... $12,647 $4,483 $24,186

Other Debt Obligations ............... 988 3,480 18,346

On April 30, 1998, the composition of unrealized appreciation and depreciaton
of investment securities based on the aggregate cost of investments for federal
income tax purposes was as follows:

LIMITED-TERM INTERMEDIATE-TERM BENHAM BOND

(In Thousands)

Appreciation ......................... $108 $327 $4,129

Depreciation ......................... (24) (89) (269)
------------------- ------------------------ ----------------------

Net .................................. $ 84 $238 $3,860
=================== ======================== ======================
</TABLE>

28 1-800-345-2021

Notes to Financial Statements (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

The aggregate cost of investments for federal income tax purposes was the
same as the cost for financial reporting purposes.

- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS

There are 100,000,000 and 50,000,000 share of the Investor Class and
Advisor Class, respectively, authorized for issuance by each Fund. All shares
are $0.01 par value. Transactions in shares of the Funds were as follows:

<TABLE>
LIMITED-TERM INTERMEDIATE-TERM BENHAM BOND
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT

INVESTOR CLASS (In Thousands)

Six Months ended April 30, 1998
<S> <C> <C> <C> <C> <C> <C>
Sold ........................... 1,321 $ 13,175 641 $ 6,467 3,559 $ 34,644

Issued in reinvestment of
distributions ............... 51 507 49 493 399 3,870

Redeemed ....................... (1,212) (12,138) (432) (4,354) (3,273) (31,783)
-------- -------- -------- -------- -------- --------

Net increase ................... 160 $ 1,544 258 $ 2,606 685 $ 6,731
======== ======== ======== ======== ======== ========

Year ended October 31, 1997

Sold ........................... 1,315 $ 13,023 1,569 $ 15,513 5,099 $ 48,694

Issued in reinvestment
of distributions ............ 62 615 95 942 946 9,015

Redeemed ....................... (662) (6,563) (1,442) (14,279) (7,835) (74,792)
-------- -------- -------- -------- -------- --------

Net increase (decrease) ........ 715 $ 7,075 222 $ 2,176 (1,790) $(17,083)
======== ======== ======== ======== ======== ========

ADVISOR CLASS (In Thousands)

Period ended April 30, 1998(1)

Sold ........................... 89 $ 888 157 $ 1,581 169 $ 1,644

Issued in reinvestment
of distributions ............ 1 5 6 64 4 34

Redeemed ....................... (21) (205) (101) (1,026) (74) (717)
-------- -------- -------- -------- -------- --------

Net increase ................... 69 $ 688 62 $ 619 99 $ 961
======== ======== ======== ======== ======== ========

Period ended October 31, 1997(2)

Sold ........................... -- -- 199 $ 2,000 61 $ 588

Issued in reinvestment
of distributions ............ -- -- 1 6 1 3

Redeemed ....................... -- -- -- -- (14) (131)
-------- -------- -------- -------- -------- --------

Net increase ................... -- -- 200 $ 2,006 48 $ 460
======== ======== ======== ======== ======== ========

(1) November 1, 1997 through April 30, 1998 for Intermediate-Term and Benham
Bond and November 12, 1997 (commencement of sale of the Advisor Class)
through April 30, 1998 for Limited-Term.

(2) August 14, 1997 (commencement of sale of the Advisor Class) through October
31, 1997 for Intermediate-Term. August 8, 1997 (commencement of sale of the
Advisor Class) through October 31, 1997 for Benham Bond.
</TABLE>

www.americancentury.com 29

Limited-Term Bond's Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

Investor Class
<TABLE>
1998(1) 1997 1996 1995 1994(2)
PER-SHARE DATA

<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.98 $ 9.93 $ 9.96 $ 9.68 $ 10.00
---------- ---------- ---------- ---------- ----------

Income From Investment Operations

Net Investment Income ........... 0.28 0.56 0.56 0.56 0.31

Net Realized and Unrealized
Gain (Loss) on
Investment Transactions ......... (0.02) 0.05 (0.03) 0.28 (0.32)
---------- ---------- ---------- ---------- ----------

Total From Investment
Operations ...................... 0.26 0.61 0.53 0.84 (0.01)
---------- ---------- ---------- ---------- ----------

Distributions

From Net Investment Income ...... (0.28) (0.56) (0.56) (0.56) (0.31)

From Net Realized Gains
on Investment Transactions ...... (0.01) -- -- -- --
---------- ---------- ---------- ---------- ----------

Total Distributions ............. (0.29) (0.56) (0.56) (0.56) (0.31)
---------- ---------- ---------- ---------- ----------

Net Asset Value, End of Period ..... $ 9.95 $ 9.98 $ 9.93 $ 9.96 $ 9.68
========== ========== ========== ========== ==========

Total Return(3) ................. 2.64% 6.30% 5.48% 8.89% (0.08)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ........... 0.70%(4) 0.69% 0.68% 0.69% 0.70%(4)

Ratio of Net Investment Income
to Average Net Assets ........... 5.59%(4) 5.63% 5.63% 5.70% 4.79%(4)

Portfolio Turnover Rate ............ 80% 109% 121% 116% 48%

Net Assets, End of Period
(in thousands) .................. $ 16,817 $ 15,269 $ 8,092 $ 7,193 $ 4,375

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.
</TABLE>

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements

30 1-800-345-2021

Limited-Term Bond's Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED APRIL 30

Advisor Class
1998(1)
PER-SHARE DATA

Net Asset Value, Beginning of Period ..................... $ 9.97
-------

Income From Investment Operations

Net Investment Income ................................. 0.25

Net Realized and Unrealized
Loss on Investment Transactions ....................... (0.01)
-------

Total From Investment Operations ...................... 0.24
-------

Distributions

From Net Investment Income ............................ (0.25)

From Net Realized Gains
on Investment Transactions ............................ (0.01)
-------

Total Distributions ................................... (0.26)
-------

Net Asset Value, End of Period ........................... $ 9.95
=======

Total Return(2) ....................................... 2.43%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ................................. 0.95%(3)

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

Portfolio Turnover Rate .................................. 80%

Net Assets, End of Period
(in thousands) ........................................ $ 687

(1) November 12, 1997 (commencement of sale) through April 30, 1998
(unaudited).

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

(3) Annualized.

See Notes to Financial Statements

www.americancentury.com 31

Intermediate-Term Bond's Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

<TABLE>
Investor Class
1998(1) 1997 1996 1995 1994(2)
PER-SHARE DATA

<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $ 10.07 $ 9.91 $ 10.07 $ 9.53 $ 10.00
---------- ---------- ---------- ---------- ----------

Income From Investment Operations

Net Investment Income ............... 0.30 0.59 0.58 0.59 0.34

Net Realized and Unrealized
Gain (Loss) on
Investment Transactions ............. (0.01) 0.16 (0.06) 0.54 (0.47)
---------- ---------- ---------- ---------- ----------

Total From Investment Operations .... 0.29 0.75 0.52 1.13 (0.13)
---------- ---------- ---------- ---------- ----------

Distributions

From Net Investment Income .......... (0.30) (0.59) (0.58) (0.59) (0.34)

From Net Realized Gains on
Investment Transactions ............. -- -- (0.10) -- --
---------- ---------- ---------- ---------- ----------

Total Distributions ................. (0.30) (0.59) (0.68) (0.59) (0.34)
---------- ---------- ---------- ---------- ----------

Net Asset Value, End of Period ......... $ 10.06 $ 10.07 $ 9.91 $ 10.07 $ 9.53
========== ========== ========== ========== ==========

Total Return(3) ..................... 2.88% 7.87% 5.36% 12.19% (1.24)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to
Average Net Assets .................. 0.75%(4) 0.75% 0.74% 0.74% 0.75%(4)

Ratio of Net Investment Income to
Average Net Assets .................. 5.92%(4) 5.99% 5.90% 6.05% 5.23%(4)

Portfolio Turnover Rate ................ 38% 99% 87% 133% 48%

Net Assets, End of Period
(in thousands) ...................... $ 20,691 $ 18,126 $ 15,626 $ 12,827 $ 4,262

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.
</TABLE>

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements

32 1-800-345-2021

Intermediate-Term Bond's Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS ENDED AS INDICATED

Advisor Class
1998(1) 1997(2)
PER-SHARE DATA

Net Asset Value, Beginning of Period ..... $ 10.07 $ 9.96
--------- ---------

Income From Investment Operations

Net Investment Income ................. 0.28 0.12

Net Realized and Unrealized Gain
(Loss) on Investment Transactions ..... (0.01) 0.11
--------- ---------

Total From Investment Operations ...... 0.27 0.23
--------- ---------

Distributions

From Net Investment Income ............ (0.28) (0.12)
--------- ---------

Net Asset Value, End of Period ........... $ 10.06 $ 10.07
========= =========

Total Return(3) ....................... 2.75% 2.33%

RATIOS/SUPPLEMENTAL DATA

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

Ratio of Net Investment Income
to Average Net Assets ................. 5.67%(4) 6.05%(4)

Portfolio Turnover Rate .................. 38% 99%

Net Assets, End of Period
(in thousands) ........................ $ 2,635 $ 2,017

(1) Six months ended April 30, 1998 (unaudited).

(2) August 14, 1997 (commencement of sale) through October 31, 1997.

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

(4) Annualized.

See Notes to Financial Statements

www.americancentury.com 33

Benham Bond's Financial Highlights
- -----------------------------------------------------------------------------
<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

Investor Class
1998(1) 1997 1996 1995 1994 1993(2)

PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period .................. $ 9.73 $ 9.63 $ 9.78 $ 8.91 $ 10.21 $ 9.92
----------- ----------- ----------- ----------- ----------- -----------

Income From Investment Operations

Net Investment Income .............. 0.29 0.60 0.60 0.61 0.58 0.66

Net Realized and Unrealized Gain
(Loss) on Investment Transactions .. (0.01) 0.19 (0.14) 0.87 (1.12) 1.88
----------- ----------- ----------- ----------- ----------- -----------

Total From Investment Operations ... 0.28 0.79 0.46 1.48 (0.54) 2.54
----------- ----------- ----------- ----------- ----------- -----------

Distributions

From Net Investment Income ......... (0.29) (0.60) (0.60) (0.61) (0.58) (0.66)

From Net Realized Gains on
Investment Transactions ............ (0.03) (0.09) (0.01) -- (0.18) (1.59)
----------- ----------- ----------- ----------- ----------- -----------

Total Distributions ................ (0.32) (0.69) (0.61) (0.61) (0.76) (2.25)
----------- ----------- ----------- ----------- ----------- -----------

Net Asset Value, End of Period ....... $ 9.69 $ 9.73 $ 9.63 $ 9.78 $ 8.91 $ 10.21
=========== =========== =========== =========== =========== ===========

Total Return(3) .................... 2.89% 8.57% 4.91% 17.16% (5.47)% 11.81%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to
Average Net Assets ................. 0.80%(4) 0.80% 0.79% 0.78% 0.88% 1.00%

Ratio of Net Investment Income to
Average Net Assets ................. 6.01%(4) 6.25% 6.18% 6.53% 6.07% 6.54%

Portfolio Turnover Rate .............. 34% 52% 100% 105% 78% 113%

Net Assets, End of Period
(in thousands) ..................... $ 132,682 $ 126,580 $ 142,567 $ 149,223 $ 121,012 $ 172,120

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.
</TABLE>

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements

34 1-800-345-2021

Benham Bond's Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS ENDED AS INDICATED

Advisor Class
1998(1) 1997(2)
PER-SHARE DATA

Net Asset Value, Beginning of Period ......... $ 9.73 $ 9.55
--------- ---------

Income From Investment Operations

Net Investment Income ..................... 0.28 0.13

Net Realized and Unrealized Gain
(Loss) on Investment Transactions ......... (0.01) 0.18
--------- ---------

Total From Investment Operations .......... 0.27 0.31
--------- ---------

Distributions

From Net Investment Income ................ (0.28) (0.13)

From Net Realized Gains
on Investment Transactions ................ (0.03) --
--------- ---------

Total Distributions ....................... (0.31) (0.13)
--------- ---------

Net Asset Value, End of Period ............... $ 9.69 $ 9.73
========= =========

Total Return(3) ........................... 2.76% 3.27%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ..................... 1.05%(4) 1.05%(4)

Ratio of Net Investment Income
to Average Net Assets ..................... 5.76%(4) 6.03%(4)

Portfolio Turnover Rate ...................... 34% 52%

Net Assets, End of Period
(in thousands) ............................ $ 1,420 $ 462

(1) Six months ended April 30, 1998 (unaudited).

(2) August 8, 1997 (commencement of sale) through October 31, 1997.

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

(4) Annualized.

See Notes to Financial Statements

www.americancentury.com 35

Share Class and Retirement Account Information
- -----------------------------------------------------------------------------

SHARE CLASS

Until September 3, 1996, Limited-Term, Intermediate-Term and Benham Bond
funds issued one class of fund shares, reflecting the fact that most investors
bought their shares directly from American Century. All investors paid the same
annual unified management fee and did not pay any commissions or other fees.

Now more shares are purchased through financial intermediaries (who
ordinarily are compensated for the services they provide). In September 1996,
American Century began to offer two classes of shares for Limited-Term,
Intermediate-Term and Benham Bond funds. One class is for investors buying
directly from American Century, the other is for investors buying through
financial intermediaries.

Both classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.

RETIREMENT ACCOUNT INFORMATION

36 1-800-345-2021

Background Information
- -----------------------------------------------------------------------------

INVESTMENT PHILOSOPHY & POLICIES

In addition to these principles, each fund has its own investment policies:

LIMITED-TERM BOND is a variable-price bond fund that seeks to provide
interest income by investing in a diversified portfolio of fixed-income
securities. The fund maintains a weighted average maturity of five years or
less.

INTERMEDIATE-TERM BOND is a variable-price bond fund that seeks to provide
interest income by investing in a diversified portfolio of fixed-income
securities. The fund maintains a weighted average maturity of 3-10 years.

BENHAM BOND is a variable-price bond fund that seeks to provide interest
income by investing in a diversified portfolio of fixed-income securities. The
fund has no weighted average maturity limitations, but the fund typically
invests in intermediate- and long-term bonds.

COMPARATIVE INDICES

The indices listed are used in the report for fund performance comparisons.
They are not investment products available for purchase.

The MERRILL LYNCH 1- TO 5 -YEAR GOVERNMENT/CORPORATE INDEX is an index
composed of corporate and Treasury debt with an overall maturity of
approximately three years. The index consists of approximately 24% corporate
debt and 76% government debt. The corporate debt issues are rated BBB or better
by Standard & Poor's.

The LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE INDEX includes the Lehman
Government Index and the Lehman Intermediate Corporate Bond Index, which reflect
the price fluctuations of U.S. Treasury and government agency securities,
corporate bonds and Yankee bonds with maturities of 1-10 years.

The LEHMAN AGGREGATE BOND INDEX is composed of the Lehman
Government/Corporate Index and the Lehman Mortgage-Backed Securities Index. It
reflects the price fluctuations of Treasury securities, U.S. government agency
securities, corporate bond issues and mortgage-backed securities.

LIPPER RANKINGS

The Lipper categories for the Diversified Bond funds are:

SHORT INVESTMENT-GRADE DEBT FUNDS (Limited-Term Bond)--funds with
dollar-weighted average maturities of five years or less that invest at least
65% of their assets in investment-grade debt.

INTERMEDIATE INVESTMENT-GRADE DEBT FUNDS (Intermediate-Term Bond)-- funds
with dollar-weighted average maturities of 5-10 years that invest at least 65%
of their assets in investment-grade debt.

A-RATED CORPORATE DEBT FUNDS (Benham Bond)--funds that invest at least 65%
of their assets in government issues or corporate debt issues rated A or better

[right margin]

INVESTMENT TEAM LEADERS

PORTFOLIO MANAGERS:
BUD HOOPS
JEFF HOUSTON

CREDIT RESEARCH MANAGER:
GREG AFIESH

www.americancentury.com 37

Glossary
- -----------------------------------------------------------------------------

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year returns, please refer to the "Financial
Highlights" on pages 30-35.

YIELDS

* 30-DAY SEC YIELD represents net investment income earned by the fund over a
30-day period, expressed as an annual percentage rate based on the fund's share
price at the end of the 30-day period. The SEC yield should be regarded as an
estimate of the fund's rate of investment income, and it may not equal the
fund's actual income distribution rate, the income paid to a shareholder's
account, or the income reported in the fund's financial statements.

PORTFOLIO STATISTICS

* NUMBER OF SECURITIES--the number of different securities held by a fund on a
given date.

* AVERAGE DURATION--another measure of the sensitivity of a fixed-income
portfolio to interest rate changes. Duration is a time-weighted average of the
interest and principal payments of the securities in a portfolio. As the
duration of a portfolio increases, so does the impact of a change in interest
rates on the value of the portfolio.

TYPES OF FIXED-INCOME SECURITIES

* CORPORATE BONDS--debt securities or instruments issued by companies and
corporations. Short-term corporate securities are tyically issued to raise cash
and cover current expenses in anticipation of future revenues; long-term
corporate securities are issued to finance capital expenditures, such as new
plant construction or equipment purchases.

* FOREIGN GOVERNMENT SECURITIES--debt securities issued or guaranteed by foreign
governments or their political subdivisions. Some of these securities are direct
obligations of the issuing government; others are backed by some form of
government sponsorship.

* MORTGAGE-BACKED SECURITIES--debt securities that represent ownership in pools
of mortgage loans. Most mortgage-backed securities are structured as
"pass-throughs"--the monthly payments of principal and interest on the mortgages
in the pool are collected by the bank that is servicing the mortgages and are
"passed through" to investors. While the payments of principal and interest are
considered secure (many are backed by government agency guarantees), the cash
flow is less certain than in other fixed-income investments. Mortgages that are
paid off early reduce future interest payments from the pool.

* U.S. GOVERNMENT AGENCY SECURITIES--debt securities issued by U.S. government
agencies (such as the Federal Home Loan Bank and the Federal Farm Credit Bank).
Government agency securities include discount notes (maturing in one year or
less) and medium-term notes, debentures and bonds (maturing in three months to
50 years).

* U.S. TREASURY SECURITIES--debt securities issued by the U.S. Treasury and
backed by the direct "full faith and credit" pledge of the U.S. government.
Treasury securities include bills (maturing in one year or less), notes
(maturing in two to 10 years) and bonds (maturing in more than 10 years).

CREDIT RATING GUIDELINES

Credit ratings are issued by independent research companies such as
Standard & Poor's and Moody's. Ratings are based on an issuer's financial
strength and ability to pay interest and principal in a timely manner.

It's important to note that credit ratings are subjective, reflecting the
opinions of the rating agencies; they are not absolute standards of quality.

38 1-800-345-2021

Notes
- -----------------------------------------------------------------------------

www.americancentury.com 39

Notes
- -----------------------------------------------------------------------------

40 1-800-345-2021

[inside back cover]

[right margin]

[american century logo(reg.sm)]
American
Century(reg.tm)

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

INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-444-3485

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY MUTUAL FUNDS INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

[recycled logo]
Recycled

[back cover]

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES

9806 (c)1998 American Century Services Corporation
SH-BKT-12670 Funds Distributor, Inc.
<PAGE>
[front cover] April 30, 1998

SEMIANNUAL REPORT
- -----------------
AMERICAN CENTURY

[graphic of globe, U.S. Currency, and money managers overlooking monitors]

TWENTIETH CENTURY GROUP
- -----------------------
SELECT
HERITAGE
GROWTH

[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]

A Note from the Founder
- --------------------------------------------------------------------------------

I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.

Sincerely,
/s/James E. Stowers

About our New Report Design
- --------------------------------------------------------------------------------

WHY WE CHANGED.

WHAT'S NEW.

The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming.

New features include:

* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.

THE BOTTOM LINE.

The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.

We believe we've come up with a more interesting, informative, and user-friendly
publication.

We hope you enjoy it.

[left margin]

TWENTIETH CENTURY GROUP
SELECT
(TWCIX)

TWENTIETH CENTURY GROUP
HERITAGE
(TWHIX)

TWENTIETH CENTURY GROUP
GROWTH
(TWCGX)

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

On the Cover:
Kevin Lewis and Cindy Miller are part of the investment group at American
Century.

OUR MESSAGE TO YOU
- --------------------------------------------------------------------------------

[photo of James E. Stowers, Jr. and James E. Stowers III]
James E. Stowers, Jr. with James E. Stowers III, seated

Stocks have posted historic returns over the last three calendar years
(1995-1997), and the first six months of our fiscal year (October 31, 1997 to
April 30, 1998) did not interrupt the momentum. U.S. financial indices continued
to soar, the generous market values accorded many large, high-profile companies
grew even more generous, and small to midsize stocks performed respectably.

Corporate America is also in excellent condition. Companies are highly
productive and generating historically strong returns on their investments,
including investments in their own stock.

But despite the robust economy, not every company is selling at record
prices. This remains a market of individual stocks, and many companies have
earnings growth and profitability that have not been fully appreciated by the
market. These stocks are attractive opportunities, even by the standards of a
potentially less enthusiastic market.

Finally, we're proud to note that 1998 money market and blended (stock and
information more accessible, and we is our 40th anniversary. Few fund companies
have been around that long, and not many offer nearly 70 stock, bond, bond)
funds that provide investors with such a wide range of choice and flexibility.

We appreciate your investment with American Century.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer

[right margin]

TABLE OF CONTENTS

Report Highlights ....................................................... 2
Market Perspective ...................................................... 3

SELECT
Performance Information ................................................. 5
Management Q & A ........................................................ 6
Schedule of Investments ................................................. 9
Financial Highlights .................................................... 33

HERITAGE
Performance Information ................................................. 12
Management Q & A ........................................................ 13
Schedule of Investments ................................................. 16
Financial Highlights .................................................... 36

GROWTH
Performance Information ................................................. 19
Management Q & A ........................................................ 20
Schedule of Investments ................................................. 23
Financial Highlights .................................................... 39

FINANCIAL STATEMENTS
Statements of Assets and
Liabilities ........................................................... 26
Statements of Operations ................................................ 27
Statements of Changes
in Net Assets ......................................................... 28
Notes to Financial
Statements ............................................................ 29

OTHER INFORMATION
Share Class and Retirement
Account Information ..................................................... 42
Background Information
Investment Philosophy and
Policies ........................................................... 43
Comparative Indices .................................................. 43
Investment Team
Leaders ............................................................ 43
Glossary .............................................................. 44

www.americancentury.com 1

REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------

MARKET PERSPECTIVE

* The U.S. stock market continued its powerful advance during the six months
ended April 30, 1998. The S&P 500 gained 22.47%.

* A robust economy helped drive the stock market's performance. Low inflation
and interest rates and continued corporate earnings growth have contributed
to economic strength.

* Earnings growth and profitability are top corporate priorities. The United
States is one of the most technologically proficient industrial nations,
and as a result, many U.S. companies are enjoying high returns.

* Investors also continue to pour money into the market. Stock prices and
investor expectations remain very high. On a historical basis, corporate
assets are expensive, and the average dividend yield is very low.

SELECT

* Select's Investor Class shares posted a 21.62% return for the six months
ended April 30, 1998, very close to the fund's benchmark, the S&P 500,
which gained 22.47%. [See total returns on page 5.]

* Fund performance benefited from a relative overweighting in pharmaceutical
and telecommunications holdings, and a smaller stake in technology
companies.

* Some of the top-performing stocks included Tyco International, Ltd., a
well-run diversified company; Pfizer, a dominant pharmaceutical company
with a number of new drugs on the market; and Procter & Gamble, which
introduced Olestra, a fat substitute.

HERITAGE

* Total return for Heritage's Investor Class shares was 9.50% for the six
months ended April 30, 1998. [See total returns on page 12.] The S&P MidCap
400 Index gained 19.17%.

* Heritage's relative performance was due in part to its underweighting in
financial services companies, where stocks as a group performed strongly in
the first six months.

* Technology stocks were hit hard in the fall by the Asian crisis, but rather
than sell the fund's technology position entirely, we examined holdings on
a stock-by-stock basis. This strategy was rewarded when many issues
rebounded in the first quarter. Merger and acquisition activity in the
banking and financial services industries also contributed to returns.

GROWTH

* Growth's Investor Class shares posted an 18.82% return for the six months
ended April 30, 1998, compared to a return of 23.07% for the fund's
benchmark, the Russell 1000 Growth Index. [See total returns on page 19.]

* Growth's benchmark was changed from the S&P 500 to the Russell 1000 Growth
Index. The Russell 1000 Growth Index is "growthier" and more representative
of Growth's portfolio.

* Pharmaceutical stocks helped boost returns. The industry benefited from
healthy fundamentals, favorable demographics as the population ages, and
limited exposure to Southeast Asia.

* Newbridge Networks, a network application company, was a disappointment. It
experienced a slowdown in its core business in the fourth quarter of 1997.

[left margin]

SELECT (TWCIX)(1)
TOTAL RETURNS: AS OF 4/30/98
6 Months 21.62%(2)
1 Year 40.19%
NET ASSETS: $5.6 billion
INCEPTION DATE: 6/30/71(3)

HERITAGE (TWHIX)(1)
TOTAL RETURNS: AS OF 4/30/98
6 Months 9.50%(2)
1 Year 35.37%
NET ASSETS: $1.4 billion
INCEPTION DATE: 11/10/87

GROWTH (TWCGX)(1)
TOTAL RETURNS: AS OF 4/30/98
6 Months 18.82%(2)
1 Year 44.50%
NET ASSETS: $6.0 billion
INCEPTION DATE: 6/30/71(3)

(1) Investor Class.
(2) Not annualized.
(3) This inception date corresponds with the management company's
implementation of its current investment practices.

Investment terms are defined in the Glossary on page 44.

2 1-800-345-2021

MARKET PERSPECTIVE FROM BOB PUFF
- --------------------------------------------------------------------------------

[photo of Bob Puff]
BOB PUFF, CHIEF INVESTMENT OFFICER OF AMERICAN CENTURY INVESTMENTS

A POWERFUL UPSLOPE

Just how quickly has the stock market appreciated over the past few years?
It took approximately 16 years, from 1970-1985, for the Standard & Poor's 500
Index to double. Only six years later, it had doubled again, and roughly five
years later, in early 1997, it had doubled once more, to 800. At the end of
April 1998, the index was just over 1100. As the chart on page 4 illustrates,
the S&P 500's recent climb has been very steep.

Lower corporate earnings, a tight U.S. labor market, and the collapse of
the "Asian Miracle" have slowed the index only briefly.

How can we account for the market's success?

A POWERHOUSE ECONOMY

Stocks owe much of their success to a robust economy with minimal
inflation. The U.S. economy is currently demonstrating a vigor we haven't seen
in a generation.

* U.S. economic growth hit 3.8% in 1997, and 4.8% in the first quarter of
1998.

* Inflation was a mere 1.4% for the 12 months ended April 30, 1998.

* In 1997, prices rose at the slowest pace in 12 years.

* Real interest rates (after adjusting for inflation) are among the lowest
since the 1960s.

* Unemployment in 1997 was the lowest it's been in 28 years.

* The U.S. government is projecting the first budget surplus in 30 years.

A successful market is also tied to the success of individual companies.
Earnings growth and productivity are at the top of the business agenda. We are
among the most technologically proficient of the industrial nations, and as a
result, U.S. companies are enjoying extraordinarily high internal returns on
equity. For example, return on equity, which is one measure of a company's value
to its shareholders, has annualized above 20%, a heady number by historical
standards. Earnings have been on a double-digit growth spurt for five of the
last six years.

Given the positive business climate, it's not surprising stocks remain such
a popular investment, and that cash continues to flow into the market at record
volumes.

However, by some key measures, stock prices are very expensive. The average
stock in the S&P 500 now costs more than 25 times last year's earnings, a
historical high. Corporate assets are also richly valued. Investors are paying
roughly five times balance sheet assets, or twice the historical average. The
dividend yield on the average S&P stock is less than 1.5%, another record.

[right margin]

A SUCCESSFUL MARKET IS ALSO TIED TO THE SUCCESS OF INDIVIDUAL COMPANIES.
EARNINGS GROWTH AND PRODUCTIVITY ARE AT THE TOP OF THE BUSINESS AGENDA.

MARKET RETURNS
FOR THE SIX MONTHS ENDED APRIL 30, 1998

S&P 500 22.47%
S&P MIDCAP 400 19.17%
RUSSELL 2000 11.88%

Source: Lipper Analytical Services, Inc.

These indices represent the performance of large, medium and small
capitalization stocks.

[line graph - data below]

MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE SIX MONTHS ENDED APRIL 30, 1998

MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE SIX MONTHS ENDED APRIL 30, 1998
S&P 500 S&P Mid-Cap 400 Russell 2000
10/31/97 $1.00 $1.00 $1.00
11/30/97 $1.05 $1.01 $0.99
12/31/97 $1.06 $1.05 $1.01
1/31/98 $1.08 $1.03 $0.99
2/28/98 $1.15 $1.12 $1.07
3/31/98 $1.21 $1.17 $1.11
4/30/98 $1.22 $1.19 $1.12

www.americancentury.com 3

MARKET PERSPECTIVE FROM BOB PUFF (CONTINUED)
- --------------------------------------------------------------------------------

INFLATION, INTEREST RATES AND EARNINGS

What could make the world less equity-friendly? Most probably, an upturn in
inflation or a substantial decline in earnings. One doesn't have to look much
farther than the last half of 1997, when a spike in oil prices, combined with
the deepening economic crisis in Southeast Asia, raised the specter of higher
inflation and lower earnings.

If inflation picks up, interest rates are likely to rise too, as the bond
market, along with the Federal Reserve, lift interest rates to slow the economy.
Higher interest rates increase the cost of borrowing for everyone, from
corporations to prospective home buyers, and thus tend to slow economic growth
and dampen inflation. Our central bank, the Federal Reserve Board, sets
short-term interest rates, but market forces determine intermediate and
long-term rates.

In 1997, inflation failed to take off. Oil prices went into a tailspin when
Asian demand fell. By early 1998, as crude oil prices hit a nine-year low,
stocks were soaring even though the fallout from Asia had hurt many companies'
earnings.

[left margin]

THIS REMAINS A VERY RESILIENT MARKET, AND WE ARE OPTIMISTIC ABOUT ITS LONG-TERM
PROSPECTS. BUT EXPECTATIONS ARE RUNNING HIGH, AS REFLECTED IN THE MARKET'S
STEEP CLIMB OVER THE LAST THREE-PLUS YEARS.

[mountain chart - data below]

S&P 500 PERFORMANCE
FROM DECEMBER 1970 TO DECEMBER 1997

Source: Bloomberg

4 1-800-345-2021

PERFORMANCE--SELECT
- --------------------------------------------------------------------------------

<TABLE>
TOTAL RETURNS AS OF APRIL 30, 1998

INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 6/30/71)(1) (INCEPTION 8/8/97) (INCEPTION 3/13/97)

SELECT S&P 500 SELECT S&P 500 SELECT S&P 500
<S> <C> <C> <C> <C> <C> <C>

6 MONTHS(2) 21.62% 22.47% 21.48% 22.47% 21.75% 22.47%
1 YEAR 40.19% 41.01% -- -- 40.48% 41.01%
- -------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
- -------------------------------------------------------------------------------------------
3 YEARS 26.48% 31.85% -- -- -- --
5 YEARS 17.66% 23.21% -- -- -- --
10 YEARS 15.42% 18.87% -- -- -- --
LIFE OF FUND 17.50% 13.57% 18.36% 20.50% 38.71% 37.84%

(1) Although the fund's actual inception date was 10/31/58, this inception date
corresponds with the management company's implementation of its current
investment philosophy and practices.

(2) Returns for periods less than one year are not annualized.
</TABLE>

See pages 42, 43 and 44 for information about share classes, the S&P 500 and
returns.

[mountain chart - data below]

GROWTH OF $10,000 OVER 10 YEARS

Select S & P 500
4/30/88 $10,000 $10,000
4/30/89 $11,752 $12,289
4/30/90 $13,623 $13,582
4/30/91 $15,818 $15,969
4/30/92 $17,491 $18,205
4/30/93 $18,612 $19,884
4/30/94 $19,342 $20,940
4/30/95 $20,721 $24,591
4/30/96 $24,842 $32,013
4/30/97 $29,945 $40,055
4/30/98 $41,974 $56,501

The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment over 10
years, while the chart below shows year-by-year performance. The S&P 500 is
provided for comparison in each chart. Past performance does not guarantee
future results. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. Select's total returns
include operating expenses (such as transaction costs and management fees) that
reduce returns, while the total returns of the S&P 500 do not.

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (YEARS ENDING APRIL 30)

Select S & P 500
4/30/89 17.52 22.78
4/30/90 15.92 10.44
4/30/91 16.11 17.56
4/30/92 10.58 14.05
4/30/93 6.41 9.22
4/30/94 3.92 5.33
4/30/95 7.13 17.42
4/30/96 19.89 30.13
4/30/97 20.54 25.10
4/30/98 40.19 41.01

www.americancentury.com 5

SELECT--Q&A
- --------------------------------------------------------------------------------

An interview with Jean Ledford and Richard Welsh, portfolio managers on the
Select investment team.

HOW DID THE FUND PERFORM DURING THE FIRST HALF OF ITS FISCAL YEAR?

Select posted a strong 21.62% return for the six months ended April 30,
1998.* Returns were very close to the fund's benchmark, the S&P 500, which
gained 22.47%. Select ranked in the top 12% out of 716 Growth & Income funds
during the period, according to Lipper Analytical Services. For the one-year
period ending April 30, 1998, Select returned 40.19%, beating the average of the
Lipper peer group, which posted a 36.09% gain. Select ranked in Lipper's top 24%
out of 661 funds in the category for the one-year period.(+)

WHAT EXPLAINS SELECT'S PERFORMANCE RELATIVE TO ITS BENCHMARK AND PEER GROUP?

After a brief summer rally for smaller growth-oriented companies, investor
sentiment shifted once again back into larger-capitalization, more defensive
stocks in the fourth quarter. Concerns about the impact of the Asian currency
and economic crisis caused the markets to become increasingly volatile and
uncertain. We continued to focus on large-cap companies demonstrating
acceleration in earnings and revenues, and it was Select's substantial positions
in these larger, high-quality companies that enabled it to stay in line with
broad market measures, yet outpace many actively managed funds. Specifically,
Select's relative overweighting in pharmaceutical stocks and telecommunications
holdings contributed significantly to performance. These industries demonstrated
strong performance in late 1997 and early 1998 relative to other industries
represented in the benchmarks.

Select's smaller stake in technology companies also helped performance.
Technology was both the market's and the fund's worst performing sector in the
fourth quarter of 1997. Although we trimmed holdings significantly in September
(to approximately 16% of assets), we remained more heavily weighted than the S&P
500 in selected technology companies -- specifically those that had little Asian
exposure or that manufacture software to help companies address Year 2000
programming issues. We felt these companies would be able to weather the Asian
storm. This strategy was rewarded in early 1998.

WERE THERE ANY GENERAL THEMES OR TRENDS IN THE MARKETPLACE THAT HELPED SELECT'S
PERFORMANCE?

Yes. A tendency toward acquisitions and mergers in a number of industries
contributed to returns. Recently, we've seen several "mega mergers": Daimler
Mercedes-Benz and Chrysler, Citicorp and Travelers, and MCI and WorldCom. Most
of these mergers or acquisitions have been not only logical, but also
synergetic. These companies have complementary strengths that should result in
stronger, more profitable organizations with good revenue and earnings growth.
In many of these deals, we owned stocks of both companies, which has been very
good for performance.

Along with this trend, we're seeing a number of large companies, such as
Monsanto and Du Pont, spin off businesses that don't fit their strategic
objectives.

[left margin]

PORTFOLIO AT A GLANCE
4/30/98 10/31/97
NO. OF COMPANIES 96 86
MEDIAN P/E RATIO 31.9 24.4
MEDIAN MARKET $30.3 $30.8
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 61%(1) 94%(2)
EXPENSE RATIO
(FOR INVESTOR CLASS) 1.00%(3) 1.00%

SELECT'S CONCENTRATED POSITIONS IN LARGER, HIGH-QUALITY COMPANIES ENABLED IT TO
STAY IN LINE WITH BROAD MARKET MEASURES, YET OUTPACE MANY ACTIVELY MANAGED
FUNDS.

(1) Six months ended 4/30/98.
(2) Year ended 10/31/97.
(3) Annualized.

Investment terms are defined in the Glossary on page 44.

*All fund returns referenced in this interview are for Investor Class shares.

(+)According to Lipper, for the periods ending April 30, Select was ranked in
the top 83% out of 262 funds for five years and 69% out of 140 funds for 10
years. Lipper rankings are based on average annual total returns. Past
performance is no guarantee of future results.

6 1-800-345-2021

SELECT--Q&A (CONTINUED)
- --------------------------------------------------------------------------------

WHICH STOCKS CONTRIBUTED MOST TO PERFORMANCE?

Without exception, the best stocks during the period were very large,
steadily growing companies that are leaders in their industries. Tyco
International, Ltd. was the fund's top performing stock and second-largest
holding at 3.2% of investments. Tyco is an extremely well run company with
thriving businesses in four separate industries. Tyco has demonstrated an
ability to manage its operations profitably and also effectively acquire other
companies that fit well into its existing structure. Another good performer was
pharmaceutical giant Pfizer, whose growth has been fueled by a strong product
pipeline, the introduction of new products and, most recently, the successful
launch of Viagra, a new drug that treats impotence. Procter & Gamble is a
holding that also has enjoyed robust growth via new products. Its extensive
product roster includes Olestra, a new fat substitute that's being used in the
snack food industry. Other strong performers were General Electric, Select's
largest holding, Microsoft and Coca-Cola.

WHICH STOCKS DAMPENED PERFORMANCE?

Select's relative underweighting in financial stocks hurt returns. This
sector continued to benefit from ongoing merger and acquisition activity in the
banking and financial services industries. We reduced the fund's holdings in
this area because we believed that problems in Southeast Asia would hit
financial stocks very hard. Although we had correctly predicted conditions in
Asia, it turned out that financial stocks were largely unaffected and continued
performing nicely into 1998.

In terms of specific holdings, Select's worst performing stock was Oracle,
which produces software for telecommunications companies. The economic turmoil
in Asia affected the company's earnings, which were already suffering somewhat
due to the near-saturation of the U.S. telecommunications market. Performance
also was dampened mildly by drug manufacturer Eli Lilly, whose earnings slowed
significantly in late 1997. Oilfield services provider Schlumberger suffered as
well, when investors became concerned about the potential impact of the Asian
slowdown on global energy markets. We have reduced our holdings in these names.

WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE THE ANNUAL REPORT?

There have been a few shifts among sectors or industries. Our bottom-up
approach has been successful in helping us identify groups and individual stocks
with accelerating earnings and revenues and in helping us allocate our
weightings. Our approach led us away from pharmaceutical companies, such as
Lilly, whose earnings and revenue growth were beginning to wane, and toward the
stocks of several diversified companies (companies with businesses in several
industries) whose profit margins were rising. These include Minnesota Mining &
Manufacturing Co. (3M) and General Electric. As you can see from the chart at
right, we also increased weightings in communications services companies from
4.1% of assets to 8.7%, and increased banks and financial services companies
from 4.9% to 7.1% of investments.

[right margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
GENERAL ELECTRIC CO. (U.S.) 4.5% 3.5%
TYCO INTERNATIONAL LTD. 3.2% 3.2%
WAL-MART STORES, INC. 2.6% 1.3%
MICROSOFT CORP. 2.5% 2.5%
CISCO SYSTEMS INC. 2.1% 1.7%
COCA-COLA COMPANY 2.1% 2.2%
AMERICAN INTERNATIONAL GROUP, INC. 2.1% 2.1%
PFIZER, INC. 2.0% 1.6%
PROCTER & GAMBLE CO. 2.0% 2.4%
NATIONSBANK CORP. 1.9% --

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
DIVERSIFIED COMPANIES 10.4% 8.9%
COMMUNICATIONS SERVICES 8.7% 4.1%
COMPUTER SOFTWARE & SERVICES 8.7% 5.5%
BANKING 7.1% 4.9%
FOOD & BEVERAGE 6.7% 5.9%

www.americancentury.com 7

SELECT--Q&A (CONTINUED)
- --------------------------------------------------------------------------------

WHAT IS YOUR OUTLOOK FOR THE MARKET GOING FORWARD?

We are pleased to observe that, thus far, 1998 is proving to be another
great year for investors. The U.S. economy remains sound, interest rates and
inflation are low and, with the exception of Southeast Asia, the world economy
is in good shape. The impact of the Asian crisis on domestic markets and our
economy has been less negative than was predicted by many economic experts. Most
of the S&P 500 companies continue to perform at or above earnings expectations,
and many are announcing stock buyback programs--a sure sign they're feeling
confident about the future. We continue to find a wealth of high-quality
large-cap companies that are demonstrating good earnings acceleration and
revenue growth. We expect Select's performance to continue to be helped by its
focus on these companies.

[left margin]

[pie charts]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF APRIL 30, 1998
Cash 4.2%
U.S. Common Stocks 95.8%

AS OF OCTOBER 31, 1997
Foreign Stocks 0.8%
Cash 3.5%
U.S. Common Stocks 95.7%

WE ARE PLEASED TO OBSERVE THAT, THUS FAR, 1998 IS PROVING TO BE ANOTHER GREAT
YEAR FOR INVESTORS. THE U.S. ECONOMY REMAINS SOUND, INTEREST RATES AND INFLATION
ARE LOW AND, WITH THE EXCEPTION OF SOUTHEAST ASIA, THE WORLD ECONOMY IS IN GOOD
SHAPE.

8 1-800-345-2021

<TABLE>
SELECT'S SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ IN THOUSANDS) Value

COMMON STOCKS

AEROSPACE & DEFENSE--2.1%

<S> <C> <C>
984,500 Textron Inc. $ 77,037

410,000 United Technologies Corp. 40,359
------------------------------------

117,396
------------------------------------

BANKING--7.1%

1,140,000 Banc One Corp. 67,046

940,000 Bank of New York Co., Inc. (The) 55,519

270,000 Chase Manhattan Corp. 37,412

1,410,000 NationsBank Corp. 106,808

1,350,000 Norwest Corp. 53,578

350,000 U.S. Bancorp 44,450

110,000 Wells Fargo & Co. 40,535
------------------------------------

405,348
------------------------------------

BIOTECHNOLOGY--0.3%

250,000 Amgen Inc.(1) 14,898
------------------------------------

BROADCASTING & MEDIA--1.6%

1,150,000 Time Warner Inc. 90,275
------------------------------------

CHEMICALS & RESINS--2.6%

1,220,000 du Pont (E.I.) de Nemours & Co. 88,831

1,075,000 Monsanto Co. 56,841
------------------------------------

145,672
------------------------------------

COMMUNICATIONS EQUIPMENT--2.5%

460,900 Ascend Communications, Inc.(1) 20,064

1,310,400 Lucent Technologies Inc. 99,754

300,000 Tellabs, Inc.(1) 21,253
------------------------------------

141,071
------------------------------------

COMMUNICATIONS SERVICES--8.7%

1,070,000 AT&T Corp. 64,266

500,000 AirTouch Communications, Inc.(1) 26,563

1,350,000 Ameritech Corp. 57,459

885,000 Bell Atlantic Corp. 82,803

1,490,000 BellSouth Corp. 95,639

450,000 MCI Communications Corp. 22,627

1,611,800 SBC Communications Inc. 66,789

1,895,000 WorldCom, Inc.(1) 81,070
------------------------------------

497,216
------------------------------------

COMPUTER PERIPHERALS--2.7%

1,647,500 Cisco Systems Inc.(1) 120,731

750,000 EMC Corp. (Mass.)(1) 34,594
------------------------------------

155,325
------------------------------------

Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES--8.7%

1,517,200 Autodesk, Inc. $ 71,214

1,045,000 Automatic Data Processing, Inc. 69,950

790,000 BMC Software, Inc.(1) 73,890

260,000 Computer Sciences Corp. 13,715

1,200,000 Compuware Corp.(1) 58,612

750,000 Electronic Data Systems Corp. 32,250

1,552,900 Microsoft Corp.(1) 140,004

600,000 Oracle Systems Corp.(1) 15,543

380,000 PeopleSoft, Inc.(1) 17,658
------------------------------------
492,836
------------------------------------

COMPUTER SYSTEMS--3.4%

448,000 Dell Computer Corp.(1) 36,162

575,000 Gateway 2000, Inc.(1) 33,745

928,000 Hewlett-Packard Co. 69,890

480,000 International Business
Machines Corp. 55,620
------------------------------------
195,417
------------------------------------

CONSUMER PRODUCTS--4.8%

340,000 Avon Products, Inc. 27,944

450,000 Clorox Company 37,744

850,000 Gillette Company 98,122

1,350,000 Procter & Gamble Co. (The) 110,952
------------------------------------
274,762
------------------------------------

DIVERSIFIED COMPANIES--10.4%

3,035,000 General Electric Co. (U.S.) 258,354

320,000 Honeywell Inc. 29,800

586,700 Minnesota Mining &
Manufacturing Co. 55,370

3,332,600 Tyco International Ltd. 181,627

870,000 Unilever N.V. 64,924
------------------------------------
590,075
------------------------------------

ELECTRICAL &
ELECTRONIC
COMPONENTS--1.5%

400,000 Analog Devices, Inc.(1) 15,575

530,000 Intel Corp. 42,847

400,000 Texas Instruments Inc. 25,625
------------------------------------
84,047
------------------------------------

ENERGY (PRODUCTION & MARKETING)--2.3%

300,000 British Petroleum Co. plc ADR 28,350

1,450,000 Royal Dutch Petroleum Co. 82,016

300,000 Texaco Inc. 18,450
------------------------------------
128,816
------------------------------------

ENERGY (SERVICES)--1.0%

1,080,000 Halliburton Co. 59,400
------------------------------------

See Notes to Financial Statements

www.americancentury.com 9

Select's Schedule of Investments (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ IN THOUSANDS) Value

FINANCIAL SERVICES--5.1%

535,000 American Express Co. $ 54,570

520,000 Associates First Capital Corp. 38,870

1,000,000 CIT Group Holdings, Inc. (The) Cl A 35,437

690,000 Fannie Mae 41,314

450,000 Federal Home Loan
Mortgage Corporation 20,841

1,666,000 Travelers Group, Inc. 101,938
------------------------------------
292,970
------------------------------------

FOOD & BEVERAGE--6.7%

300,000 Anheuser-Busch Companies, Inc. 13,744

450,000 Bestfoods 24,694

1,575,000 Coca-Cola Company (The) 119,503

515,000 Heinz (H.J.) Co. 28,068

841,000 Hershey Foods Corp. 61,603

1,925,000 PepsiCo, Inc. 76,398

950,000 Sara Lee Corp. 56,584
------------------------------------
380,594
------------------------------------

FURNITURE & FURNISHINGS--0.3%

370,000 Newell Co. 17,876
------------------------------------

HEALTHCARE--1.5%

600,000 Cardinal Health, Inc. 57,750

710,000 Tenet Healthcare Corp.(1) 26,581
------------------------------------
84,331
------------------------------------

INSURANCE--3.7%

665,000 Allstate Corp. 64,006

905,000 American International Group, Inc. 119,064

500,000 UNUM Corp. 26,875
------------------------------------
209,945
------------------------------------

LEISURE--2.3%

625,000 Carnival Corp. Cl A 43,477

600,000 Disney (Walt) Co. 74,587

580,000 International Game Technology 16,131
------------------------------------
134,195
------------------------------------

MACHINERY & EQUIPMENT--0.6%

550,000 Deere & Co. 32,141
------------------------------------

MEDICAL EQUIPMENT & SUPPLIES--2.2%

723,000 Guidant Corp. 48,351

1,450,000 Medtronic, Inc. 76,306
------------------------------------
124,657
------------------------------------

PAPER & FOREST PRODUCTS--0.3%

290,000 Weyerhaeuser Co. 16,711
------------------------------------

- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value

PHARMACEUTICALS--6.5%

418,800 Abbott Laboratories $ 30,625

460,000 ALZA Corp.(1) 22,051

790,000 Bristol-Myers Squibb Co. 83,642

685,000 Johnson & Johnson 48,892

980,000 Pfizer, Inc. 111,536

890,000 Schering-Plough Corp. 71,311
------------------------------------
368,057
------------------------------------

RESTAURANTS--0.8%

750,000 McDonald's Corp. 46,406
------------------------------------

RETAIL (APPAREL)--0.4%

591,600 TJX Companies, Inc. (The) 26,178
------------------------------------

RETAIL (FOOD & DRUG)--0.9%

666,000 Rite Aid Corp. 21,395

1,290,000 SYSCO Corp. 30,718
------------------------------------
52,113
------------------------------------

RETAIL (GENERAL MERCHANDISE)--3.1%

165,000 Dayton Hudson Corp. 14,407

400,000 Dollar General Corp. 15,150

2,900,000 Wal-Mart Stores, Inc. 146,631
------------------------------------
176,188
------------------------------------

RETAIL (SPECIALTY)--1.0%

787,500 Home Depot, Inc. 54,830
------------------------------------

RUBBER & PLASTICS--0.7%

541,700 Illinois Tool Works Inc. 38,190
------------------------------------

TOTAL COMMON STOCKS--95.8% 5,447,936
------------------------------------

(Cost $3,939,562)

See Notes to Financial Statements

10 1-800-345-2021

Select's Schedule of Investments (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Principal Amount ($ IN THOUSANDS) Value

TEMPORARY CASH INVESTMENTS(2)

$50,000 par value FHLMC Discount Notes,
5.44%, 5/8/98 $ 49,948

20,000 par value FHLMC Discount Notes,
5.40%, 5/13/98 19,964

20,000 par value FHLMC Discount Notes,
5.42%, 5/18/98 19,949

50,000 par value FNMA Discount Notes,
5.40%, 5/13/98 49,910

Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 5.44%, dated 4/30/98,
due 5/1/98 (Delivery value $99,015) 99,000
------------------------------------

TOTAL TEMPORARY CASH
INVESTMENTS--4.2% 238,771
------------------------------------
(Cost $238,770)

TOTAL INVESTMENT SECURITIES--100.0% $ 5,686,707
====================================
(Cost $4,178,332)
</TABLE>

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
(1) Non--income producing.
(2) The rates for U.S. Government Agency discount notes represent the yield to
maturity at purchase.

The schedule includes:

* the percentage of total investments in each industry

* a list of each investment

* the number of shares of each stock * the market value of each investment

* the percent and dollar breakdown of each investment category

* the dollar value of other short-term investments that are considered the
same as cash

See Notes to Financial Statements

www.americancentury.com 11

Performance--Heritage
- --------------------------------------------------------------------------------

<TABLE>
TOTAL RETURNS AS OF APRIL 30, 1998

INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 11/10/87) (INCEPTION 7/11/97) (INCEPTION 6/16/97)

HERITAGE S&P 500 HERITAGE S&P 500 HERITAGE S&P 500
<S> <C> <C> <C> <C> <C> <C>

6 MONTHS(1) 9.50% 19.17% 9.35% 19.17% 9.63% 19.17%
1 YEAR 35.37% 47.92% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
- ------------------------------------------------------------------------------------------------------------------------
3 YEARS 21.47% 28.35% -- -- -- --
5 YEARS 16.54% 20.58% -- -- -- --
10 YEARS 15.83% 19.41% -- -- -- --
LIFE OF FUND 17.05% 20.89%(2) 14.11% 20.39%(3) 19.87% 32.26%(4)

(1) Returns for periods less than one year are not annualized.

(2) Return from 11/30/87, the date nearest to the class's inception for which
data are available.

(3) Return from 7/31/97, the date nearest to the class's inception for which
data are available.

(4) Return from 6/30/97, the date nearest to the class's inception for which
data are available.
</TABLE>

See pages 42, 43 and 44 for information about share classes, the S&P MidCap 400
and returns.

[mountain chart - data below]

GROWTH OF $10,000 OVER 10 YEARS

Heritage S & P Mid-Cap 400
4/30/88 $10,000 $10,000
4/30/89 $12,284 $12,286
4/30/90 $13,394 $13,429
4/30/91 $15,142 $16,819
4/30/92 $17,468 $20,190
4/30/93 $20,232 $23,117
4/30/94 $22,890 $25,385
4/30/95 $24,241 $27,870
4/30/96 $30,311 $36,179
4/30/97 $32,132 $39,844
4/30/98 $43,494 $58,937

The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment over 10
years, while the chart below shows year-by-year performance. The S&P MidCap 400
Index is provided for comparison in each chart. Past performance does not
guarantee future results. Investment return and principal value will fluctuate,
and redemption value may be more or less than original cost. Heritage's total
returns include operating expenses (such as transaction costs and management
fees) that reduce returns, while the total returns of the S&P MidCap 400 do not

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (YEARS ENDING APRIL 30)

Heritage S & P Mid-Cap 400
4/30/89 22.84 15.11
4/30/90 9.04 3.84
4/30/91 13.05 16.85
4/30/92 15.36 15.77
4/30/93 15.82 6.89
4/30/94 13.14 14.38
4/30/95 5.90 11.69
4/30/96 25.04 39.19
4/30/97 6.01 -6.98
4/30/98 35.37 39.27

12 1-800-345-2021

Heritage--Q&A
- --------------------------------------------------------------------------------

An interview with Harold Bradley and Linda Peterson, portfolio managers on
the Heritage investment team.

HOW DID HERITAGE PERFORM DURING THE FIRST HALF OF ITS FISCAL YEAR?

Heritage posted a 9.50% return for the six months ended April 30, 1998.*
The S&P MidCap 400 Index gained 19.17% in the same timeframe.

We wish to stress that we use the S&P MidCap 400 only to relate investment
performance to a publicly available index. It is not a factor in how we manage
the portfolio. This index serves as a proxy for the performance of mid-cap
stocks in general. We use a time-tested, bottom-up approach and rely on our
proprietary acceleration models and a rigorous stock screening process in
choosing securities. We believe this disciplined approach leads us to
fast-growing, small- and mid-cap companies with substantial potential for
appreciation.

WHAT EXPLAINS HERITAGE'S PERFORMANCE RELATIVE TO THE S&P MIDCAP 400?

Heritage's six-month return trailed the S&P MidCap 400 Index primarily
because the portfolio was heavily weighted in technology. Although some
technology stocks were among Heritage's top performers for the period, concerns
about fallout from the Asian economic crisis in late 1997 drove down the
technology sector. Several companies in which the fund was heavily invested were
severely punished. Heritage was also underweighted compared to the index in
financial services, where stocks as a group performed strongly in the first six
months.

It's important to note that the greatest single contributor to the S&P
MidCap 400's return during the six months was America Online, which basically
doubled in value and contributed nearly 1% to the index's return. Although AOL
was widely held in a number of American Century's growth portfolios, we are
unable to include it in Heritage's portfolio because its average weighted market
capitalization ($17 billion) places it outside the fund's mid-cap investment
parameters. In seeking to meet its long-term growth objective, Heritage invests
in the shares of small companies (those with a market capitalization of less
than $1 billion) and mid-sized companies (companies with a market capitalization
of between $1 billion and $5 billion).

WHICH HOLDINGS ADDED MOST TO RETURNS DURING THE SIX MONTHS?

As we mentioned, technology contributed positively to returns, despite the
technology sell-off in late 1997 when Asian markets collapsed. Rather than sell
the fund's technology position entirely, we selectively eliminated those we
thought were vulnerable to developments in that region of the world. This
strategy was rewarded in the first quarter of 1998, when many technology issues
rebounded.

Autodesk is one of the fund's technology holdings that weathered the Asian
storm. Autodesk's recent growth has been driven primarily by the introduction of
its new version of Autocad (electronic drafting) software in the United States.
Because the company has sales in Southeast Asia, Autodesk's share price dropped
nearly 35% during October. However, fundamentals remained sound, and the company
continued to demonstrate good earnings, so we held our position. Autodesk

[right margin]

PORTFOLIO AT A GLANCE
4/30/98 10/31/97
NO. OF COMPANIES 97 93
MEDIAN P/E RATIO 23.1 22.5
MEDIAN MARKET $1.87 $893
CAPITALIZATION BILLION MILLION
PORTFOLIO TURNOVER 60%(1) 69%(2)
EXPENSE RATIO (INVESTOR CLASS) 1.00%(3) 1.00%

WE USE A BOTTOM-UP APPROACH, AND RELY ON OUR PROPRIETARY ACCELERATION MODELS AND
A RIGOROUS STOCK-SCREENING PROCESS IN CHOOSING SECURITIES.

(1) Six months ended 4/30/98.
(2) Year ended 10/31/97.
(3) Annualized.

Investment terms are defined in the Glossary on page 44.

*All fund returns referenced in this interview are for Investor Class shares.

www.americancentury.com 13

Heritage--Q&A (continued)
- --------------------------------------------------------------------------------

snapped back in early 1998, reversing its previous loss and increasing 52% in
the first quarter alone, making it one of Heritage's best performers.

Other technology companies that contributed to performance include FileNet,
which develops and markets information management software, and Cap Gemini, a
Netherlands-based software and computer services company. FileNet's earnings
suffered for several quarters but then began to improve following the company's
introduction of a new product line. Our methodology alerted us to these positive
changes, and we bought the stock well before the market in general realized its
potential for gain. We were rewarded later when FileNet began to report
progressively stronger earnings and revenue results. Cap Gemini's recent growth
has been driven largely through increased demand for its software products,
which help companies address Year 2000 programming problems. We feel confident
that Cap Gemini's growth will be solid going forward, given the instrumental
role its software is playing in the changeover to a common currency in Europe.

Outside the technology sector, Heritage benefited substantially from
continued merger and acquisition activity in the banking and financial services
industries. One of the top contributors during the period, financial services
provider Ahmanson & Company, was also among Heritage's largest holdings.
Ahmanson's stock appreciated nicely in March when Washington Mutual, another
large financial holding, announced plans to acquire the company.

WHICH STOCKS NEGATIVELY AFFECTED HERITAGE'S PERFORMANCE?

BMC and Apogee, two strong contributors in the past, were surprising
disappointments. In both cases, the companies were sharply discounted following
poor earnings announcements and have been eliminated from the portfolio. BMC is
a leading manufacturer of aperture masks -- metal screens used in televisions
and computer terminals. A consistent grower, BMC has enjoyed increasing demand
for its product. Demand has been driven by robust television sales and the
increasing popularity of big-screen TVs. BMC was adding new production lines to
meet increasing orders but ran into start-up problems in the fourth quarter,
which ultimately dampened earnings. The already-nervous market reacted swiftly
to the earnings announcement and BMC's stock fell 35% in one day.

Apogee suffered similarly. This company manufactures coated glass for the
commercial construction and automotive industries. The company stumbled in the
fourth quarter when it was forced to write off several unprofitable foreign
projects, and its automotive glass-replacement business softened. Both problems
resulted in poor fourth-quarter earnings and Apogee's stock dropped 40%
overnight.

WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE THE ANNUAL REPORT?

We reduced the concentrated weighting in technology companies and
redistributed assets to areas where we saw acceleration, such as energy,
financial

[left margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

FILENET CORP. 2.8% --
MYLAN LABORATORIES INC. 2.6% 1.5%
REYNOLDS & REYNOLDS CO. 2.1% 1.3%
NETWORK ASSOCIATES INC. 2.0% --
HBO & CO. 2.0% 2.0%
ATMEL CORP. 2.0% --
TOSCO CORP. 1.8% 2.6%
REYNOLDS METALS CO. 1.8% --
GETRONICS N.V. ORD 1.5% 1.1%
INTERFACE, INC. 1.5% 1.0%

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
COMPUTER SOFTWARE & SERVICES 15.6% 16.7%
BUSINESS SERVICES & SUPPLIES 6.9% 4.5%
ENERGY (PRODUCTION & MARKETING) 6.2% 10.8%
PHARMACEUTICALS 5.1% 3.9%
METALS & MINING 4.7% 1.9%

14 1-800-345-2021

Heritage--Q&A (continued)
- --------------------------------------------------------------------------------

services and pharmaceuticals. We began building the position in oil services
companies after prices weakened in late 1997. These stocks were attractively
priced following the sell-off in the fourth quarter, and our acceleration models
indicated that many oil services companies were continuing to grow at even
faster rates than when their prices were much higher. We increased
pharmaceutical holdings because we have seen acceleration in the generic drug
industry, which is benefiting from improved pricing and a more favorable product
approval environment. We also increased holdings in the financial services
industry.

CAN YOU TELL US ABOUT CHANGES TO HERITAGE'S MANAGEMENT TEAM DURING THE SIX
MONTHS?

Portfolio Manager Nancy Prial left American Century in March to pursue
other opportunities, and we were named co-managers of the fund. Linda has been
an investment analyst on the Heritage team for more than four years. Harold is a
member of American Century's investment oversight committee and has been with
the company 10 years. Investment analyst Michael Orndorff remains on the
management team, and another analyst will be joining us in July.

WHAT IS YOUR STRATEGY AND OUTLOOK FOR HERITAGE GOING FORWARD?

We are optimistic that Heritage's performance will benefit from the new and
more advanced portfolio construction models we recently adopted. These models
help us identify companies that meet our accelerating earnings and revenue
growth criteria across industries, so that we can pick the best companies using
a more diversified, strategic approach. For the four months ended April 30,
1998, Heritage's 12.96% return compares favorably with the S&P MidCap 400's
13.04% gain.

[right margin]

[pie charts]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF APRIL 30, 1998
Convertible Bonds 0.5%
Cash 6.9%
Foreign Common Stocks 8.0%
U.S. Commom Stocks 84.6%

AS OF OCTOBER 31, 1997
Preferred Stock 0.8%
Foreign Common Stocks 1.8%
Convertible Bonds 1.9%
Cash 2.3%
U.S. Commom Stocks 93.2%

WE ARE OPTIMISTIC THAT HERITAGE'S PERFORMANCE WILL BENEFIT FROM THE NEW AND MORE
ADVANCED PORTFOLIO CONSTRUCTION MODELS WE RECENTLY ADOPTED. THESE MODELS HELP US
IDENTIFY COMPANIES THAT MEET OUR ACCELERATING EARNINGS AND REVENUE GROWTH
CRITERIA ACROSS INDUSTRIES.

www.americancentury.com 15

Heritage's Schedule of Investments
- --------------------------------------------------------------------------------
<TABLE>

APRIL 30, 1998 (UNAUDITED)

Shares ($ IN THOUSANDS) Value

COMMON STOCKS

AEROSPACE & DEFENSE--4.3%
<S> <C> <C>
622,500 AAR CORP. $ 16,302

795,000 Bombardier Inc. Cl B ORD 21,456

680,000 EG&G, Inc. 20,485

86,800 Thiokol Corp. 4,676
------------------------------------
62,919
------------------------------------

AGRICULTURE--0.9%

180,000 DEKALB Genetics Corp. 12,274
------------------------------------

AUTOMOBILES & AUTO PARTS--0.6%

230,000 Hayes Lemmerz International Inc.(1) 8,841
------------------------------------

BANKING--3.6%

250,000 Ahmanson (H.F.) & Co. 19,062

1,309,000 Christiania Bank Og
Kreditkasse ORD 6,018

6,000 Generale de Banque SA ORD 3,462

820,000 Merita OY Ltd. Cl A ORD 5,492

500,000 North Fork Bancorporation, Inc. 18,563
------------------------------------
52,597
------------------------------------

BUILDING & HOME IMPROVEMENTS--3.6%

716,900 CRH plc ORD 10,191

509,100 Interface, Inc. 21,541

495,100 Owens Corning 20,578
------------------------------------
52,310
------------------------------------

BUSINESS SERVICES & SUPPLIES--6.9%

100,000 AccuStaff, Inc.(1) 3,588

500,000 LECG, Inc.(1) 8,500

484,200 National Computer Systems, Inc. 12,135

1,300,000 Reynolds & Reynolds Co. 29,900

575,000 Romac International, Inc.(1) 15,309

443,000 True North Communications Inc. 13,512

450,000 Valassis Communications, Inc.(1) 17,662
------------------------------------
100,606
------------------------------------

COMMUNICATIONS EQUIPMENT--3.4%

310,000 Ascend Communications, Inc.(1) 13,495

300,000 Nokia Corp. Cl A ADR 20,063

510,000 Premisys Communications, Inc.(1) 14,917
------------------------------------
48,475
------------------------------------

COMMUNICATIONS SERVICES--0.8%

305,000 IDT Corp.(1) 9,369

35,000 Pacific Gateway Exchange, Inc.(1) 1,997
------------------------------------
11,366
------------------------------------

COMPUTER PERIPHERALS--3.5%

350,000 C-Cube Microsystems Inc.(1) 8,454
310,000 SCI Systems, Inc.(1) 12,768
------------------------------------

Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------

383,900 Telxon Corp. $ 12,513

630,000 Xeikon N.V. ADR(1) 16,715
------------------------------------
50,450
------------------------------------

COMPUTER SOFTWARE & SERVICES--15.5%

480,000 Analysts International Corp. 13,740

380,000 Autodesk, Inc. 17,836

275,000 Cap Gemini N.V. ORD 18,095

300,000 Cerner Corp.(1) 8,934

410,000 Comdisco, Inc. 18,143

750,000 FileNet Corp.(1) 40,828

495,000 Getronics N.V. ORD 21,893

490,000 HBO & Co. 29,293

400,000 Henry (Jack) & Associates, Inc. 13,700

325,000 Midway Games Inc.(1) 6,013

430,000 Network Associates Inc.(1) 29,482

618,200 Objective Systems
Integrators, Inc.(1) 7,032
------------------------------------
224,989
------------------------------------

CONSTRUCTION &
PROPERTY
DEVELOPMENT--1.1%

94,000 Heijmans N.V. ORD 2,767

138,000 Lafarge SA ORD 13,025
------------------------------------
15,792
------------------------------------

CONTROL & MEASUREMENT--1.0%

340,000 Tektronix, Inc. 14,620
------------------------------------

DIVERSIFIED COMPANIES--1.0%

355,000 Developers Diversified Realty Corp. 14,089
------------------------------------

ELECTRICAL &
ELECTRONIC
COMPONENTS--3.4%

1,418,000 Atmel Corp.(1) 28,582

306,500 Kuhlman Corp. 15,018

535,000 Nimbus CD International, Inc.(1) 5,668
------------------------------------
49,268
------------------------------------

ENERGY (PRODUCTION & MARKETING)--6.2%

133,000 Camco International, Inc. 9,027

676,000 Lomak Petroleum, Inc. 9,337

175,000 ONEOK, Inc. 7,088

300,000 Pennzoil Co. 19,219

465,000 Sun Company, Inc. 18,803

745,000 Tosco Corp. 26,541
------------------------------------
90,015
------------------------------------

ENERGY (SERVICES)--2.2%

260,000 Atwood Oceanics, Inc.(1) 14,219

745,000 Pride International Inc.(1) 18,113
------------------------------------
32,332
------------------------------------

FINANCIAL SERVICES--2.8%

507,000 Affiliated Managers Group Inc.(1) 18,822

100,000 Countrywide Credit Industries, Inc. 4,838

280,200 Heller Financial, Inc.(1) 7,565

See Notes to Financial Statements

16 1-800-345-2021

Heritage's Schedule of Investments (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------

1,902 Julius Baer Holding AG ORD $ 5,248

59,000 Natexis ORD 4,263
------------------------------------
40,736
------------------------------------

FOOD & BEVERAGE--2.4%

120,000 Canandaigua Brands, Inc. Cl A(1) 6,263

200,000 Earthgrains Company 9,350

360,000 International Multifoods Corp. 10,462

290,000 Keebler Foods Co.(1) 8,265
------------------------------------
34,340
------------------------------------

HEALTHCARE--0.1%

61,100 Total Renal Care Holdings, Inc.(1) 2,024
------------------------------------

INDUSTRIAL--1.2%

700,000 Liberty Property Trust 17,894
------------------------------------

INSURANCE--1.6%

35,600 Axa Colonia Konzern AG ORD 4,561

395,900 ReliaStar Financial Corp. 18,063
------------------------------------
22,624
------------------------------------

MACHINERY & EQUIPMENT--3.1%

455,200 DT Industries, Inc. 15,164

600,000 General Scanning Inc.(1) 13,743

310,000 Kennametal Inc. 16,527
------------------------------------
45,434
------------------------------------

MEDICAL EQUIPMENT & SUPPLIES--1.3%

337,200 AmeriSource Health Corp.(1) 18,377
------------------------------------

METALS & MINING--4.7%

400,000 General Cable Corp. 18,125

270,000 Getchell Gold Corp.(1) 6,649

538,000 Newmont Mining Corp. 17,317

385,000 Reynolds Metals Co. 25,410
------------------------------------
67,501
------------------------------------

PAPER & FOREST PRODUCTS--3.8%

370,000 Boise Cascade Corp. 13,898

375,000 Bowater Inc. 20,976

245,000 Champion International Corp. 13,184

100,000 Georgia-Pacific Corp. 7,719
------------------------------------
55,777
------------------------------------

PERSONAL SERVICES--2.2%

285,000 Block (H & R), Inc. 12,825

675,000 Loewen Group Inc. 19,153
------------------------------------
31,978
------------------------------------

PHARMACEUTICALS--5.1%

343,283 ALPHARMA INC. 7,810

1,365,000 Mylan Laboratories Inc. 37,025

500,000 Omnicare, Inc. 17,125

275,000 Teva Pharmaceutical
Industries Ltd. ADR 11,722
------------------------------------
73,682
------------------------------------

Shares/Principal Amount ($ IN THOUSANDS) Value
- -----------------------------------------------------------------------------------------------

REAL ESTATE--0.6%

417,000 Security Capital Pacific Trust $ 9,331
------------------------------------

RESTAURANTS--0.1%

48,000 Bob Evans Farms, Inc. 972
------------------------------------

RETAIL (SPECIALTY)--0.7%

1,025,000 Food Lion, Inc. Cl A 10,410
------------------------------------

RUBBER & PLASTICS--0.6%

100,000 Armstrong World Industries, Inc. 8,575
------------------------------------

TEXTILES & APPAREL--1.2%

453,400 Fruit of the Loom, Inc.(1) 16,946
------------------------------------

TRANSPORTATION--2.1%

410,000 Budget Group Inc.(1) 13,735

410,000 Expeditors International of
Washington, Inc. 17,323
------------------------------------
31,058
------------------------------------

UTILITIES--1.0%

150,000 GPU Inc. 5,944

300,000 SCANA Corp. 8,962
------------------------------------
14,906
------------------------------------

TOTAL COMMON STOCKS--92.6% 1,343,508
------------------------------------
(Cost $1,072,206)

CONVERTIBLE BONDS

COMPUTER PERIPHERALS--0.5%

$7,000 C-Cube Microsystems Inc.,
5.875%, 11/1/05 6,851
------------------------------------
(Cost $8,743)

TEMPORARY CASH INVESTMENTS(2)

25,000 par value FHLMC Discount Notes,
5.44%, 5/15/98 24,948

Repurchase Agreement, Goldman Sachs &
Co., Inc., (U.S. Treasury obligations), in a joint
trading account at 5.48%, dated 4/30/98,
due 5/1/98 (Delivery value $46,707) 46,700

Repurchase Agreement, BA Security Services,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.48%, dated 4/30/98,
due 5/1/98 (Delivery value $28,904) 28,900

TOTAL TEMPORARY CASH INVESTMENTS--6.9% 100,548
------------------------------------
(Cost $100,547)

TOTAL INVESTMENT SECURITIES--100.0% $1,450,907
====================================
(Cost $1,181,496)

See Notes to Financial Statements

www.americancentury.com 17

Heritage's Schedule of Investments (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
($ IN THOUSANDS)
Contracts Settlement Unrealized
to Sell Date Value Gain/(Loss)
- ------------------------------------------------------------------------------------------------------------------------
325,028,419 BEF 5/29/98 $ 8,774 $ 35
3,880,521 CHF 5/29/98 2,594 30
2,735,729 DEM 5/29/98 1,526 4
65,798,850 FIM 5/29/98 12,092 31
45,234,920 FRF 5/29/98 7,528 20
2,517,971 GBP 5/29/98 4,204 (7)
43,386,042 NLG 5/29/98 21,496 (317)
22,253,548 NOK 5/29/98 2,986 6
------------------------------------------------------------------
$61,200 $(198)
==================================================================

(Value on Settlement Date $61,002)

FUTURES CONTRACTS
($ IN THOUSANDS)
Expiration Underlying Face Unrealized
Purchased Date Amount at Value Gain
- ------------------------------------------------------------------------------------------------------------------------
150 S&P 500 June
Futures 1998 $41,992 $1,157
==================================================================
</TABLE>

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt
BEF = Belgian Franc
CHF = Swiss Franc
DEM = German Mark
FHLMC = Federal Home Loan Mortgage Corporation FIM = Finnish Markka FRF = French
Franc GBP = British Pound NLG = Netherlands Guilder NOK = Norwegian Krona ORD =
Foreign Ordinary Share
(1) Non-income producing.
(2) The rates for U.S. Government Agency discount notes represent the yield to
maturity at purchase.

The schedule includes:

* the percentage of total investments in each industry

* a list of each investment

* the number of shares of each stock * the market value of each investment

* the percent and dollar breakdown of each investment category

* the dollar value of other short-term investments that are considered the
same as cash

See Notes to Financial Statements

18 1-800-345-2021

Performance--Growth
- --------------------------------------------------------------------------------
<TABLE>

TOTAL RETURNS AS OF APRIL 30, 1998

INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 6/30/71)(1) (INCEPTION 6/4/97) (INCEPTION 6/16/97)

GROWTH S&P 500 GROWTH S&P 500 GROWTH S&P 500
<S> <C> <C> <C> <C> <C> <C>

6 MONTHS(2) 18.82% 23.07% 18.69% 23.07% 18.94% 23.07%
1 YEAR 44.50% 42.09% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
- ------------------------------------------------------------------------------------------------------------------------
3 YEARS 23.90% 31.98% -- -- -- --
5 YEARS 18.26% 23.35% -- -- -- --
10 YEARS 17.06% 19.39% -- -- -- --
LIFE OF FUND 18.88% N/A(3) 35.65% 27.43%(4) 28.78% 27.43%(4)
</TABLE>

(1) Although the fund's actual inception date was 10/31/58, this date
corresponds with the management company's implementation of its current
investment philosophy and practices.

(2) Returns for periods less than one year are not annualized.

(3) Benchmark began 1/1/79.

(4) Return from 6/30/97, the date nearest the class's inception for which data
are available.

See pages 42, 43 and 44 for information about share classes, the Russell 1000
Growth Index and returns.

[mountain chart - data below]

GROWTH OF $10,000 OVER 10 YEARS

Growth Russell 1000 Growth
4/30/88 $10,000 $10,000
4/30/89 $12,183 $12,218
4/30/90 $14,009 $13,921
4/30/91 $17,635 $17,150
4/30/92 $21,178 $19,746
4/30/93 $20,890 $20,615
4/30/94 $23,823 $21,402
4/30/95 $25,378 $25,601
4/30/96 $29,517 $33,937
4/30/97 $33,443 $41,424
4/30/98 $48,325 $58,859

The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment over 10
years, while the chart below shows year-by-year performance. The Russell 1000
Growth Index is provided for comparison in each chart. Past performance does not
guarantee future results. Investment return and principal value will fluctuate,
and redemption value may be more or less than original cost. Growth's total
returns include operating expenses (such as transaction costs and management
fees) that reduce returns, while the total returns of the Russell 1000 Growth do
not.

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING APRIL 30)

Growth Russell 1000 Growth
4/30/89 21.83 22.18
4/30/90 14.99 13.94
4/30/91 25.88 23.19
4/30/92 20.09 15.14
4/30/93 -1.36 4.40
4/30/94 14.04 3.82
4/30/95 6.53 19.62
4/30/96 16.31 32.56
4/30/97 13.30 22.06
4/30/98 44.50 42.09

www.americancentury.com 19

Growth--Q&A
- --------------------------------------------------------------------------------

An interview with C. Kim Goodwin and Greg Woodhams, portfolio managers on
the Growth investment team.

HOW DID GROWTH PERFORM DURING THE FIRST SIX MONTHS OF ITS FISCAL YEAR?

Growth posted an 18.82% return for the six months ended April 30, 1998.*
During that period, the fund's benchmark was changed from the S&P 500 to the
Russell 1000 Growth Index. Growth's performance slightly lagged that of the
Russell 1000 Growth Index, which posted a 23.07% gain. The S&P 500 gained
22.47%. However, for the one-year period ending April 30, 1998, Growth returned
44.50%, outpacing the Russell 1000's 42.09% gain and the S&P 500's 41.01%
return.

WHY WAS GROWTH'S BENCHMARK CHANGED FROM THE S&P 500 TO THE RUSSELL 1000 GROWTH
INDEX?

To serve as a meaningful standard for comparative performance, a benchmark
should resemble a fund's holdings as closely as possible. The Russell 1000
Growth Index and the S&P 500 are both considered proxies for the performance of
large-cap stocks. However, in our opinion, the Russell 1000 Index is "growthier"
and therefore more representative of Growth's portfolio. Stocks of companies
represented by the Russell 1000 Growth Index tend to have higher forecasted
growth rates and higher price-to-book ratios than those represented in the S&P
500. (Price-to-book ratio is calculated by dividing a company's stock price by
its book value per share.) In addition, a disproportionate percentage of the S&P
500 is allocated to larger companies, which can skew its performance.

WILL YOU EXPLAIN GROWTH'S PERFORMANCE RELATIVE TO ITS NEW BENCHMARK?

The most telling factor is that several stocks that contributed the most to
Growth's performance in the previous six months, between April 30, 1997, and
October 31, 1997, were among the biggest underperformers in the most recent
period. A primary example is Newbridge Networks. This company manufactures and
markets products for local- and wide-area network applications. We bought
Newbridge at about $16 per share in April 1995, and it was a tremendous
contributor until the fourth quarter of 1997, when it suffered a significant
slowdown in its core business. These troubles were compounded by the firm's
ill-fated acquisition of UB Networks, another manufacturer of networking
products, in January 1997. Due to competitive pressures, the company was neither
able to successfully digest this acquisition or to profitably dispose of it. The
company subsequently announced poor fourth-quarter earnings, and the stock was
punished accordingly. Although we had greatly reduced holdings when Newbridge's
share prices were in the $50 to $60 range, well above our acquisition cost, the
company's lackluster fourth quarter made this stock one of Growth's worst
performers.

Growth's performance also was negatively affected by its heavy weighting in
technology stocks, which were both the fund's and the market's worst performers
during the fourth quarter of 1997 due to concerns about Southeast Asia. Holdings
that were problematic included Intel, Texas Instruments, Compaq and Microchip
Technology. Although we sold those technology holdings we believed to be the
riskiest,

[left margin]

PORTFOLIO AT A GLANCE
4/30/98 10/31/97
NO. OF COMPANIES 57 65
MEDIAN P/E RATIO 33.1 25.7
MEDIAN MARKET $27.2 $25.7
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 71%(1) 75%(2)
EXPENSE RATIO
(FOR INVESTOR CLASS) 1.00%(3) 1.00%

THE RUSSELL 1000 GROWTH INDEX AND THE S&P 500 ARE BOTH CONSIDERED PROXIES FOR
THE PERFORMANCE OF LARGE-CAP STOCKS. HOWEVER, IN OUR OPINION, THE RUSSELL 1000
INDEX IS "GROWTHIER" AND THEREFORE MORE REPRESENTATIVE OF GROWTH'S PORTFOLIO.

(1) Six months ended 4/30/98.
(2) Year ended 10/31/97.
(3) Annualized.

Investment terms are defined in the Glossary on page 44.

*All fund returns referenced in this interview are for Investor Class shares.

20 1-800-345-2021

Growth--Q&A (continued)
- --------------------------------------------------------------------------------

Growth maintains a small weighting in companies that continue to demonstrate
strong earnings acceleration.

WHICH STOCKS ADDED MOST TO RETURNS DURING THE SIX MONTHS?

Growth's top-performing stock was Tyco International Ltd., which has been
and at the time of this report continues to be among the portfolio's largest
holdings at 3.7%. Tyco is a well-managed, diversified company with successful
businesses in four segments (fire and safety protection systems, flow control
equipment, electrical and electronics components, and disposable products).
Tyco's long-running success has been driven by its proven ability to both
effectively operate its businesses and also acquire companies that fit well into
its existing structure. The company recently integrated four large acquisitions,
which boosted operating margins and drove triple-digit gains in sales and
earnings growth. We met with Tyco's senior management in February and were
impressed with the company's seamless integration of its recent acquisitions and
its plans for additional acquisitions in 1998. We are optimistic that Tyco will
continue to grow rapidly.

Growth's substantial stake in pharmaceutical stocks also helped boost
performance. Pharmaceutical companies in general have benefited from healthy
industry fundamentals, favorable demographics as the population ages, and
limited exposure to Southeast Asia. Growth held a relatively large position in
drug manufacturer Eli Lilly, but we began selling it down in late 1997 when our
acceleration models indicated its earnings growth was slowing. At the same time,
our search for earnings growth led us to Pfizer, a major producer of
pharmaceuticals and hospital and consumer products. Pfizer fit our profile in
many respects: It has a number of new drugs on the market, an excellent product
pipeline and little exposure to generic competition. Pfizer was particularly
additive to Growth's performance in early 1998 following its introduction of the
much-touted drug Viagra, a new treatment for impotency. Another helpful
pharmaceutical holding was Bristol-Myers Squibb, with its expanding, high-margin
business in the United States.

Other top-performing stocks were in the financial services industry, which
continued to benefit from the benign interest rate environment and ongoing
consolidation within the industry. Growth's substantial stake in financial
services companies and property & casualty insurance companies included Allstate
Insurance and Travelers' Group. A share buy-back program and a new, more
efficient claims processing system continued to lift profits for Allstate, which
also was among Growth's top performers in the preceding period. We built a
substantial position in Travelers throughout the fourth quarter of 1997. The
stock's share price later jumped on news that Citicorp would acquire the
company.

WHICH STOCKS WERE DISAPPOINTING?

In addition to Newbridge, the portfolio's worst-performing stocks were,
almost without exception, technology issues that were devalued in the market's
sell-off in the fourth quarter of 1997.

Outside the technology sector, the worst-performing stock was Avon
Products. However, a deceleration in earnings led us to sell Avon early in its
decline, a move that coincided with our decision to buy another consumer
products company, Gillette, which met our acceleration criteria. Our timing was
very good. When we purchased Gillette, a number of its businesses were thought
to be underperforming. However, we were impressed with the company's

[right margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
GENERAL ELECTRIC CO. (U.S.) 4.2% 1.8%
PFIZER, INC. 3.9% --
TYCO INTERNATIONAL LTD. 3.8% 3.1%
BRISTOL-MYERS SQUIBB CO. 3.7% 2.8%
PROCTER & GAMBLE CO. 3.4% 1.3%
GILLETTE COMPANY 3.3% 1.5%
WORLDCOM, INC. 3.1% 3.3%
MICROSOFT CORP. 2.8% 1.0%
COMPUWARE CORP. 2.7% 4.3%
ALLSTATE CORP. 2.7% 3.5%

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97
PHARMACEUTICALS 11.4% 8.5%
COMPUTER SOFTWARE & SERVICES 8.6% 9.1%
DIVERSIFIED COMPANIES 7.9% 4.9%
FOOD & BEVERAGE 7.2% --
COMMUNICATIONS SERVICES 6.8% 8.4%

www.americancentury.com 21

Growth--Q&A (continued)
- --------------------------------------------------------------------------------

proven ability to respond to and fix operating problems. We were in close
contact with Gillette's top management and knew its faltering businesses were
recovering and that significant new product launches were imminent. The stock
has performed well, and we are confident Gillette will continue to prosper.

WHAT SIGNIFICANT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE THE ANNUAL REPORT?

Our greatest shift has been in the food and beverage sector. Although
Growth didn't own any food and beverage stocks at the beginning of the period,
we were drawn to several names, including Hershey, Coca-Cola, Best Foods and
Pepsico, whose earnings were accelerating due to pending new product launches or
anticipated acquisitions. We also built a significant position (4.3% of
investments at April 30) in broadcasting companies. Although we are not seeing
much earnings acceleration in these names, we are seeing good cash flow.
Portfolio additions include Clear Channel Communications, Chancellor Media and
CBS Corp. Clear Channel owns or programs radio and television stations in 36
markets and also owns Heftel Broadcasting, the largest Spanish-language
broadcaster in the United States. Through its pending acquisition of Universal
Outdoor Holdings, Clear Channel is building a formidable presence in the outdoor
advertising market, giving it entry into new geographic markets and access to
additional sources of advertising revenue. A flurry of acquisitions by CBS
(previously Westinghouse Electric Corp.) has driven this company's growth, which
should continue to improve through rising viewership and a pending $1 billion
share repurchase program.

We also are pleased to report that several efforts we've made to enhance
Growth's performance are working. One initiative was to increase our
concentration in the fund's top holdings. Two years ago, the top 10 holdings
accounted for roughly 21% of fund investments; at the end of 1997, that number
was up to 33%. It's also been our goal to focus primarily on the large-cap
universe of the domestic equity market. As a result of this effort, Growth's
median market capitalization has more than doubled since the end of 1996.

WERE THERE ANY CHANGES TO GROWTH'S MANAGEMENT TEAM?

Yes. John Sykora, who has been a member of Growth's investment team since
1995, accepted another assignment within American Century in December. The
current team, which is dedicated entirely to managing the Growth fund, came
together in January 1998. Members include Portfolio Manager Greg Woodhams, who
joined American Century in 1997, and Analyst Ken Crawford, who has been with the
company since 1995. We added another analyst, Kenneth Smith, in May. Together,
we share a combined 23 years of investment experience. We think the team's size
and depth of experience are important because Growth is a very
research-intensive fund. It differentiates itself from other growth-oriented
funds in that its holdings are quite concentrated, meaning that if we are
confident about a particular stock, we often will take a large position in it.
For that reason, it's critical that we do our homework well. We are confident
that we have the resources and the infrastructure to help us do that
effectively.

[left margin]

[pie charts]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF APRIL 30, 1998
Foreign Common Stocks 1.0%
Preferred Stock 1.3%
Cash 3.7%
U.S. Common Stocks 94.0%

AS OF OCTOBER 31, 1997
Preferred Stock 0.3%
Cash 1.7%
Foreign Common Stocks 2.1%
U.S. Common Stocks 95.9%

GROWTH'S HOLDINGS ARE QUITE CONCENTRATED, MEANING THAT IF WE ARE CONFIDENT ABOUT
A PARTICULAR STOCK, WE OFTEN WILL TAKE A LARGE POSITION IN IT.

22 1-800-345-2021

Growth's Schedule of Investments
- --------------------------------------------------------------------------------
<TABLE>

APRIL 30, 1998 (UNAUDITED)

Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS

AEROSPACE & DEFENSE--0.7%

<S> <C> <C>
794,000 Boeing Co. $ 39,750
------------------------------------

AGRICULTURE--1.7%

2,727,000 Pioneer Hi-Bred International, Inc. 102,944
------------------------------------

BANKING--3.9%

1,941,956 Banc One Corp. 114,211

413,000 Mellon Bank Corp. 29,736

2,337,000 Norwest Corp. 92,750
------------------------------------
236,697
------------------------------------

BROADCASTING & MEDIA--4.3%

2,700,000 CBS Corporation 96,188

1,332,300 Chancellor Media Corp.(1) 63,159

1,017,100 Clear Channel
Communications, Inc.(1) 95,862
------------------------------------
255,209
------------------------------------

BUSINESS SERVICES & SUPPLIES--1.8%

1,940,000 Ceridian Corp.(1) 109,731
------------------------------------

COMMUNICATIONS EQUIPMENT--2.8%

1,386,000 Lucent Technologies Inc. 105,509

839,000 Tellabs, Inc.(1) 59,438
------------------------------------
164,947
------------------------------------

COMMUNICATIONS SERVICES--6.8%

2,704,000 AirTouch Communications, Inc.(1) 143,650

1,840,000 SBC Communications Inc. 76,245

4,408,000 WorldCom, Inc.(1) 188,580
------------------------------------
408,475
------------------------------------

COMPUTER PERIPHERALS--3.4%

1,335,500 Cisco Systems Inc.(1) 97,867

2,321,000 EMC Corp. (Mass.)(1) 107,056
------------------------------------
204,923
------------------------------------

COMPUTER SOFTWARE & SERVICES--8.6%

921,000 BMC Software, Inc.(1) 86,142

3,339,900 Compuware Corp.(1) 163,133

484,000 Fiserv, Inc.(1) 31,551

1,893,000 Microsoft Corp.(1) 170,666

1,732,000 SunGard Data Systems Inc.(1) 61,703
------------------------------------
513,195
------------------------------------

COMPUTER SYSTEMS--1.7%

1,242,000 Dell Computer Corp.(1) 100,253
------------------------------------

Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------

CONSUMER PRODUCTS--6.7%

1,697,000 Gillette Company $ 195,897

2,507,000 Procter & Gamble Co. (The) 206,044
------------------------------------
401,941
------------------------------------

DIVERSIFIED COMPANIES--7.9%

2,923,000 General Electric Co. (U.S.) 248,820

4,147,724 Tyco International Ltd. 226,051
------------------------------------
474,871
------------------------------------

ELECTRICAL &
ELECTRONIC
COMPONENTS--0.9%

641,000 Intel Corp. 51,821
------------------------------------

ENERGY (PRODUCTION & MARKETING)--1.6%

1,627,000 Enron Oil & Gas Co. 38,031

1,851,000 Williams Companies, Inc. (The) 58,538
------------------------------------
96,569
------------------------------------

FINANCIAL SERVICES--2.6%

914,000 Fannie Mae 54,726

151,600 ING Groep N.V. ORD 9,847

1,483,000 Travelers Group, Inc. 90,741
------------------------------------
155,314
------------------------------------

FOOD & BEVERAGE--7.2%

1,788,000 Bestfoods 98,117

751,000 Coca-Cola Company (The) 56,982

2,013,400 Coca-Cola Enterprises, Inc. 76,006

221,900 Groupe Danone ORD 52,359

840,300 Hershey Foods Corp. 61,552

2,248,000 PepsiCo, Inc. 89,217
------------------------------------
434,233
------------------------------------

HEALTHCARE--0.5%

330,000 Cardinal Health, Inc. 31,763
------------------------------------

INSURANCE--5.8%

1,672,600 Ace, Ltd. 63,350

1,651,000 Allstate Corp. 158,909

943,000 American International Group, Inc. 124,063
------------------------------------
346,322
------------------------------------

MACHINERY & EQUIPMENT--1.6%

1,400,000 Sundstrand Corp. 96,688
------------------------------------

MEDICAL EQUIPMENT & SUPPLIES--0.9%

850,000 Guidant Corp. 56,844
------------------------------------

OFFICE EQUIPMENT & SUPPLIES--2.2%

1,167,000 Xerox Corp. 132,455
------------------------------------

See Notes to Financial Statements

www.americancentury.com 23

Growth's Schedule of Investments (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
PHARMACEUTICALS--11.4%

2,100,000 Bristol-Myers Squibb Co. $ 222,337

2,069,000 Pfizer, Inc. 235,478

1,488,400 Pharmacia & Upjohn Inc. 62,606

1,229,000 Schering-Plough Corp. 98,474

1,045,000 SmithKline Beecham plc ADR 62,243
------------------------------------
681,138
------------------------------------

RETAIL (FOOD & DRUG)--5.0%

1,092,000 Albertson's, Inc. 54,600

1,650,000 CVS Corp. 121,687

3,162,000 Safeway Inc.(1) 120,946
------------------------------------
297,233
------------------------------------

RETAIL (GENERAL MERCHANDISE)--3.3%

715,000 Penney (J.C.) Company, Inc. 50,809

2,947,000 Wal-Mart Stores, Inc. 149,008
------------------------------------
199,817
------------------------------------

RETAIL (SPECIALTY)--0.8%

701,000 Home Depot, Inc. 48,807
------------------------------------

RUBBER & PLASTICS--0.8%

639,800 Illinois Tool Works Inc. 45,106
------------------------------------

TOTAL COMMON STOCKS--94.9% 5,687,046
------------------------------------

(Cost $4,127,617)

Shares/Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
PREFERRED STOCK

PRINTING & PUBLISHING--1.4%

3,450,000 News Corp. Ltd. ADR $ 80,428
------------------------------------
(Cost $64,807)

TEMPORARY CASH INVESTMENTS(2)

$73,820 par value FHLMC Discount Notes,
5.44%, 5/8/98 73,742

15,000 par value FHLMC Discount Notes,
5.40%, 5/13/98 14,973

20,000 par value FHLMC Discount Notes,
5.42%, 5/18/98 19,949

Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 5.44%, dated 4/30/98,
due 5/1/98 (Delivery value $114,917) 114,900
------------------------------------

TOTAL TEMPORARY CASH
INVESTMENTS--3.7% 223,564
------------------------------------
(Cost $223,564)

TOTAL INVESTMENT SECURITIES--100.0% $5,991,038
=====================================
(Cost $4,415,988)

See Notes to Financial Statements

24 1-800-345-2021

Growth's Schedule of Investments (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
($ IN THOUSANDS)
Contracts Settlement Unrealized
to Sell Date Value Loss
- ------------------------------------------------------------------------------------------------------------------------
106,264,196 FRF 5/29/98 $17,684 $(431)
==================================================================
(Value on Settlement Date $17,253)

FUTURES CONTRACTS
Expiration Underlying Face Unrealized
Purchased Date Amount at Value Gain
- ------------------------------------------------------------------------------------------------------------------------
420 S&P 500
June
Futures 1998 $117,579 $3,582
==================================================================
</TABLE>

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt FHLMC = Federal Home Loan Mortgage Corporation
FRF = French Franc ORD = Foreign Ordinary Share
(1) Non-income producing.
(2) The rates for U.S. Government Agency discount notes represent the yield to
maturity at purchase.

The schedule includes:

* the percentage of total investments in each industry

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percent and dollar breakdown of each investment category

* the dollar value of other short-term investments that are considered the
same as cash

See Notes to Financial Statements

www.americancentury.com 25

<TABLE>
<CAPTION>
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED) SELECT HERITAGE GROWTH

ASSETS (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C>
Investment securities, at value (identified cost of $4,178,332,
$1,181,496 and $4,415,988, respectively) (Note 3 and Note 5) ..... $ 5,686,707 $ 1,450,907 $ 5,991,038
Cash ............................................................... 1,883 6,510 6,408
Receivable for investments sold .................................... 16,069 52,038 101,569
Receivable for forward foreign currency exchange contracts ......... -- 126 --
Dividends and interest receivable .................................. 6,180 734 4,963
Receivable for variation margin on futures contracts ............... -- 840 2,352
-------------- -------------- --------------
5,710,839 1,511,155 6,106,330
-------------- -------------- --------------

LIABILITIES

Disbursements in excess of demand deposit cash ..................... 7,188 1,936 6,213
Payable for forward foreign currency exchange contracts ............ -- 324 431
Payable for investments purchased .................................. 48,864 77,697 131,451
Payable for capital shares redeemed ................................ 1,492 372 2,148
Accrued management fees (Note 2) ................................... 4,653 1,161 4,875
Distribution and service fee payable (Note 2) ...................... 1 -- 2
Other liabilities .................................................. 8 2 8
-------------- -------------- --------------
62,206 81,492 145,128
-------------- -------------- --------------
Net Assets ......................................................... $ 5,648,633 $ 1,429,663 $ 5,961,202
============== ============== ==============

NET ASSETS CONSIST OF:

Capital (par value and paid in surplus) ........................... $ 3,509,154 $ 1,039,682 $ 3,506,660
Undistributed net investment income ................................ 6,107 1,055 3,075
Accumulated undistributed net realized gain on investments
and foreign currency transactions ................................. 625,044 118,557 873,337
Net unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies (Note 3) .......... 1,508,328 270,369 1,578,130
-------------- -------------- --------------
$ 5,648,633 $ 1,429,663 $ 5,961,202
============== ============== ==============

Investor Class ($ and shares in full)
Net assets ......................................................... $5,633,206,621 $1,428,639,680 $5,957,503,413
Shares outstanding ................................................. 114,957,724 109,964,149 211,998,028
Net asset value per share .......................................... $ 49.00 $ 12.99 $ 28.10

Advisor Class ($ and shares in full)
Net assets ......................................................... $ 1,530,982 $ 931,973 $ 3,526,760
Shares outstanding ................................................. 31,269 71,835 125,611
Net asset value per share .......................................... $ 48.96 $ 12.97 $ 28.08

Institutional Class ($ and shares in full)
Net assets ......................................................... $ 13,894,965 $ 91,446 $ 172,168
Shares outstanding ................................................. 283,352 7,033 6,122
Net asset value per share .......................................... $ 49.04 $ 13.00 $ 28.12
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF ASSETS AND LIABILITIES--This page details what
the fund owns (assets), what it owes (liabilities), and its net assets as of the
last day of the period. If you subtract what the fund owes from what it owns,
you get the fund's NET assets. The net assets by class divided by the total
number of fund shares outstanding by class gives you the price of an individual
share, or the NET ASSET VALUE PER SHARE--for each class of shares.

NET ASSETS are also broken out by capital (money invested by shareholders);
income not yet paid to shareholders; gains not yet paid to shareholders (known
as realized gains); and gains or losses on securities still owned by the fund
(known as unrealized gains or losses). This breakout tells you the value of
assets that are performance-related, such as income and investment gains or
losses, and the value of assets that are not related to performance, such as
shareholder investments and redemptions.

See Notes to Financial Statements

26 1-800-345-2021

<TABLE>
<CAPTION>
Statements of Operations
- --------------------------------------------------------------------------------

FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)

SELECT HERITAGE GROWTH
INVESTMENT INCOME (IN THOUSANDS)
<S> <C> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $64, $122,
and $150, respectively) .............................................. $ 27,943 $ 5,439 $ 24,881
Interest ................................................................ 4,555 2,396 5,086
---------- ---------- ----------
32,498 7,835 29,967
---------- ---------- ----------
Expenses (Note 2):
Management fees ......................................................... 25,742 6,576 26,854
Distribution fees -- Advisor Class ...................................... 2 1 3
Service fees -- Advisor Class ........................................... 2 1 3
Directors' fees and expenses ............................................ 28 7 30
---------- ---------- ----------
25,774 6,585 26,890
---------- ---------- ----------

Net investment income ................................................... 6,724 1,250 3,077
---------- ---------- ----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)

Net realized gain on:
Investments ............................................................. 629,959 118,053 884,090
Foreign currency transactions ........................................... 742 1,264 3,813
---------- ---------- ----------
630,701 119,317 887,903
---------- ---------- ----------

Change in net unrealized appreciation on:
Investments ............................................................. 378,875 325 55,011
Translation of assets and liabilities in foreign currencies ............. 140 1,007 3,746
---------- ---------- ----------
379,015 1,332 58,757
---------- ---------- ----------

Net realized and unrealized gain on investments ......................... 1,009,716 120,649 946,660
---------- ---------- ----------

Net Increase in Net Assets Resulting from Operations .................... $1,016,440 $ 121,899 $ 949,737
========== ========== ==========
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF OPERATIONS--This statement breaks out how each
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.

Fund OPERATIONS include:
* income earned from investments (dividends and interest)
* management fees and expenses
* gains or losses from selling investments (known as realized gains or losses)
* gains or losses on current fund holdings (known as unrealized gains or losses

See Notes to Financial Statements

www.americancentury.com 27

<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED) AND OCTOBER 31, 1997

SELECT HERITAGE GROWTH
Increase in Net Assets 1998 1997 1998 1997 1998 1997

OPERATIONS (IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C>
Net investment income .......................$ 6,724 $ 14,916 $ 1,250 $ 619 $ 3,077 $ 994
Net realized gain on investments and
foreign currency transactions ............. 630,701 789,506 119,317 248,649 887,903 759,739
Change in net unrealized appreciation on
investments and translation of assets and
liabilities in foreign currencies ......... 379,015 270,066 1,332 52,273 58,757 400,028
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations ........................... 1,016,440 1,074,488 121,899 301,541 949,737 1,160,761
----------- ----------- ----------- ----------- ----------- -----------

DISTRIBUTIONS TO SHAREHOLDERS

From net investment income:
Investor Class ............................ (19,490) (31,065) (6,632) (8,095) (2) (38,510)
Advisor Class ............................. (4) -- (1) -- -- --
Institutional Class ....................... (65) -- (1) -- -- --

From net realized gains from
investment transactions:

Investor Class ............................ (783,151) (353,996) (241,134) (62,011) (763,692) (51,784)
Advisor Class ............................. (208) -- (22) -- (362) --
Institutional Class ....................... (1,889) -- (23) -- (26) --
----------- ----------- ----------- ----------- ----------- -----------

Decrease in net assets from distributions ... (804,807) (385,061) (247,813) (70,106) (764,082) (90,294)
----------- ----------- ----------- ----------- ----------- -----------

CAPITAL SHARE TRANSACTIONS (NOTE 4)

Net increase (decrease) in net assets from
capital share transactions ................ 654,789 54,105 234,062 6,929 660,399 (720,743)
----------- ----------- ----------- ----------- ----------- -----------

Net increase in net assets .................. 866,422 743,532 108,148 238,364 846,054 349,724

NET ASSETS

Beginning of period ......................... 4,782,211 4,038,679 1,321,515 1,083,151 5,115,148 4,765,424
----------- ----------- ----------- ----------- ----------- -----------
End of period ...............................$ 5,648,633 $ 4,782,211 $ 1,429,663 $ 1,321,515 $ 5,961,202 $ 5,115,148
=========== =========== =========== =========== =========== ===========

Undistributed net investment income .........$ 6,107 $ 28,576 $ 1,055 $ 6,439 $ 3,075 --
=========== =========== =========== =========== =========== ===========
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
each fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:

* performance

* distributions to shareholders

* shareholders either investing, reinvesting distributions or withdrawing
money

The changes are broken out into:

* operations--a summary of the Statement of Operations from the previous page
for the most recent period

* distributions--income and gains distributed to shareholders

* share transactions--shareholders' purchases, reinvestment of distributions
and redemptions

The statement also takes net assets at the beginning of the period to the end of
the period.

See Notes to Financial Statements

28 1-800-345-2021

Notes to Financial Statements
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century - Twentieth Century Select Fund
(Select), American Century - Twentieth Century Heritage Fund (Heritage), and
American Century - Twentieth Century Growth Fund (Growth) (the Funds) are three
of the thirteen series of funds issued by the Corporation. The Funds' investment
objective is to seek capital growth by investing primarily in equity securities.
The Funds are authorized to issue three classes of shares: the Investor Class,
the Advisor Class and the Institutional Class. The three classes of shares
differ principally in their respective shareholder servicing and distribution
expenses and arrangements. All shares of each Fund represent an equal pro rata
interest in the assets of the class to which such shares belong, and have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except for class specific expenses and exclusive rights to vote on
matters affecting only individual classes. The following significant accounting
policies, related to all classes of the Funds, are in accordance with accounting
policies generally accepted in the investment company industry.

FOREIGN CURRENCY TRANSACTIONS -- The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Funds may enter into
forward foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Fund's exposure to foreign currency exchange rate fluctuations. When
required, the Funds will segregate assets in an amount sufficient to cover its
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Funds and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of risk in excess
of the amount reflected in the Statement of Assets and Liabilities. The Funds
bear the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms.

FUTURES CONTRACTS -- The Fund may enter into stock index futures contracts
in order to manage the Fund's exposure to changes in market conditions. One of
the risks of entering into futures contracts includes the possibility that the
changes in value of the contract may not correlate with the changes in value of
the underlying securities. Upon entering into a futures contract, the Fund is
required to deposit either cash or securities in an amount equal to a certain
percentage of the contract value (initial margin). Subsequent payments
(variation margin) are made or received daily, in cash, by the Fund. The
variation margin is equal to the daily change in the contract value and is
recorded as an unrealized gain or loss. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Net realized and unrealized gains
or losses occurring during the holding period of futures contracts are a
component of realized gain (loss) on investments and

www.americancentury.com 29

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

unrealized appreciation (depreciation) on investments, respectively.

REPURCHASE AGREEMENTS -- The Funds may enter into repurchase agreements
with institutions that the Funds' investment manager, American Century
Investment Management, Inc. (ACIM), has determined are creditworthy pursuant to
criteria adopted by the Board of Directors. Each repurchase agreement is
recorded at cost. Each Fund requires that the collateral, represented by
securities, received in a repurchase transaction be transferred to the custodian
in a manner sufficient to enable each Fund to obtain those securities in the
event of a default under the repurchase agreement. ACIM monitors, on a daily
basis, the securities transferred to ensure the value, including accrued
interest, of the securities under each repurchase agreement is equal to or
greater than amounts owed to each Fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, each Fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS -- It is the policy of the Funds to distribute all
taxable income and capital gains to shareholders and to otherwise qualify as a
regulated investment company under provisions of the Internal Revenue Code.
Accordingly, no provision has been made for federal or state income taxes.

DISTRIBUTIONS TO SHAREHOLDERS -- Distribu-tions to shareholders are
recorded on the ex- dividend date. Distributions from net investment income and
net realized gains are declared and paid annually.

The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. The differences reflect the differing character of
certain income items and net capital gains and losses for financial statement
and tax purposes and may result in reclassification among certain capital
accounts.

ADDITIONAL INFORMATION -- Effective January 15, 1998, Funds Distributor,
Inc. (FDI) became the Corporation's distributor. Certain officers of FDI are
also officers of the Corporation.

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The Corporation has entered into a Management Agreement with ACIM that
provides the Funds with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreement provides that all
expenses of the Funds, except brokerage commissions, taxes, interest, expenses
of those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on each Fund's class average daily closing net assets during the previous month.
The annual management fee for the Investor Class, Advisor Class and
Institutional Class is 1.00%, 0.75% and 0.80%, respectively.

The Board of Directors has adopted a Master Distribution and Shareholder
Services Plan (the Plan) for the Advisor Class, pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Plan provides that the Funds will pay ACIM
an annual distribution fee equal to 0.25% and service fee equal to 0.25%. The
fees are computed daily and paid monthly based on the Advisor Class's average
daily closing net assets during the previous month. The distribution fee
provides compensation for distribution expenses incurred by financial
intermediaries in connection with distributing shares of the Advisor Class
including, but not limited to, payments to brokers, dealers, and financial
institutions that have entered into sales agreements with respect to shares of
the Funds. The service fee provides compensation for shareholder and
administrative services rendered by ACIM, its affiliates or independent third
party providers. Fees incurred under the Plan for the period ended April 30,
1998 were $3,486, $1,384 and $6,924 for Select, Heritage and Growth,
respectively.

Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, the
Corporation's distributor, American Century Investment Services, Inc., and the
Corporation's transfer agent, American Century Services Corporation.

30 1-800-345-2021

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Investment transactions, exluding short-term investments, for the six months
ended April 30, 1998, were as follows:

<TABLE>
SELECT HERITAGE GROWTH
(IN THOUSANDS)
<S> <C> <C> <C>
Purchases ..................... $3,100,761 $765,511 $3,732,216

(IN THOUSANDS)

Proceeds From Sales ........... $3,302,898 $782,773 $3,752,277

On April 30, 1998, the composition of unrealized appreciation and
depreciation of investment securities based on the aggregate cost of investments
for federal income tax purposes was as follows:

SELECT HERITAGE GROWTH
(IN THOUSANDS)
Appreciation ................. $1,524,580 $288,953 $1,578,658

Depreciation ................. (21,408) (20,298) (17,351)
--------- --------- ---------
Net .......................... $1,503,171 $268,695 $1,561,307
========== ========== ==========
Federal Tax Cost. ............ $4,183,536 $1,182,212 $4,429,731
========== ========== ==========
</TABLE>

- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS

There are 250,000,000, 250,000,000, and 500,000,000 shares of the Investor
Class authorized for issuance by Select, Heritage, and Growth, respectively.
There are 105,000,000, 105,000,000, and 210,000,000 shares of the Advisor Class
authorized for issuance by Select, Heritage, and Growth, respectively. There are
41,000,000, 41,000,000, and 80,000,000 shares of the Institutional Class
authorized for issuance by Select, Heritage, and Growth, respectively.
Transactions in shares of the Funds were as follows:

<TABLE>
SELECT HERITAGE GROWTH
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS (IN THOUSANDS)

Six Months ended April 30, 1998
<S> <C> <C> <C> <C> <C> <C>
Sold ............................ 9,476 $439,150 14,230 $180,849 20,023 $527,753
Issued in reinvestment of
distributions ................. 18,613 773,188 21,904 240,788 31,652 740,695
Redeemed ........................ (12,118) (559,563) (15,071) (188,265) (23,190) (609,065)
--------- --------- -------- --------- --------- ---------
Net increase .................... 15,971 $652,775 21,063 $233,372 28,485 $659,383
========== ========== ========== ========== ========== ==========

Year ended October 31, 1997
Sold ............................ 17,600 $ 778,552 26,794 $355,329 35,274 $ 876,879
Issued in reinvestment of
distributions ................. 9,470 371,414 5,793 68,885 3,935 87,875
Redeemed ........................ (25,362) (1,106,798) (32,170) (418,518) (70,222) (1,687,973)
--------- --------- -------- --------- --------- ---------
Net increase (decrease) ......... 1,708 $ 43,168 417 $ 5,696 (31,013) $ (723,219)
========== ========== ========== ========== ========== ==========
</TABLE>

www.americancentury.com 31

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>

SELECT HERITAGE GROWTH
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
ADVISOR CLASS
(IN THOUSANDS)

Six Months ended April 30, 1998
<S> <C> <C> <C> <C> <C> <C>
Sold .............................. 5 $206 68 $775 36 $ 947
Issued in reinvestment of
distributions ................... 5 212 2 22 15 346
Redeemed .......................... (5) (238) (6) (86) (4) (101)
--------- --------- -------- --------- --------- ---------
Net increase ...................... 5 $180 64 $711 47 $1,192
========== ========== ========== ========== ========== ==========

Period ended October 31, 1997(1)
Sold .............................. 30 $1,512 12 $167 81 $2,368
Issued in reinvestment of
distributions ................... -- -- -- -- -- --
Redeemed .......................... (3) (163) (4) (52) (2) (50)
--------- --------- -------- --------- --------- ---------
Net increase ...................... 27 $1,349 8 $115 79 $2,318
========== ========== ========== ========== ========== ==========

INSTITUTIONAL CLASS
(IN THOUSANDS)

Six Months ended April 30, 1998
Sold .............................. 60 $2,885 -- -- 100 $2,412
Issued in reinvestment of
distributions ................... 47 1,954 2 24 1 25
Redeemed .......................... (62) (3,005) (4) (45) (101) (2,613)
--------- --------- -------- --------- --------- ---------
Net increase (decrease) ........... 45 $1,834 (2) $(21) -- $ (176)
========== ========== ========== ========== ========== ==========

Period ended October 31, 1997(2)
Sold .............................. 258 $10,551 9 $1,118 6 $158
Issued in reinvestment of
distributions ................... -- -- -- -- -- --
Redeemed .......................... (20) (963) -- -- -- --
--------- --------- -------- --------- --------- ---------
Net increase ...................... 238 $ 9,588 9 $1,118 6 $158
========== ========== ========== ========== ========== ==========

- --------------------------------------------------------------------------------
5. AFFILIATED COMPANY TRANSACTIONS

A summary of transactions for each issuer who is or was an affiliate at or
during the six months ended April 30, 1998, follows:

April 30, 1998
Share
Balance Purchase Sales Realized Share Market
Fund/Issuer(3) 10-31-97 Cost Cost Gain Balance Value
- --------------------------------------------------------------------------------------------------------------------------------
HERITAGE (IN
THOUSANDS)
InaCom Corp. .................................. 540,000 -- $14,928 $76 -- --
=========================================== ===========

(1) Sale of the Advisor Class for Select, Heritage, and Growth commenced on
August 8, 1997, July 11, 1997, and June 4, 1997, respectively.

(2) Sale of the Institutional Class for Select commenced on June 16, 1997 and
for both Heritage and Growth on March 13, 1997.

(3) None of the securities produced income during the period held.
</TABLE>

32 1-800-345-2021

<TABLE>
<CAPTION>
Select's Financial Highlights
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Investor Class
1998(1) 1997 1996 1995 1994 1993
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............ $48.18 $41.52 $39.52 $37.67 $45.76 $39.18
------- ------- ------- ------- ------- -------
Income From Investment Operations
Net Investment Income ......................... 0.06(2) 0.15(2) 0.20(2) 0.33(2) 0.40 0.46
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ............. 8.89 10.51 6.73 4.68 (3.59) 7.94
------- ------- ------- ------- ------- -------
Total From Investment Operations .............. 8.95 10.66 6.93 5.01 (3.19) 8.40
------- ------- ------- ------- ------- -------
Distributions
From Net Investment Income .................... (0.20) (0.32) (0.27) (0.28) (0.43) (0.49)
From Net Realized Gains
on Investment Transactions .................... (7.93) (3.68) (4.66) (2.75) (4.47) (1.31)
In Excess of Net Realized Gains ............... -- -- -- (0.13) -- (0.02)
------- ------- ------- ------- ------- -------
Total Distributions ........................... (8.13) (4.00) (4.93) (3.16) (4.90) (1.82)
------- ------- ------- ------- ------- -------

Net Asset Value, End of Period .................. $49.00 $48.18 $41.52 $39.52 $37.67 $45.76
======= ======= ======= ======= ======= =======
Total Return(3) ............................... 21.62% 27.89% 19.76% 15.02% (7.37)% 22.20%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ........................... 1.00%(4) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average Net Assets .................... 0.26%(4) 0.33% 0.50% 0.90% 1.00% 1.10%
Portfolio Turnover Rate ......................... 61% 94% 105% 106% 126% 82%
Average Commission Paid per Share
of Equity Security Traded ....................... $0.0450 $0.0457 $0.0410 $0.0460 --(5) --(5)
Net Assets, End of Period (in millions) ......... $5,633 $4,769 $4,039 $4,008 $4,278 $5,160

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.

(5) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended October 31, 1995.
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--This page itemizes what contributed to
the class's change in share price during the period, and compares this to
changes over the last five fiscal years (or less, if the class is not five years
old).

On a per-share basis, it includes:

* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements

www.americancentury.com 33

Select's Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS AS INDICATED
Advisor Class
1998(1) 1997(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ................................... $ 48.16 $ 49.43
----------- -----------
Income From Investment Operations
Net Investment Loss(3) ............................................... -- (0.02)
Net Realized and Unrealized Gain (Loss) on Investment Transactions ... 8.89 (1.25)
----------- -----------
Total From Investment Operations ..................................... 8.89 (1.27)
----------- -----------
Distributions
From Net Investment Income ........................................... (0.16) --
From Net Realized Gains on Investment Transactions ................... (7.93) --
----------- -----------
Total Distributions .................................................. (8.09) --
----------- -----------
Net Asset Value, End of Period ......................................... $ 48.96 $ 48.16
=========== ===========
Total Return(4) ...................................................... 21.48% (2.57)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ...................... 1.25%(5) 1.25%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets ............ 0.01%(5) (0.17)%(5)
Portfolio Turnover Rate ................................................ 61% 94%
Average Commission Paid per Share of Equity Security Traded ............ $ 0.0450 $ 0.0457
Net Assets, End of Period (in thousands) ............................... $ 1,531 $ 1,289
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

(2) August 8, 1997 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.

See Notes to Financial Statements

34 1-800-345-2021

Select's Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS AS INDICATED
Institutional Class
1998(1) 1997(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ............................ $ 48.24 $ 40.56
------------ ------------
Income From Investment Operations
Net Investment Income(3) ...................................... 0.11 0.13
Net Realized and Unrealized Gain on Investment Transactions ... 8.89 7.55
------------ ------------
Total From Investment Operations .............................. 9.00 7.68
------------ ------------
Distributions
From Net Investment Income .................................... (0.27) --
From Net Realized Gains on Investment Transactions ............ (7.93) --
------------ ------------
Total Distributions ........................................... (8.20) --
------------ ------------
Net Asset Value, End of Period .................................. $ 49.04 $ 48.24
============ ============
Total Return(4) ............................................... 21.75% 18.93%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............... 0.80%(5) 0.80%(5)
Ratio of Net Investment Income to Average Net Assets ............ 0.46%(5) 0.45%(5)
Portfolio Turnover Rate ......................................... 61% 94%
Average Commission Paid per Share of Equity Security Traded ..... $ 0.0450 $ 0.0457
Net Assets, End of Period (in thousands) ........................ $ 13,895 $ 11,486
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

(2) March 13, 1997 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.

See Notes to Financial Statements

www.americancentury.com 34

Heritage's Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Investor Class
1998(1) 1997 1996 1995 1994 1993
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ..... $ 14.86 $ 12.24 $ 11.75 $ 10.32 $ 11.03 $ 9.30
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income .................. 0.01(2) 0.01(2) --(2) 0.05(2) 0.07 0.07
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ...... 0.89 3.41 1.15 1.96 (0.21) 2.43
----------- ----------- ----------- ----------- ----------- -----------
Total From Investment Operations ....... 0.90 3.42 1.15 2.01 (0.14) 2.50
----------- ----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income ............. (0.07) (0.09) (0.05) (0.03) (0.06) (0.09)
From Net Realized Gains
on Investment Transactions ............. (2.70) (0.71) (0.61) (0.52) (0.50) (0.68)
In Excess of Net Realized Gains ........ -- -- -- (0.03) (0.01) --
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions .................... (2.77) (0.80) (0.66) (0.58) (0.57) (0.77)
----------- ----------- ----------- ----------- ----------- -----------

Net Asset Value, End of Period ........... $ 12.99 $ 14.86 $ 12.24 $ 11.75 $ 10.32 $ 11.03
=========== =========== =========== =========== =========== ===========
Total Return(3) ........................ 9.50% 29.56% 10.44% 21.04% (1.13)% 28.64%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .................... 1.00%(4) 1.00% 0.99% 0.99% 1.00% 1.00%
Ratio of Net Investment
Income to Average Net Assets ............. 0.16%(4) 0.05% -- 0.50% 0.70% 0.70%
Portfolio Turnover Rate .................. 60% 69% 122% 121% 136% 116%
Average Commission Paid per Share
of Equity Security Traded ................ $ 0.0359 $ 0.0436 $ 0.0420 $ 0.0420 --(5) --(5)
Net Assets, End of Period (in millions) .. $ 1,428 $ 1,321 $ 1,083 $ 1,008 $ 897 $ 702
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.

(5) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended October 31, 1995.

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--This page itemizes what contributed to
the class's change in share price during the period, and compares this to
changes over the last five fiscal years (or less, if the class is not five years
old).

On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period

It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements

36 1-800-345-2021

Heritage's Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS AS INDICATED
Advisor Class
1998(1) 1997(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ............................ $ 14.85 $ 14.23
--------- ---------
Income From Investment Operations
Net Investment Loss(3) ........................................ -- (0.01)
Net Realized and Unrealized Gain on Investment Transactions ... 0.89 0.63
--------- ---------
Total From Investment Operations .............................. 0.89 0.62
--------- ---------
Distributions
From Net Investment Income .................................... (0.07) --
From Net Realized Gains on Investment Transactions ............ (2.70) --
--------- ---------
Total Distributions ........................................... (2.77) --
--------- ---------
Net Asset Value, End of Period .................................. $ 12.97 $ 14.85
========= =========
Total Return(4) ............................................... 9.35% 4.36%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............... 1.25%(5) 1.25%(5)
Ratio of Net Investment Loss to Average Net Assets .............. (0.09)%(5) (0.23)%(5)
Portfolio Turnover Rate ......................................... 60% 69%
Average Commission Paid per Share of Equity Security Traded ..... $ 0.0359 $ 0.0436
Net Assets, End of Period (in thousands) ........................ $ 932 $ 120
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

(2) July 11, 1997 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.

See Notes to Financial Statements

www.americancentury.com 37

Heritage's Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS AS INDICATED
Institutional Class
1998(1) 1997(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ............................ $ 14.87 $ 13.60
--------- ---------
Income From Investment Operations
Net Investment Income(3) ...................................... 0.02 0.01
Net Realized and Unrealized Gain on Investment Transactions ... 0.90 1.26
--------- ---------
Total From Investment Operations .............................. 0.92 1.27
--------- ---------
Distributions
From Net Investment Income .................................... (0.09) --
From Net Realized Gains on Investment Transactions ............ (2.70) --
--------- ---------
Total Distributions ........................................... (2.79) --
--------- ---------
Net Asset Value, End of Period .................................. $ 13.00 $ 14.87
========= =========
Total Return(4) ............................................... 9.63% 9.34%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............... 0.80%(5) 0.80%(5)
Ratio of Net Investment Income to Average Net Assets ............ 0.36%(5) 0.21%(5)
Portfolio Turnover Rate ......................................... 60% 69%
Average Commission Paid per Share of Equity Security Traded ..... $ 0.0359 $ 0.0436
Net Assets, End of Period (in thousands) ........................ $ 91 $ 129
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

(2) June 16, 1997 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.

See Notes to Financial Statements

38 1-800-345-2021

Growth's Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Investor Class
1998(1) 1997 1996 1995 1994 1993
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .......... $27.86 $22.21 $23.88 $22.99 $25.27 $23.64
------- ------- ------- ------- ------- -------
Income From Investment Operations
Net Investment Income (Loss) ................ 0.02(2) 0.01(2) (0.01)(2) 0.08(2) 0.06 0.06
Net Realized and Unrealized Gain
on Investment Transactions .................. 4.39 6.07 1.47 4.08 0.48 1.94
------- ------- ------- ------- ------- -------
Total From Investment Operations ............ 4.41 6.08 1.46 4.16 0.54 2.00
------- ------- ------- ------- ------- -------
Distributions
From Net Investment Income .................. -- (0.18) (0.07) (0.05) (0.06) --
From Net Realized Gains
on Investment Transactions .................. (4.17) (0.25) (2.98) (3.18) (2.76) (0.36)
In Excess of Net Realized Gains ............. -- -- (0.08) (0.04) -- (0.01)
------- ------- ------- ------- ------- -------
Total Distributions ......................... (4.17) (0.43) (3.13) (3.27) (2.82) (0.37)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period ................ $28.10 $27.86 $22.21 $23.88 $22.99 $25.27
======= ======= ======= ======= ======= =======
Total Return(3) ............................. 18.82% 27.85% 8.18% 22.31% 2.66% 8.48%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......................... 1.00%(4) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income
(Loss) to Average Net Assets .................. 0.11%(4) 0.02% (0.10)% 0.40% 0.30% 0.20%
Portfolio Turnover Rate ....................... 71% 75% 122% 141% 100% 94%
Average Commission Paid per Share
of Equity Security Traded ..................... $0.0430 $0.0393 $0.0360 $0.0400 --(5) --(5)
Net Assets, End of Period (in millions) ....... $5,958 $5,113 $4,765 $5,130 $4,363 $4,641
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.

(5) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended October 31, 1995.

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--This page itemizes what contributed to
the class's change in share price during the period, and compares this to
changes over the last five fiscal years (or less, if the class is not five years
old).

It also includes some key statistics for the period:

See Notes to Financial Statements

www.americancentury.com 39

Growth's Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS AS INDICATED
Advisor Class
1998(1) 1997(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ............................ $ 27.84 $ 24.36
----------- -----------
Income From Investment Operations
Net Investment Loss(3) ........................................ (0.02) (0.06)
Net Realized and Unrealized Gain on Investment Transactions ... 4.40 3.54
----------- -----------
Total From Investment Operations .............................. 4.38 3.48
----------- -----------
Distributions
From Net Realized Gains on Investment Transactions ............ (4.14) --
----------- -----------
Net Asset Value, End of Period .................................. $ 28.08 $ 27.84
=========== ===========
Total Return(4) ............................................... 18.69% 14.29%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............... 1.25%(5) 1.25%(5)
Ratio of Net Investment Income to Average Net Assets ............ (0.14)%(5) (0.47)%(5)
Portfolio Turnover Rate ......................................... 71% 75%
Average Commission Paid per Share of Equity Security Traded ..... $ 0.0430 $ 0.0393
Net Assets, End of Period (in thousands) ........................ $ 3,527 $ 2,200
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

(2) June 4, 1997 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.

See Notes to Financial Statements

40 1-800-345-2021

Growth's Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS AS INDICATED
Institutional Class
1998(1) 1997(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ............................ $ 27.88 $ 25.75
--------- ---------
Income From Investment Operations
Net Investment Income(3) ...................................... 0.03 0.01
Net Realized and Unrealized Gain on Investment Transactions ... 4.40 2.12
--------- ---------
Total From Investment Operations .............................. 4.43 2.13
--------- ---------
Distributions
From Net Realized Gains on Investment Transactions ............ (4.19) --
--------- ---------
Net Asset Value, End of Period .................................. $ 28.12 $ 27.88
========= =========
Total Return(4) ............................................... 18.94% 8.27%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............... 0.80%(5) 0.80%(5)
Ratio of Net Investment Income to Average Net Assets ............ 0.31%(5) 0.07%(5)
Portfolio Turnover Rate ......................................... 71% 75%
Average Commission Paid per Share of Equity Security Traded ..... $ 0.0430 $ 0.0393
Net Assets, End of Period (in thousands) ........................ $ 172 $ 171
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

(2) June 16, 1997 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.

See Notes to Financial Statements

www.americancentury.com 41

Share Class and Retirement Account Information
- --------------------------------------------------------------------------------

SHARE CLASSES

All shares issued and outstanding before September 3, 1996, have been
designated as INVESTOR CLASS shares. Investor Class shares may also be purchased
after September 3, 1996. Investor Class shareholders do not pay any commissions
or other fees for purchase of fund shares directly from American Century.
Investors who buy Investor Class shares through a broker-dealer may be required
to pay the broker-dealer a transaction fee. THE PRICE AND PERFORMANCE OF THE
INVESTOR CLASS SHARES ARE LISTED IN NEWSPAPERS. NO OTHER CLASS IS CURRENTLY
LISTED.

In addition, there is an ADVISOR CLASS, which is sold through banks,
broker-dealers, insurance companies and financial advisors. Advisor Class shares
are subject to a 0.50% Rule 12b-1 service and distribution fee. Half of that fee
is available to pay for recordkeeping and administrative services, and half is
available to pay for distribution services provided by the financial
intermediary through which the Advisor Class shares are purchased. The total
expense ratio of the Advisor Class shares is 0.25% higher than the total expense
ratio of the Investor Class shares.

There is also an INSTITUTIONAL CLASS, which is available to endowments,
foundations, defined benefit pension plans or financial intermediaries serving
these investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million in an American
Century fund or at least $10 million in multiple funds. In recognition of the
larger investments and account balances and comparatively lower transaction
costs, the total expense ratio of the Institutional Class shares is 0.20% less
than the total expense ratio of the Investor Class shares.

All classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.

RETIREMENT ACCOUNT INFORMATION

As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)
account] are subject to federal income tax withholding at the rate of 10% of the
total amount withdrawn, unless you elect not to have withholding apply. If you
don't want us to withhold on this amount, you may send us a written notice not
to have the federal income tax withheld. Your written notice is valid for six
months from the date of receipt at American Century. Even if you plan to roll
over the amount you withdraw to another tax-deferred account, the withholding
rate still applies to the withdrawn amount unless we have received a written
notice not to withhold federal income tax within six months prior to the
withdrawal.

42 1-800-345-2021

Background Information
- --------------------------------------------------------------------------------

INVESTMENT PHILOSOPHY AND POLICIES

The Twentieth Century Group offers 10 equity funds that invest in the
stocks of growing companies, both domestically and internationally. The
philosophy behind these growth funds focuses on three important principles.
First, the funds seek to own successful companies, which we define as those
whose earnings and revenues are growing at accelerating rates. Second, we
attempt to keep the funds fully invested, regardless of short-term market
activity. Experience has shown that market gains can occur in unpredictable
spurts and that missing those opportunities can significantly limit potential
for gain. Third, the funds are managed by teams, rather than by one "star." We
believe this allows us to make better, more consistent management decisions.

In addition to these principles, each fund has its own investment policies:

TWENTIETH CENTURY SELECT seeks large, established companies that show
accelerating growth rates. Also, at least 80% of the fund's assets must be
invested in stocks or securities that pay regular dividends or otherwise produce
income. These dividends, and the established nature of the companies in which
Select invests, help lessen the fund's short-term price fluctuations.

TWENTIETH CENTURY HERITAGE seeks smaller and mid-sized firms showing
accelerating growth rates, and at least 60% of its assets must be in stocks or
securities paying regular dividends or otherwise producing income. While
Heritage's dividend requirement should make the fund less volatile than funds
without dividends, it should also display somewhat more price variability -- and
greater long-term growth potential -- than Select.

TWENTIETH CENTURY GROWTH invests in larger, more established firms that
exhibit accelerating growth. Because the value of established firms tends to
change relatively slowly, Growth can ordinarily be expected to show more
moderate price fluctuations than growth funds that invest in smaller or
mid-sized firms.

COMPARATIVE INDICES

The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.

The S&P MIDCAP 400 INDEX is a capitalization-weighted index of the stocks
of the 400 largest leading U.S. companies not included in the S&P 500. Created
by Standard & Poor's Corporation, it is considered to represent the performance
of mid-capitalization stocks generally. The index was created in March 1994.
Data presented for prior periods have been provided by S&P.

The RUSSELL 1000 INDEX, created by Frank Russell Company, measures the
performance of the 1,000 largest companies in the Russell 3000 Index (the 3,000
largest publicly traded U.S. companies, based on total market capitalization).
The RUSSELL 1000 GROWTH INDEX measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth rates.

[right margin]

INVESTMENT TEAM LEADERS

SELECT
PORTFOLIO MANAGER: JEAN LEDFORD, CFA
PORTFOLIO MANAGER: RICHARD WELSH

HERITAGE
PORTFOLIO MANAGER: HAROLD BRADLEY
PORTFOLIO MANAGER: LINDA PETERSON, CFA

GROWTH
PORTFOLIO MANAGER: C. KIM GOODWIN
PORTFOLIO MANAGER: GREG WOODHAMS, CFA

www.americancentury.com 43

Glossary
- --------------------------------------------------------------------------------

RETURNS

* TOTAL RETURN figures show the overall dollar or percentage change in the value
of a hypothetical investment in the portfolio and assume that all of the
portfolio's distributions are reinvested.

* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the Portfolio's cumulative total returns if the Portfolio's
performance had been constant over the entire period. Average annual total
returns smooth out variations in a fund's return; they are not the same as
year-by-year results. For fiscal year-by-year total returns, please refer to the
portfolios' "Financial Highlights" on page 33-41.

PORTFOLIO STATISTICS

* NUMBER OF COMPANIES-- the number of different companies held by a fund on a
given date.

* PRICE/EARNINGS (P/E) RATIO-- a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)

* PORTFOLIO TURNOVER-- the percentage of a fund's investment portfolio that is
replaced during a given time period, usually a year. Actively managed portfolios
tend to have higher turnover than passively managed portfolios such as index
funds.

* EXPENSE RATIO-- the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)

TYPES OF STOCKS

* BLUE-CHIP STOCKS-- stocks of the most established companies in American
industry. They are generally large, fairly stable companies that have
demonstrated consistent earnings and usually have long-term growth potential.
Examples include General Electric and Coca-Cola.

* CYCLICAL STOCKS-- stocks whose price and earnings fluctuations tend to follow
the ups and downs of the business cycle. Examples include the stocks of
automobile manufacturers, steel producers and textile operators.

* GROWTH STOCKS-- stocks of companies that have experienced above-average
earnings growth and are expected to continue such growth. These stocks often
sell at high P/E ratios. Examples can include the stocks of high-tech,
healthcare and consumer staples companies.

* LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS-- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of more than $5 billion. These tend to be the stocks that
make up the Dow Jones Industrial Average, the S&P 500 and the Russell 1000
Index.

* MEDIUM CAPITALIZATION ("MID-CAP") STOCKS-- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P MidCap 400.

* SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS-- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of less than $1 billion. These tend to be the stocks that
make up the Nasdaq Composite Index and the Russell 2000 Index.

* VALUE STOCKS -- stocks that are purchased because they are relatively
inexpensive. These stocks are typically characterized by low P/E ratios.

STATISTICAL TERMINOLOGY

* PRICE/BOOK RATIO-- a stock value measurement calculated by dividing a
company's stock price by its book value per share, with the result expressed as
a multiple instead of as a percentage. (Book value per share is calculated by
subtracting a company's liabilities from its assets, then dividing that value by
the number of outstanding shares.)

44 1-800-345-2021

[inside back cover]

[right margin]

[american century logo(reg.sm)]
American
Century(reg.tm)

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

INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-444-3485

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY MUTUAL FUNDS INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

[recycled logo]
Recycled

[back cover]

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES

9806 (c)1998 American Century Services Corporation
SH-BKT-12483 Funds Distributor, Inc.
<PAGE>
[front cover] April 30, 1998

SEMIANNUAL REPORT
- -----------------
AMERICAN CENTURY

[graphic of U.S. currency and two individuals walking up stairs]

BENHAM GROUP
- ------------
HIGH-YIELD

[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]

A Note from the Founder
- --------------------------------------------------------------------------------

I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.

Sincerely,
/s/James E. Stowers

About our New Report Design
- --------------------------------------------------------------------------------

WHY WE CHANGED.

WHAT'S NEW.

The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming.

New features include:

* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.

THE BOTTOM LINE.

The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.

We believe we've come up with a more interesting, informative, and user-friendly
publication.

We hope you enjoy it.

[left margin]

BENHAM GROUP HIGH-YIELD
(ABHIX)

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

Our Message to You
- -----------------------------------------------------------------------------

[photo James E. Stowers, Jr. with James E. Stowers III, seated]
James E. Stowers, Jr. with James E. Stowers III, seated

The high-yield bond market rallied during the six months ended April 30,
1998. Those positive returns came from the bonds' high interest payments and
significant price appreciation. High-yield bonds' price gains were largely a
result of rapidly declining interest rates and healthy demand. In addition,
strong economic growth helped improve credit quality for corporate bonds
overall. We are very pleased to report that the Benham High-Yield fund
outperformed the average high-yield fund during the period, according to Lipper
Analytical Services.

The past six months have also been favorable for American Century. We
gained a powerful business partner in January when J.P. Morgan, one of the
oldest, largest and most respected financial service institutions in the U.S.,
became a substantial minority shareholder. The new business partnership will
allow both companies to offer investors a highly diverse menu of investment
options and services.

Another significant event was the retirement of Jim Benham, founder of The
Benham Group, in December. With the integration of Benham and Twentieth Century
successfully completed, Jim felt it was time to step back from the business.
Much of the Benham culture has become part of American Century, including the
educational investor seminar program Jim created. Two of his sons, Jim A. Benham
and Tim Benham, remain with the company to carry on the Benham tradition.

Finally, we are pleased to have you with us to celebrate the company's 40th
anniversary this year. We are very proud of the lineup of funds we have
developed over that past four decades to help you achieve your financial goals.

Thank you for investing with us.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
CHAIRMAN OF THE BOARD AND FOUNDER CHIEF EXECUTIVE OFFICER

[right margin]

Table of Contents
Report Highlights ....................................................... 2
Market Perspective ...................................................... 3
Credit Review ........................................................... 4
HIGH-YIELD
Performance Information ................................................. 5
Management Q & A ........................................................ 6
Schedule of Investments ................................................. 9
FINANCIAL STATEMENTS
Statement of Assets and
Liabilities .......................................................... 12
Statement of Operations ................................................. 13
Statements of Changes
in Net Assets ........................................................ 14
Notes to Financial
Statements ........................................................... 15
Financial Highlights .................................................... 17
OTHER INFORMATION
Retirement Account
Information .......................................................... 18
Background Information
Investment Philosophy
and Policies ...................................................... 19
Comparative Indices .................................................. 19
Lipper Rankings ...................................................... 19
Investment Team
Leaders ........................................................... 19
Glossary ................................................................ 20

www.americancentury.com 1

Report Highlights
- -----------------------------------------------------------------------------

MARKET PERSPECTIVE

* High-yield bonds produced solid returns for the six months ended April 30,
1998, when the DLJ High Yield Index rose 5.88%.

* Prices on high-yield bonds gained as a result of declining interest rates, a
vibrant economy, heavy demand and a rising stock market.

* Inflation was dormant, while the economy surged ahead at a 3.7% annual rate
in the fourth quarter of 1997 and an estimated 4.8% in the first three
months of 1998.

* Supply and demand for high-yield securities soared, both reaching record
highs in the first quarter of 1998.

* The spread, or difference in yield, between high-yield bonds and Treasury
securities remained near historically low levels.

CREDIT REVIEW

* Credit quality trends for U.S. high-yield corporate bonds were positive,
with more credit rating upgrades than downgrades.

* The default rate on high-yield bonds also remained near historic lows, at
around 2%.

* However, we're concerned that an economic slowdown and tighter bank lending
standards could put a strain on credit quality down the line.

* We continued to add to our team of corporate credit analysts--the eleventh
member of our team joined us in June.

HIGH-YIELD

* The High-Yield fund performed very well for the six months, producing a
total return of 7.65%, compared with the 6.34% return of the average
high-yield fund.

* Despite lower interest rates overall, the fund's 30-day SEC yield rose from
7.41% to 7.97%.

* A significant portion of High-Yield's return was from price appreciation,
with the fund's telecommunications holdings performing particularly well.
Teleport Communications is an example of a portfolio holding that saw a big
price increase.

* High-Yield had an intermediate-term duration of 5.5 years at the end of
April.

* We have a positive outlook for the market. Demand for high-yield bonds is
very strong and credit quality is generally good.

* Going forward, we'll try to keep outperforming our peers by using a
credit-intensive approach to security selection. We're also likely to
maintain an intermediate-term duration and to continue to have a relatively
heavy weighting in telecommunications bonds.

[left margin]

HIGH-YIELD PERFORMED VERY WELL FOR THE SIX MONTHS, PRODUCING A TOTAL RETURN OF
7.65%, COMPARED WITH THE 6.34% RETURN OF THE AVERAGE HIGH-YIELD FUND.

HIGH-YIELD (ABHIX)

TOTAL RETURNS: AS OF 4/30/98
6 Months 7.65%(1)
Since Inception 7.26%(1)

NET ASSETS: $29.5 million

30-DAY SEC YIELD: 7.97%

INCEPTION DATE: 9/30/97

(1) Not annualized.

Investment terms are defined in the Glossary on page 20.

2 1-800-345-2021

Market Perspective from Randall W. Merk
- -----------------------------------------------------------------------------

[photo of Randall W. Merk, director of fixed-income investing at American
Century]
Randall W. Merk, director of fixed-income investing at American Century

SOLID PERFORMANCE

U.S. high-yield bonds produced solid returns during the six months ended
April 30, 1998, when the DLJ High Yield Index rose 5.88%. High-yield securities,
which act like a mix between stocks and bonds, were boosted by declining
interest rates, a strong economy, heavy demand and a soaring stock market.

POSITIVE ENVIRONMENT

The U.S. economy was very healthy, expanding at a 3.7% annual rate in the
fourth quarter of 1997 and an estimated 4.8% in the first three months of 1998,
while the unemployment rate reached a 28-year low. A vibrant economy benefits
high-yield bonds by improving credit quality and reducing the likelihood of
default.

Interest rates fell in part because inflation remained tame. For the year
ended in April, consumer prices were up just 1.4%. That's the smallest annual
increase in a decade. Gains in worker productivity and savings on health care
and benefits costs played a role in keeping inflation in check, as did lower
energy and commodity prices.

Economic turmoil in Asia also contributed to lower U.S. interest
rates--investors looking for a safe haven from volatile global financial markets
flocked to Treasury securities. That surge in demand caused an increase in bond
prices and a corresponding decline in rates. High-yield bond prices rose as a
result of the decline in interest rates.

In addition, the high-yield bond market was helped by many of the same
factors that contributed to the continued stock market rally, including steady
corporate profit growth and healthier balance sheets.

SUPPLY AND DEMAND

Rapidly falling interest rates caused many traditional high-quality bond
investors to "trade down" in quality to get the additional yield of high-yield
bonds. Demand from individual investors and large institutions surged. Evidence
suggests that insurance companies and pension funds in particular stepped up
investment in high-yield debt, while cash flows into high-yield mutual funds
reached record levels in 1997 and the first quarter of 1998.

Corporations took advantage of the relatively low interest rate environment
and healthy demand for high-yield bonds to issue new debt, which they used to
refinance bank loans, pay for mergers and acquisitions and internally grow
business. As a result, supply rose at a record pace in the first quarter, when
almost $50 billion in new high-yield bonds came to market.

NARROW CREDIT SPREADS

The spread, or difference in yield, between high-yield bonds and Treasury
securities remained near historically low levels. Credit spreads have narrowed
significantly since the early 1990s, when interest rates on high-yield bonds
were nearly 500 basis points (a basis point equals 0.01%) higher than the yield
on 10-year Treasury notes (see the accompanying graph).

[right margin]

HIGH-YIELD SECURITIES, WHICH ACT LIKE A MIX BETWEEN STOCKS AND A STRONG ECONOMY,
HEAVY DEMAND AND A SOARING STOCK MARKET.

[line chart - data below]

HIGH-YIELD/TREASURY YIELD SPREAD

in basis points
(a basis point equals 0.01%)
'92 490
'93 405
'94 420
'95 477
'96 342
'97 359
1/98 366
2/98 349
3/98 345
4/98 357

This chart shows the yield difference, or spread, between the bonds in the DLJ
High Yield Index and 10-year Treasury securities.

Source: Donaldson, Lufkin & Jenrette

www.americancentury.com 3

Credit Review
- -----------------------------------------------------------------------------

CREDIT QUALITY GENERALLY POSITIVE

U.S. corporate credit quality remained healthy during the six months ended
April 30, 1998, when credit rating upgrades on high-yield bonds outnumbered
downgrades. Defaults remain in the neighborhood of historic lows--solid economic
growth boosted earnings for many businesses, helping keep the default rate on
high-yield securities at around 2%.

However, default rates were also kept low by an increased willingness on
the part of commercial banks to extend credit to companies that failed to meet
projected budgets. That's a reflection of the fact that both commercial banks
and high-yield bond buyers have relaxed their credit standards during the
current economic expansion.

We are concerned that when the economy slows, the trend toward easier
credit could reverse itself and exacerbate a possible future credit downturn. A
similar scenario played out in the early 1990s, when banks tightened their
lending standards as the economy was falling into recession. At that time,
default rates reached 10%.

EXPANDING CREDIT TEAM

Careful credit analysis and security selection are vital to our investment
approach for the High-Yield fund. To strengthen that approach, we continued to
add to our team of corporate credit analysts--the eleventh member of our team
joined us in June.

A larger and more diverse group of analysts gives us a better opportunity
to add value for our shareholders because each team member brings unique
experience and industry-specific knowledge to the team. Our analysts have
diverse investment backgrounds with experience at an array of lending
institutions, credit rating agencies and investment banks.

[left margin]

SOLID ECONOMIC GROWTH BOOSTED EARNINGS FOR MANY BUSINESSES, HELPING KEEP THE
DEFAULT RATE ON HIGH-YIELD SECURITIES AT AROUND 2%.

CORPORATE CREDIT RESEARCH TEAM

DIRECTOR:
GREG AFIESH

HIGH-YIELD ANALYSTS:
MICHAEL DIFLEY
TANYA FLEISCHER

CORPORATE CREDIT ANALYSTS:
DANIEL BAKER
KALPESH DADBHAWALA
ED GRANT
KRISTINE IWAFUCHI
LYNDA LOWRY
SUDHA MANI
GINA SANCHEZ
TOM VAIANA

WE CONTINUED TO ADD TO OUR TEAM OF CORPORATE CREDIT ANALYSTS--THE ELEVENTH
MEMBER OF OUR TEAM JOINED US IN JUNE.

4 1-800-345-2021

Performance--High-Yield
- -----------------------------------------------------------------------------
TOTAL RETURNS AS OF APRIL 30, 1998(1)

<TABLE>
INVESTOR CLASS (INCEPTION 9/30/97)

DLJ HIGH YIELD HIGH CURRENT YIELD FUND(2)
HIGH-YIELD INDEX AVERAGE RETURN FUND'S RANKING
<S> <C> <C> <C> <C>

6 MONTHS .................. 7.65% 5.88% 6.34% --
- --------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS

LIFE OF FUND .............. 7.26% 5.74% 5.80% 41 OUT OF 230

(1) Returns for periods less than one year are not annualized.

(2) According to Lipper Analytical Services.

See pages 19-20 for more information about returns, the comparative index and
Lipper fund rankings.
</TABLE>

[mountain chart - data below]
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 9/30/97

Value on 4/30/98:
High-Yield Fund DLJ High Yield Index
9/30/97 $10,000 $10,000
10/31/97 $9,963 $9,987
11/30/97 $10,044 $10,072
12/31/97 $10,174 $10,172
1/31/98 $10,437 $10,329
2/28/98 $10,491 $10,412
3/31/98 $10,667 $10,529
4/30/98 $10,726 $10,574

The chart at left shows the growth of a $10,000 investment over the life of the
fund. The DLJ High Yield Index is provided for comparison. Past performance does
not guarantee future results. Investment return and principal value will
fluctuate, and redemption value may be more or less than original cost.
High-Yield's total returns include operating expenses (such as transaction costs
and management fees) that reduce returns, while the total returns of the index
do not.

www.americancentury.com 5

High-Yield--Q&A
- -----------------------------------------------------------------------------

An interview with Theresa Fennell, a portfolio manager on the Benham
High-Yield fund investment team.

HOW DID THE FUND PERFORM OVER THE LAST SIX MONTHS?

High-Yield performed very well, providing better returns and slightly
higher income than the average high-yield fund. For the six months ended April
30, 1998, High-Yield returned 7.65%, compared with the 5.88% return of the DLJ
High Yield Index and the 6.34% average return of the 233 "High Current Yield
Funds" tracked by Lipper Analytical Services. (See the Total Returns table on
the previous page for the life-of-fund performance comparisons.)

WHAT ABOUT THE FUND'S YIELD?

Its 30-day SEC yield rose substantially, from 7.41% to 7.97%, despite a
decline in interest rates over the last six months. According to Lipper, the
average high-yield fund had a 30-day SEC yield of 7.72% at the end of April.

The increase in yield reflects the fund's lower average cash balances over
the last six months. We invested the fund's assets gradually over its first
month of existence, which held down the yield in October to 7.41%. In addition,
since October we increased our position in higher-yielding telecommunications
bonds, many of which were unrated.

Although not a formal objective, we generally try to deliver a yield that's
at least 250 basis points (a basis point equals 0.01%) higher than the yield on
the 10-year Treasury note. At the end of April, 10-year Treasurys were yielding
a little less than 5.7%, so we're getting closer to our yield target of greater
than 8% based on current interest rates. Of course, there's no guarantee that
the fund will reach this yield, and its yield will fluctuate as rates and its
holdings change.

WHAT'S BEHIND HIGH-YIELD'S SOLID RETURNS?

Returns benefited from higher yields and price gains by a number of
portfolio holdings. Historically, about 90% of high-yield bond returns have come
from interest payments. The last six months were unusual in that a
greater-than-average portion of the fund's returns came from price appreciation

With a current yield of just under 8% on April 30, you'd expect that the
yield alone would give you about an 8% return over the course of a year. Because
we're looking at a six-month period in this report, we'd have gotten roughly
half that amount, or around 4%. The fund's actual total return was much higher,
at 7.65%, so we got about 4% return from interest and 3.65% from price
appreciation.

In general, those price gains were a result of falling interest rates and
improving credit quality. In particular, returns were boosted by the portfolio's
heavy weighting in telecommunications securities, which performed very well.

WHY DID TELECOMMUNICATIONS DO SO WELL?

The telecommunications industry is benefiting from deregulation, new
technology and increased globalization. Deregulation has allowed new entrants
into the market to compete for services traditionally offered by the Baby Bells.
New technology is allowing companies to provide those services more cheaply and
efficiently. Many domestic companies are expanding into global markets.
Increased competition and open markets have also sparked a surge in merger and
acquisition activity.

[left margin]]

HIGH-YIELD PERFORMED VERY WELL, PROVIDING BETTER RETURNS AND SLIGHTLY HIGHER
INCOME THAN THE AVERAGE HIGH-YIELD FUND.

PORTFOLIO AT A GLANCE
4/30/98 10/31/97

NUMBER OF SECURITIES 64 32

WEIGHTED AVERAGE
MATURITY 7.0 YRS 6.9 YRS

AVERAGE DURATION 5.5 YRS 5.0 YRS

EXPENSE RATIO (FOR
INVESTOR CLASS) 0.90%* 0.90%*

* Annualized.

YIELD AS OF APRIL 30, 1998

HIGH-YIELD
30-DAY SEC 7.97%

Investment terms are defined in the Glossary on page 20.

6 1-800-345-2021

High-Yield--Q&A (continued)
- -----------------------------------------------------------------------------

Many new entrants into the telecommunications arena are using the
high-yield market to finance expansion. Because these companies are in their
infancy, it can be risky to buy their debt. Their interest rates also tend to be
high because competition for capital means they must pay higher rates. But if
those companies execute their business plans and mature from startups to
established businesses, their debt will rise in value.

CAN YOU GIVE AN EXAMPLE OF SOME TELECOMMUNICATIONS SECURITIES IN THE PORTFOLIO
THAT SAW BIG INCREASES IN VALUE?

A good example is Teleport Communications, which provides local phone
services in several major U.S. cities. In January, AT&T agreed to purchase
Teleport, whose debt jumped in price as a result of the acquisition. Another
example is Nextel Communications, which provides wireless communications. Nextel
bond prices moved higher after the company announced it had secured additional
financing to facilitate its buildout. Of course, not all portfolio holdings were
so successful.

YOU MENTIONED EARLIER THAT FALLING INTEREST RATES HELPED THE FUND. HOW DO
CHANGES IN RATES AFFECT THE PORTFOLIO?

A bond or bond fund's price moves in the opposite direction of interest
rates. For example, if a bond yields 7% and rates rise to 8%, you'd have to
discount the price of your 7% bond to attract buyers. But if rates fell to 6%,
your 7% bond would command a premium, or higher price, from the market.

Fixed-income investors use a concept called "duration" to measure a bond or
bond fund's price sensitivity to interest rate changes. The longer the duration,
the more the price of a bond or fund rises when rates fall, and the more the
price falls when rates rise. Conversely, a shorter duration means a bond
portfolio's price fluctuates less when rates change. Typically, the higher the
interest rate and shorter the maturity, the lower the bond or fund's duration.
High-yield bonds, which tend to have higher interest rates and intermediate-term
maturities, generally have shorter durations--and therefore, less interest rate
volatility--than higher-quality securities, which have lower interest coupons
and are often issued with longer maturities.

The fund did benefit from falling interest rates, but we don't rely on big
duration bets to boost returns. Rather, we emphasize careful credit analysis and
security selection to help us build a well-balanced portfolio of consistent to
improving credits with attractive yields. Over the last six months, the fund's
duration lengthened slightly, from 5 to 5.5 years. That's right around the
intermediate-term duration we expect.

SEVERAL LARGE HIGH-YIELD FUNDS REPORTEDLY HOLD A PORTION OF ASSETS IN STOCKS,
PRESUMABLY IN AN ATTEMPT TO BOOST RETURNS. DOES HIGH-YIELD HOLD ANY EQUITY
SECURITIES?

No. We're sticking to our marching orders, which are to buy high-yield U.S.
corporate bonds. While we have the flexibility to invest up to 20% of assets in
equities and 40% in international bonds, we don't intend to take big positions
in these markets.

[right margin]

THE FUND DID BENEFIT FROM FALLING INTEREST RATES, BUT WE DON'T RELY ON BIG
DURATION BETS TO BOOST RETURNS.

TOP FIVE INDUSTRIES (AS OF 4/98)
% OF FUND INVESTMENTS

PAPER & FOREST PRODUCTS 9.8%

TELEPHONE COMMUNICATIONS 8.1%

WIRELESS COMMUNICATIONS 6.8%

ENERGY (PRODUCTION &
MARKETING) 6.1%

BUSINESS SERVICES
& SUPPLIES 6.0%

TOP FIVE INDUSTRIES (AS OF 10/97)
% OF FUND INVESTMENTS

WIRELESS COMMUNICATIONS 16.3%

STEEL 13.5%

ENERGY (PRODUCTION &
MARKETING) 10.9%

TELEPHONE COMMUNICATIONS 9.9%

METALS & MINING 9.2%

www.americancentury.com 7

High-Yield--Q&A (continued)
- -----------------------------------------------------------------------------

WHAT'S YOUR OUTLOOK FOR THE HIGH-YIELD BOND MARKET?

We have a generally positive outlook, despite the fact that yield spreads
between high-yield and Treasury bonds remain near historic lows. Even at these
levels we've been able to find what we consider attractive buys. Demand for
high-yield bonds is very strong, particularly from large institutional investors
such as insurance companies and pension funds. Because they tend to be
long-term, buy-and-hold investors, their presence in the market is a good sign
of support for high-yield bonds.

WHAT DO YOU SEE FOR CREDIT QUALITY GOING FORWARD?

Credit quality is generally good, though we think we may be on the verge of
seeing some deterioration in quality down the line--we believe we're late in the
business cycle and could be in for slower economic growth. Also, the Asian
economic crisis could be a drag on the U.S. economy. That would hurt the credit
quality of some of the more economically sensitive issues. However, a robust
consumer sector, which accounts for about two-thirds of economic growth,
suggests it's unlikely the economy will slow dramatically in the near future.

WHAT ARE YOUR PLANS FOR THE FUND OVER THE NEXT SIX MONTHS?

We're going to continue to use our credit-intensive approach to security
selection. We're also going to try to maintain the overall quality of our
portfolio, even if it means giving up yield in a declining interest rate
environment.

We'll try to continue to outperform our peers by buying what we think are
good, attractively priced bonds with the potential to increase in value. That
means we'll likely continue to maintain a relatively large position in
telecommunications bonds. We'll also continue to take a conservative approach to
managing the fund's duration, keeping it around five years.

[left margin]

DEMAND FOR HIGH-YIELD BONDS IS VERY STRONG, PARTICULARLY FROM LARGE
INSTITUTIONAL INVESTORS SUCH AS INSURANCE COMPANIES AND PENSION FUNDS.

PORTFOLIO COMPOSITION BY CREDIT RATING

% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

AAA 6% 3%

BB 6% 4%

B 74% 92%

CCC 2% --

UNRATED 12% 1%

WE'LL TRY TO CONTINUE TO OUTPERFORM OUR PEERS BY BUYING WHAT WE THINK ARE GOOD,
ATTRACTIVELY PRICED BONDS WITH THE POTENTIAL TO INCREASE IN VALUE.

8 1-800-345-2021

High-Yield's Schedule of Investments
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount Value
- -----------------------------------------------------------------------------

CORPORATE BONDS

AUTOMOBILES & AUTO PARTS--2.5%

$ 250,000 Breed Technologies, Inc., 9.25%,
4/15/08 (Acquired 4/21/98,
Cost $250,000)(1) $ 252,187

500,000 Stanadyne Automotive Corp.,
10.25%, 12/15/07 (Acquired
12/4/97, Cost $500,000)(1) 512,500
-----------------

764,687
-----------------

BANKING--3.6%

500,000 Bay View Capital Corp., 9.125%,
8/15/02 516,250

540,000 Ocwen Capital Trust I, 10.875%,
8/1/27 594,000
-----------------

1,110,250
-----------------

BROADCASTING & MEDIA--6.0%

750,000 21st Century Telecom Group,
11.04%, 2/15/08 (Acquired
2/2/98, Cost $413,069)(1)(2) 438,750

500,000 Fox Kids Worldwide Inc., 9.25%,
11/1/07 (Acquired 4/29/98,
Cost $495,000)(1) 495,000

500,000 Intl. Cabletel Inc., 9.11%,
2/1/06(2) 400,625

750,000 RCN Corp., 10.08%, 10/15/07(2) 498,750
-----------------

1,833,125
-----------------

BUSINESS SERVICES & SUPPLIES--6.0%

250,000 Elgar Holdings Inc., 9.875%,
2/1/08 (Acquired 1/30/98,
Cost $250,000)(1) 255,625

500,000 Intermedia Capital Partners,
11.25%, 8/1/06 561,250

500,000 Nationwide Credit, Inc., 10.25%,
1/15/08 (Acquired 1/23/98,
Cost $500,000)(1) 511,250

500,000 Unicco Service/Finance, Series B,
9.875%, 10/15/07 (Acquired
10/14/97, Cost $497,650)(1) 511,875
-----------------

1,840,000
-----------------

CHEMICALS & RESINS--1.8%

500,000 Texas Petrochemical Corp.,
11.125%, 7/1/01 552,500
-----------------

COMMUNICATIONS EQUIPMENT--1.4%

500,000 Clearnet Communications Inc.,
9.76%, 12/15/05(2) 418,750
-----------------

COMMUNICATIONS SERVICES--1.7%

500,000 Paging Network, Inc., 10.00%,
10/15/08 521,250
-----------------

Principal Amount Value
- -----------------------------------------------------------------------------

COMPUTER SOFTWARE & SERVICES--4.7%

$1,000,000 ICG Services Inc., 9.14%,
2/15/08 (Acquired 2/10/98,
Cost $613,410)(1)(2) $ 651,250

500,000 PSINet Inc., 10.00%, 2/15/05
(Acquired 4/7/98, Cost
$500,000)(1) 515,000

250,000 Unisys Corp., 12.00%, 4/15/03 283,125
-----------------

1,449,375
-----------------

CONTROL & MEASUREMENT--1.8%

500,000 Goss Graphic Systems Inc.,
12.00%, 10/15/06 565,000
-----------------

ELECTRICAL & ELECTRONIC
COMPONENTS--4.1%

250,000 International Utility
Structures Inc.,
10.75%, 2/1/08 (Acquired
1/27/98, Cost $250,000)(1) 260,000

500,000 MCMS, Inc., 9.75%, 3/1/08
(Acquired 2/20/98-3/20/98,
Cost $500,625)(1) 505,000

500,000 Trench Electric & Trench Inc.,
10.25%, 12/15/07 (Acquired
12/11/97, Cost $500,000)(1) 508,750
-----------------

1,273,750
-----------------

ENERGY (PRODUCTION & MARKETING)--6.1%

250,000 Belco Oil & Gas Corp., Series B,
10.50%, 4/1/06 270,625

525,000 Cross Timbers Oil Co., Series B,
9.25%, 4/1/07 (Acquired
3/30/98-4/30/98,
Cost $551,344)(1) 548,625

750,000 Kelley Oil & Gas Corp., 10.375%,
10/15/06 780,000

250,000 United Meridian Corp., 10.375%,
10/15/05 276,250
-----------------

1,875,500
-----------------

ENERGY (SERVICES)--1.8%

250,000 Trico Marine Services, Inc., 8.50%,
8/1/05 (Acquired 12/18/97,
Cost $250,625)(1) 252,500

500,000 Universal Compression Inc., 9.02%,
2/15/08 (Acquired 2/13/98,
Cost $309,200)(1)(2) 311,250
-----------------

563,750
-----------------

ENVIRONMENTAL SERVICES--1.7%

500,000 Envirosource, Inc., 9.75%,
6/15/03 511,250
-----------------

See Notes to Financial Statements

www.americancentury.com 9

High-Yield's Schedule of Investments (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount Value
- -----------------------------------------------------------------------------

FINANCIAL SERVICES--5.9%

$ 750,000 AMRESCO, INC., Series 1998 A,
9.875%, 3/15/05 $ 772,500

500,000 Intertek Finance PLC, Series B,
10.25%, 11/1/06 531,875

500,000 Metris Companies Inc., 10.00%,
11/1/04 525,625
-----------------

1,830,000
-----------------

HEALTHCARE--0.8%

250,000 Magellan Health Services, Inc.,
9.00%, 2/15/08 (Acquired
2/5/98, Cost $250,000)(1) 249,062
-----------------

METALS & MINING--2.7%

500,000 Renco Metals Inc., 11.50%,
7/1/03 537,500

250,000 Westmin Resources Ltd., 11.00%,
3/15/07 301,875
-----------------

839,375
-----------------

PAPER & FOREST PRODUCTS--9.8%

750,000 Ainsworth Lumber Co. Ltd., PIK,
12.50%, 7/15/07 802,500

250,000 Amscan Holdings, Inc., 9.875%,
12/15/07 (Acquired 12/15/97,
Cost $250,000)(1) 260,625

500,000 Gaylord Container Corp., Series B,
9.75%, 6/15/07 (Acquired
9/30/97-1/15/98,
Cost $499,063)(1) 507,500

500,000 Graham Packaging Co., 9.46%,
1/15/09 (Acquired 1/26/98,
Cost $297,670)(1)(2) 317,500

500,000 Grupo Industrial Durango,
S.A. de C.V., 12.625%, 8/1/03 569,275

275,000 Printpack Inc., 10.625%, 8/15/06 299,063

250,000 Repap New Brunswick, 10.625%,
4/15/05 260,000
-----------------

3,016,463
-----------------

RETAIL (SPECIALTY)--0.8%

250,000 Finlay Enterprises, Inc., 9.00%,
5/1/08 251,250
-----------------

RUBBER & PLASTICS--1.7%

500,000 Day International Group Inc.,
9.50%, 3/15/08 (Acquired
3/13/98, Cost $498,190)(1) 506,250
-----------------

STEEL--4.4%

750,000 GS Technologies, 12.25%,
10/1/05 845,625

500,000 Keystone Consolidated Industries,
Inc., 9.625%, 8/1/07 (Acquired
9/30/97-10/1/97,
Cost $514,063)(1) 512,500
-----------------

1,358,125
-----------------

Principal Amount Value
- -----------------------------------------------------------------------------

TELEPHONE COMMUNICATIONS--8.1%

$1,000,000 Allegiance Telecom Inc., 10.64%,
2/15/08 (Acquired 1/29/98,
Cost $562,870)(1)(2) $ 575,000

1,000,000 DTI Holdings Inc., 11.25%,
3/1/08 (Acquired 2/13/98,
Cost $543,920)(1)(2) 587,500

500,000 GST USA, Inc., 9.63%,
12/15/05(2) 410,625

750,000 IDT Corp., 8.75%, 2/15/06
(Acquired 2/12/98-4/14/98,
Cost $749,063)(1) 744,375

250,000 Intermedia Communications Inc.,
8.97%, 7/15/02(2) 183,438
-----------------

2,500,938
-----------------

TEXTILES & APPAREL--1.7%

500,000 Worldtex Inc., 9.625%, 12/15/07
(Acquired 11/20/97-4/3/98,
Cost $505,000)(1) 514,375
-----------------

TRANSPORTATION--4.3%

750,000 Atlas Air, Inc., 10.75%, 8/1/05 806,250

250,000 Diamond Triumph Auto, 9.25%,
4/1/08 (Acquired 3/25/98,
Cost $250,000)(1) 255,625

250,000 Kitty Hawk, Inc., 9.95%, 11/15/04 258,750
-----------------

1,320,625
-----------------

WIRELESS COMMUNICATIONS--6.8%

500,000 Centennial Cellular Corp., 8.875%,
11/1/01 516,250

250,000 Metrocall, Inc., 10.375%, 10/1/07 260,000

250,000 Microcell Telecommunications Inc.,
11.36%, 6/1/06(2) 187,813

500,000 NEXTEL Communications, Inc.,
8.47%, 8/15/04(2) 483,125

500,000 NEXTEL Communications, Inc.,
9.22%, 2/15/08 (Acquired
2/25/98, Cost $305,000)(1)(2) 319,375

500,000 Telesystem International Wireless
Inc., Series C, 9.56%, 11/1/07
(Acquired 10/22/97, Cost
$299,575)(1)(2) 319,375
-----------------

2,085,938
-----------------

TOTAL CORPORATE BONDS--90.2% 27,751,588
-----------------
(Cost $27,349,709)

See Notes to Financial Statements

10 1-800-345-2021

High-Yield's Schedule of Investments (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

Principal Amount Value
- -----------------------------------------------------------------------------

TEMPORARY CASH INVESTMENTS

$1,538,000 FHLMC Discount Notes, 5.43%,
5/1/98(3) $ 1,538,000

Repurchase Agreement, Merrill Lynch & Co., Inc.,
(U.S. Treasury obligations), in a joint trading
account at 5.375%, dated 4/30/98, due
5/1/98 (Delivery value $1,479,221) 1,479,000
-----------------

TOTAL TEMPORARY CASH
INVESTMENTS--9.8% 3,017,000
-----------------
(Cost $3,017,000)

TOTAL INVESTMENT SECURITIES--100.0% $30,768,588
-----------------
(Cost $30,366,709)

NOTES TO SCHEDULE OF INVESTMENTS

PIK = Payment in Kind. Coupon payments may be in the form of additional bonds.

(1) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may only be
sold to qualified institutional investors. The aggregate value of
restricted securities at April 30, 1998, was $12,198,624, which represented
41.4% of net assets. None of these securities are considered to be
illiquid.

(2) Step-coupon security. Yield to maturity at purchase is indicated. These
securities become interest bearing at a predetermined rate and future date
and are purchased at a substantial discount from their value at maturity.

(3) Rate disclosed is the yield to maturity at purchase.

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments the fund owned on the last day of the reporting period.

The schedule includes:

* a list of each investment

* the principal amount of each investment

* the market value of each investment

* the dollar value of other short-term investments that are considered the same
as cash

* the percentage of total investments in each industry

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

www.americancentury.com 11

Statement of Assets and Liabilities
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

ASSETS

Investment securities, at value
(identified cost of $30,366,709) (Note 3) ................. $ 30,768,588

Receivable for investments sold ............................. 601,500

Receivable for capital shares sold .......................... 346

Interest receivable ......................................... 465,446
------------

31,835,880
------------

LIABILITIES

Disbursements in excess of
demand deposit cash ....................................... 968,499

Payable for investments purchased ........................... 1,309,086

Payable for capital shares redeemed ......................... 18,387

Accrued management fees (Note 2) ............................ 21,432

Dividends payable ........................................... 38,160
------------

2,355,564
------------

Net Assets .................................................. $ 29,480,316
------------

CAPITAL SHARES, $0.01 PAR VALUE

Authorized .................................................. 200,000,000
------------

Outstanding ................................................. 2,878,065
------------

Net Asset Value Per Share ................................... $ 10.24
------------

NET ASSETS CONSIST OF:

Capital (par value and paid in surplus) ..................... $ 28,958,148

Accumulated undistributed net
realized gain from investment
transactions .............................................. 120,289

Net unrealized appreciation on
investments (Note 3) ...................................... 401,879
------------

$ 29,480,316
------------

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF ASSETS AND LIABILITIES--This page details what
the fund owns (assets), what it owes (liabilities), and its net assets as of the
last day of the period. If you subtract what the fund owes from what it owns,
you get the fund's net assets. The net assets divided by the total number of
fund shares outstanding gives you the price of an individual share, or the net
asset value per share.

NET ASSETS are also broken out by capital (money invested by shareholders);
income; net gains earned but not yet paid out to shareholders or net losses on
investment activity (known as realized gains or losses); and gains or losses on
securities still owned by the fund (known as unrealized gains or losses). This
breakout tells you the value of net assets that are performance-related, such as
income and investment gains or losses, and the value of net assets that are not
related to performance, such as shareholder investments and redemptions.

See Notes to Financial Statements

12 1-800-345-2021

Statement of Operations
- -----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)

INVESTMENT INCOME

Income:

Interest .................................................. $ 943,495
----------

Expenses (Note 2):

Management fees ........................................... 94,768

Directors' fees and expenses .............................. 99
----------

94,867
----------

Net investment income ..................................... 848,628
----------

REALIZED AND UNREALIZED
GAIN ON INVESTMENTS (NOTE 3)

Net realized gain on investments .......................... 120,289

Change in net unrealized
appreciation on investments ............................. 513,551
----------

Net realized and unrealized
gain on investments ..................................... 633,840
----------

Net Increase in Net Assets
Resulting from Operations ............................... $1,482,468
----------

Fund OPERATIONS include:

* interest income earned from investments

* management fees and expenses

* gains or losses from selling investments (known as realized gains or losses)

* gains or losses on current fund holdings (known as unrealized gains or losses

See Notes to Financial Statements

www.americancentury.com 13

Statements of Changes in Net Assets
- -----------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
AND SEPTEMBER 30, 1997 (INCEPTION) THROUGH OCTOBER 31, 1997

Increase in Net Assets:

1998 1997
OPERATIONS

Net investment income ........................ $ 848,628 $ 69,472

Net realized gain on investments ............. 120,289 --

Change in net unrealized appreciation
(depreciation) on investments ............. 513,551 (111,672)
------------ ------------

Net increase (decrease) in net
assets resulting from operations ........... 1,482,468 (42,200)
------------ ------------

DISTRIBUTIONS TO SHAREHOLDERS

From net investment income ................... (848,628) (69,472)
------------ ------------

CAPITAL SHARE TRANSACTIONS

Proceeds from shares sold .................... 32,931,025 11,671,040

Proceeds from reinvestment
of distributions ........................... 730,692 65,996

Payments for shares redeemed ................. (15,887,233) (553,372)
------------ ------------

Net increase in net assets from
capital share transactions ................. 17,774,484 11,183,664
------------ ------------

Net increase in net assets ................... 18,408,324 11,071,992

NET ASSETS

Beginning of period .......................... 11,071,992 --
------------ ------------

End of period ................................ $ 29,480,316 $ 11,071,992
------------ ------------

TRANSACTIONS IN
SHARES OF THE FUND

Sold ......................................... 3,251,674 1,166,684

Issued in reinvestment of distributions ...... 71,945 6,666

Redeemed ..................................... (1,563,364) (55,540)
------------ ------------

Net increase ................................. 1,760,255 1,117,810
------------ ------------

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--This statement shows how
the fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:

* performance (operations)

* distributions to shareholders

* shareholders either investing, reinvesting distributions, or withdrawing mone

The changes are broken out into:

* operations--a summary of the Statement of Operations from the previous page
for the current period

* distributions--income and gains distributed to shareholders

* share transactions--shareholders' purchases, reinvestment of distributions,
and redemptions

The statements also include net assets at the beginning and end of the period.

See Notes to Financial Statements

14 1-800-345-2021

Notes to Financial Statements
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--American Century Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century - Benham High-Yield Fund (the
Fund) is one of the thirteen series of funds issued by the Corporation. The
Fund's investment objective is to seek high current income by investing in a
diversified portfolio of high-yielding corporate bonds, debentures and notes.
The Fund invests primarily in lower-rated debt securities, which are subject to
greater credit risk and consequently offer higher yield. Securities of this type
are subject to substantial risks including price volatility, liquidity risk and
default risk. The Fund is authorized to issue two classes of shares: the
Investor Class and the Advisor Class. The two classes of shares differ
principally in their respective shareholder servicing and distribution expenses
and arrangements. All shares of the Fund represent an equal pro rata interest in
the assets of the class to which such shares belong, and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
for class specific expenses and exclusive rights to vote on matters affecting
only individual classes. Sale of the Advisor Class had not commenced as of the
report date. The following significant accounting policies, related to all
classes of the Fund, are in accordance with accounting policies generally
accepted in the investment company industry.

SECURITY VALUATIONS--Portfolio securities are valued through a commercial
pricing service or at the mean of the most recent bid and asked prices. When
valuations are not readily available, securities are valued at fair value as
determined in accordance with procedures adopted by the Board of Directors.

SECURITY TRANSACTIONS--Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.

INVESTMENT INCOME--Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums.

REPURCHASE AGREEMENTS--The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to the Fund under each repurchase agreement.

JOINT TRADING ACCOUNT--Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS--It is the Fund's policy to distribute all net investment
income and net realized capital gains to shareholders and to otherwise qualify
as a regulated investment company under the provisions of the Internal Revenue
Code. Accordingly, no provision has been made for federal or state income taxes.

DISTRIBUTIONS TO SHAREHOLDERS--Distributions from net investment income are
declared daily and distributed monthly. Distributions from net realized gains
are declared and paid annually.

The character of distributions made during the year from net investment
income or net realized capital gains may differ from their ultimate
characterization for federal income tax purposes. These differences reflect the
differing character of certain income items and net capital gains and losses for
financial statement and tax purposes and may result in reclassification among
certain capital accounts.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the period. Actual results could differ from
these estimates.

ADDITIONAL INFORMATION--Effective January 15, 1998, Funds Distributor, Inc.
(FDI) became the Corporation's distributor. Certain officers of FDI are also
officers of the Corporation.

www.americancentury.com 15

Notes to Financial Statements (continued)
- -----------------------------------------------------------------------------
APRIL 30, 1998 (UNAUDITED)

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The Corporation has entered into a Management Agreement with ACIM that
provides the Fund with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreement provides that all
expenses of the Fund, except brokerage commissions, taxes, interest, expenses of
those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will by paid by ACIM. The fee is computed daily and paid monthly based
on the Fund's class average closing net assets during the previous month. The
annual management fee for the Investor Class is 0.90%.

The Board of Directors adopted the Advisor Class Master Distribution and
Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the Investment
Company Act of 1940. The Plan provides that the Funds will pay ACIM an annual
distribution fee equal to 0.25% and service fee equal to 0.25%. The fees are
computed daily and paid monthly based on the Advisor Class's average daily
closing net assets during the previous month. The distribution fee provides
compensation for distribution expenses incurred by financial intermediaries in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers, and financial institutions that have
entered into sales agreements with respect to shares of the Fund. The service
fee provides compensation for shareholder and administrative services rendered
by ACIM, its affiliates or independent third party providers.

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of securities, excluding short-term investments, were
$25,657,764 and $9,772,438, respectively.

As of April 30, 1998, accumulated net unrealized appreciation for federal
income tax purposes was $401,879, which consisted of unrealized appreciation of
$447,284 and unrealized depreciation of $45,405. The aggregate cost of
investments for federal income tax purposes was the same as the cost for
financial reporting purposes.

16 1-800-345-2021

High-Yield's Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED

1998(1) 1997(2)

PER-SHARE DATA

Net Asset Value, Beginning of Period ......... $ 9.91 $ 10.00
---------- ----------

Income From Investment Operations

Net Investment Income ...................... 0.41 0.06

Net Realized and Unrealized Gain
(Loss) on Investment Transactions ......... 0.33 (0.09)
---------- ----------

Total From Investment Operations ............. 0.74 (0.03)
---------- ----------

Distributions

From Net Investment Income ................. (0.41) (0.06)
---------- ----------

Net Asset Value, End of Period ............... $ 10.24 $ 9.91
---------- ----------

Total Return(3) ............................ 7.65% (0.27)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to
Average Net Assets(4) ...................... 0.90% 0.90%

Ratio of Net Investment Income
to Average Net Assets(4) ................... 8.06% 7.39%

Portfolio Turnover Rate ...................... 65% --

Net Assets, End of Period
(in thousands) ............................. $ 29,480 $ 11,072

(1) Six months ended April 30, 1998 (unaudited).

(2) September 30, 1997 (inception) through October 31, 1997.

(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total return is not annualized.

(4) Annualized.

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--This page itemizes current period
activity and statistics and provides comparison data for the last five fiscal
years (or less, if the fund is not five years old).

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* distributions of income and capital gains paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming
reinvestment of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced

See Notes to Financial Statements

www.americancentury.com 17

Retirement Account Information
- -----------------------------------------------------------------------------

RETIREMENT ACCOUNT INFORMATION

18 1-800-345-2021

Background Information
- -----------------------------------------------------------------------------

INVESTMENT PHILOSOPHY AND POLICIES

In addition to these principles, each fund has its own investment policies:

HIGH-YIELD seeks to provide a high level of interest income by investing in
a diversified portfolio of high-yielding fixed-income securities. As a secondary
objective, the fund seeks capital appreciation. The fund invests primarily in
lower-quality corporate bonds, with an emphasis on securities rated BB or B. The
fund has no average maturity limitations, but it typically invests in
intermediate- and long-term bonds.

Lower-rated bonds may be subject to greater default risk, liquidity risk
and price volatility.

COMPARATIVE INDICES

The index listed below is used in the report for fund performance
comparisons. It is not an investment product available for purchase.

The DLJ HIGH YIELD INDEX is a broad index of corporate bonds with credit
ratings below investment grade. The index has an average maturity of 8 years and
an average credit rating of BB/B.

LIPPER RANKINGS

LIPPER ANALYTICAL SERVICES, INC. is an independent mutual fund ranking
service that groups funds according to their investment objectives. The Lipper
category for High-Yield is:

HIGH CURRENT YIELD FUNDS--funds that aim at high current yield from
fixed-income securities. No quality or maturity restrictions; funds tend to
invest in lower-grade debt issues.

[right margin]

INVESTMENT TEAM LEADERS

HIGH-YIELD

PORTFOLIO MANAGER:
THERESA FENNELL

HIGH-YIELD ANALYSTS:
MICHAEL DIFLEY
TANYA FLEISCHER

www.americancentury.com 19

Glossary
- -----------------------------------------------------------------------------

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

YIELDS

PORTFOLIO STATISTICS

* NUMBER OF SECURITIES--the number of different securities held by a fund on a
given date.

TYPES OF FIXED-INCOME SECURITIES

* CORPORATE BONDS--debt securities or instruments issued by companies and
corporations. Short-term corporate securities are tyically issued to raise cash
and cover current expenses in anticipation of future revenues; longer-term
corporate securities are issued to finance capital expenditures, such as new
plant construction or equipment purchases.

CREDIT RATING GUIDELINES

Securities rated AAA, AA, A, or BBB are considered "investment-grade"
securities, meaning they are relatively safe from default. The High-Yield fund
generally invests in securities that are below investment grade, including those
with the following credit ratings:

BB--securities that are less vulnerable to default than other lower-quality
issues but do not quite meet investment-grade standards.

B--securities that are more vulnerable to default than BB-rated securities
but whose issuers are currently able to meet their obligations.

CCC--securities that are currently vulnerable to default and are dependent
on favorable economic or business conditions for the issuers to meet their
obligations.

It's important to note that credit ratings are subjective, reflecting the
opinions of the rating agencies; they are not absolute standards of quality.

20 1-800-345-2021

[inside back cover]

[left margin]

[american century logo(reg.sm)]
American
Century(reg.tm)

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

INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-444-3485

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY MUTUAL FUNDS INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

[recycled logo]
Recycled

[back cover]

[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998

American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES

9806 (c)1998 American Century Services Corporation
SH-BKT-12671 Funds Distributor, Inc.
<PAGE>
[front cover]
April 30, 1998
SEMIANNUAL REPORT
- -----------------
AMERICAN CENTURY

[graphic of globe, U.S. Currency, and money managers overlooking monitors]

TWENTIETH CENTURY GROUP
- -----------------------
ULTRA
VISTA

[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]

A Note from the Founder
- --------------------------------------------------------------------------------

I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.

Sincerely,
/s/James E. Stowers

About our New Report Design
- --------------------------------------------------------------------------------

WHY WE CHANGED.

WHAT'S NEW.

The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming.

New features include:

* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.

THE BOTTOM LINE.

The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.

We believe we've come up with a more interesting, informative, and user-friendly
publication.

We hope you enjoy it.

[left margin]

TWENTIETH CENTURY GROUP
ULTRA
(TWCUX)

TWENTIETH CENTURY GROUP
VISTA
(TWCVX)

[40 Years logo]
Four Decades of Serving Investors
American Century
1958-1998

On the Cover:
Kevin Lewis and Cindy Miller are part of the investment group at American
Century.

Our Message to You
- --------------------------------------------------------------------------------

[photo of James E. Stowers, Jr. and James E. Stowers III]
James E. Stowers, Jr. with James E. Stowers III, seated

Corporate America is also in excellent condition. Companies are highly
productive and generating historically strong returns on their investments,
including investments in their own stock.

But despite the robust economy, not every company is selling at record
prices. This remains a market of individual stocks. Many companies have earnings
growth and profitability that have not been fully appreciated by the market.

On the corporate front, the past six months have been eventful for American
Century. As many of you may know, we gained a powerful business partner in
January, when J.P. Morgan became a substantial minority shareholder. The new
business partnership will eventually broaden the menu of investment options and
services we provide.

We also hope you like the new design of this report. Our annual and
semiannual reports contain a wealth of information about fund strategies and
holdings. The new design is intended to and should encourage readers to take a
Corporate America is also in excellent make this information more accessible
closer look. For Ultra shareholders, we've included an article that provides an
account of the fund's history and fine long-term performance.

We appreciate your investment with American Century.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer

[left margin]
Table of Contents

Report Highlights .................. 2

Market Perspective ................. 3

ULTRA

Performance Information ............ 5

Management Q & A ................... 6

Portfolio at a Glance .............. 6

Top Ten Holdings ................... 7

Top Five Industries ................ 7

Types of Investments ............... 8

Schedule of Investments ............ 9

Financial Highlights ............... 26

VISTA

Performance Information ............ 13

Management Q & A ................... 14

Portfolio at a Glance .............. 14

Top Ten Holdings ................... 15

Top Five Industries ................ 15

Types of Investments ............... 16

Schedule of Investments ............ 17

Financial Highlights ............... 29

FINANCIAL STATEMENTS

Statements of Assets and Liabilities 19

Statements of Operations ........... 20

Statements of Changes
in Net Assets ...................... 21

Notes to Financial Statements ...... 22

Share Class and Retirement
Account Information ................ 32

Background Information

Investment Philosophy
and Policies .................... 33

Comparative Indices ............. 33

Investment Team
Leaders ......................... 33

Glossary ........................... 34

www.americancentury.com 1

Report Highlights
- --------------------------------------------------------------------------------

THE MARKET

* The U.S. stock market continued its powerful advance during the six months
ended April 30, 1998. The S&P 500 gained 22.47%.

* A robust economy has fueled the stock market's performance. Low inflation
and interest rates and continued corporate earnings growth have contributed
to economic strength.

* Earnings growth and productivity are top corporate priorities. The U.S. is
one of the most technologically proficient of the industrial nations, and
as a result, many U.S. companies are enjoying high returns.

* Investors also continue to pour money into the market. Stock prices and
investor expectations remain high. On a historical basis, corporate assets
are expensive, and the average dividend yield is very low.

ULTRA

* Ultra's Investor Class shares posted a 21.58% return for the six months
ended April 30, 1998. (See total returns on page 5.)

* Technology holdings were reduced in late 1997. The biggest increase in the
portfolio was in the communications services area, which includes cable
companies and regional Bell operating companies, or "Baby Bells."

* Ultra's top performing stock was America Online. Its price jumped in early
1998 after AOL announced a 10% increase in its monthly unlimited access
fee. Another strong performer was Pfizer, a dominant pharmaceutical company
with a number of new drugs on the market.

* Ultra's portfolio is diversified across a broader cross-section of
industries than in the past. The fund is also being run by a larger
investment team.

VISTA

* Vista's Investor Class shares posted a -0.44% return for the six months
ended April 30, 1998. Vista's benchmark, the Russell 2500 Growth, returned
10.04%. (See total returns on page 13.)

* The portfolio was overweighted in technology and energy stocks that were
hurt by troubles in Southeast Asia. Its lighter weighting in strong
performing financial stocks also restrained returns.

* Significant changes have been made in the portfolio in an effort to improve
results. The fund is more diversified across a range of industries than in
the past, and its holdings have been repositioned to gain exposure to more
seasoned companies.

* Vista's three largest holdings on April 30 -- USA Waste Services, Stage
Stores and Parametric Technology -- also were its top performers. These are
companies whose earnings and revenue growth should prove less volatile than
the stocks they replaced.

[left margin]
ULTRA (TWCUX)(1)

TOTAL RETURNS: AS OF 4/30/98

6 Months 21.58%(2)
1 Year 39.75%

NET ASSETS: $26 billion

INCEPTION DATE: 11/2/81

VISTA (TWCVX)(1)

TOTAL RETURNS: AS OF 4/30/98

6 Months -0.44%(2)
1 Year 26.13%

NET ASSETS: $1.5 billion

INCEPTION DATE: 11/25/83

A robust economy has fueled the stock
market's performance. Low inflation and
interest rates and continued corporate
earnings growth have contributed to
economic strength.

(1) Investor Class.
(2) Not annualized.

Investment terms are defined in the Glossary on page 34.

2 1-800-345-2021

Market Perspective from Bob Puff
- --------------------------------------------------------------------------------

[photo of Bob Puff]
Bob Puff, chief investment officer of American Century Investments

A POWERFUL UPSLOPE

Just how quickly has the stock market appreciated over the past few years?
It took approximately 16 years, from 1970-1985, for the Standard & Poor's 500 to
double. Only six years later, it had doubled again, and roughly five years
later, in early 1997, it had doubled once more, to 800. At the end of April
1998, the index was just over 1100. As the chart on page 4 illustrates, the S&P
500's recent climb has been very steep.

Lower corporate earnings, a tight U.S. labor market, and the collapse of
the "Asian Miracle" have slowed the index only briefly.

How can we account for the market's success?

A POWERHOUSE ECONOMY

Stocks owe much of their success to a robust, low-inflation economy. The
U.S. economy is currently demonstrating a vigor we haven't seen in a generation.

* U.S. economic growth hit 3.8% in 1997, and 4.8% in the first quarter of 1998

* Inflation was a mere 1.4% for the 12 months ended April 30, 1998.

* In 1997, prices rose at the slowest pace in 12 years.

* Real interest rates (after adjusting for inflation) are among the lowest since
the 1960s.

* Unemployment hit its lowest level in 28 years.

* The U.S. government is projecting the first budget surplus in 30 years.

A successful market is also tied to the success of individual companies.
Earnings growth and productivity are at the top of the business agenda. We are
also among the most technologically proficient of the industrial nations, and as
a result, U.S. companies have enjoyed an extraordinarily high record of
profitability. Earnings have been on a double-digit growth spurt for five of the
last six years.

Given the positive business climate, it's not surprising stocks remain such
a popular investment, and that cash continues to flow into the market at record
volumes.

However, by some key measures stock prices are very expensive. The average
stock in the S&P 500 now costs more than 25 times last year's earnings, a
historical high. Corporate assets are also richly valued. Investors are paying
roughly five times balance sheet assets, or twice the historical average. The
dividend yield on the average S&P stock is less than 1.5%, another record.

[right margin]

Calendar 1995-1997 marked one of the
best three-year performance runs on
record. It was, in fact, the most
consistent performance period ever for
large-stock indices like the S&P 500.

MARKET RETURNS
FOR THE SIX MONTHS ENDED APRIL 30, 1998

S&P 500 22.47%
S&P MIDCAP 400 19.17%
RUSSELL 2000 11.88%
Source: Lipper Analytical Services, Inc.

These indices represent the performance of large, medium and small
capitalization stocks.

[line graph - data below]

www.americancentury.com 3

Market Perspective (continued)
- --------------------------------------------------------------------------------

INFLATION, INTEREST RATES, AND EARNINGS

If inflation picks up, interest rates are likely to rise too, as the bond
market and the Federal Reserve boost interest rates to slow the economy. Higher
interest rates increase the cost of borrowing for everyone, from corporations to
prospective home buyers, and thus tend to slow economic growth and dampen
inflation. Our central bank, the Federal Reserve Board, sets short-term interest
rates, but market forces determine intermediate and long-term rates.

[left margin]

This remains a very resilient market,
and we are optimistic about its
long-term prospects. But expectations
are running high, as reflected in the
market's steep climb over the last
three-plus years.

[mountain graph - data below]

S&P 500 PERFORMANCE
FROM DECEMBER 1970 TO DECEMBER 1997

Source: Bloomberg

4 1-800-345-2021

Performance--Ultra
- --------------------------------------------------------------------------------
<TABLE>
TOTAL RETURNS AS OF APRIL 30, 1998
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 11/2/81) (INCEPTION 10/2/96) (INCEPTION 11/14/96)

ULTRA S&P 500 ULTRA S&P 500 ULTRA S&P 500
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS* ................ 21.58% 22.47% 21.48% 22.47% 21.71% 22.47%

1 YEAR ................... 39.75% 41.01% 39.41% 41.01% 40.04% 41.01%
- -------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS

3 YEARS .................. 28.21% 31.85% -- -- -- --

5 YEARS .................. 22.12% 23.21% -- -- -- --

10 YEARS ................. 22.25% 18.87% -- -- -- --

LIFE OF FUND ............. 18.66% 18.13% 26.68% 37.11% 26.15% 35.11%

* Returns for periods less than one year are not annualized.

See pages 32, 33 and 34 for information about share classes, the S&P 500 and
returns.
</TABLE>

These charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see the Total Returns
table above). The chart at left shows the growth of a $10,000 investment in the
fund over 10 years, while the chart below shows the fund's year-by-year
performance. The S&P 500 is provided for comparison in each chart. Past
performance does not guarantee future results. Investment return and principal
value will fluctuate, and redemption value may be more or less than original
cost. Ultra's total returns include operating expenses (such as transaction
costs and management fees) that reduce returns, while the total returns of the
S&P 500 do not.

[mountain graph - data below]

GROWTH OF $10,000 OVER 10 YEARS
ULTRA S&P 500
4/30/88 $10,000 $10,000
4/30/89 $12,581 $12,289
4/30/90 $12,654 $13,582
4/30/91 $19,805 $15,969
4/30/92 $23,839 $18,205
4/30/93 $27,474 $19,884
4/30/94 $33,293 $20,940
4/30/95 $35,361 $24,591
4/30/96 $48,239 $32,013
4/30/97 $53,396 $40,055
4/30/98 $74,618 $56,501

[bar graph - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING APRIL 30)
ULTRA S&P 500
4/30/89 25.81 22.78
4/30/90 0.58 10.44
4/30/91 56.51 17.56
4/30/92 20.37 14.05
4/30/93 15.25 9.22
4/30/94 21.18 5.33
4/30/95 6.21 17.42
4/30/96 36.42 30.13
4/30/97 10.69 25.10
4/30/98 39.75 41.01

www.americancentury.com 5

Ultra--Q&A
- --------------------------------------------------------------------------------

An interview with Jim Stowers III, Bruce Wimberly and John Sykora,
portfolio managers on the Ultra investment team.

HOW DID THE FUND PERFORM DURING THE SIX MONTHS ENDED APRIL 30?

Ultra gained 21.58%* for the period. As you can see from the chart on the
previous page, the fund's return of 39.75% for the year ended April 30 was its
highest annual total return since 1991.

By comparison, the S&P 500 posted total returns of 22.47% and 41.01% for
the six- and 12-month periods respectively. Ultra was in the top 22% out of 953
growth mutual funds during the six months, according to Lipper Analytical
Services.(+)

We believe Ultra's performance was the result of good stock selection,
using our bottom-up approach to find stocks with strong upward trends in
earnings and revenues.

HAVE YOU MADE ANY SIGNIFICANT CHANGES TO THE PORTFOLIO SINCE OCTOBER 31, 1997?

Yes. In the past, Ultra has taken very large positions in technology and
healthcare because we found earnings acceleration in many stocks in these
sectors. During the second half of 1997, we sold several long-term technology
holdings at a healthy profit when our system of identifying earnings
acceleration increasingly pointed toward other areas, including
telecommunications, broadcasting, retail, media and cable companies. The
deceleration in technology earnings, along with our desire to increase the
diversification of the portfolio, drove a reduction in the technology weighting.
We believe this more diversified approach will lower fund volatility over time.

WILL ULTRA CONTINUE TO BUY LARGE POSITIONS IN INDIVIDUAL STOCKS?

Yes. Ultra will continue to take concentrated positions in stocks and
industries with an accelerating trend in earnings. But on the whole, the
portfolio is more likely to be spread across a broad spectrum of industry
groups. We are committed to finding companies growing at a fast pace relative to
the market and to making sure they are significant weightings in the portfolio.
This bottom-up process can lead to significant overweightings and
underweightings, relative to Ultra's benchmark, in individual stocks and
sectors.

WHAT OTHER CHANGES HAVE YOU MADE TO THE PORTFOLIO?

Our biggest increase was in the communications services area. Within this
group are cable companies, which historically carried a heavy debt load to
finance infrastructure development. These companies are benefiting from
increased fee revenue and declining capital expenditures and financing costs.

Also within the communications sector are regional Bell operating
companies, or "Baby Bells." We built positions in companies such as SBC
Communi-cations and Bell Atlantic Corp. because consolidation and deregulation
have led to cost savings opportunities. In addition, these companies are
experiencing accelerating revenues driven by demand for a range of new services,
including dedicated data lines, wireless products and caller identification.

* All fund returns referenced in this interview are for Investor Class shares.

(+) According to Lipper, for the periods ending April 30, Ultra was ranked in
the top 49% among 864 funds for one year, 25% out of 332 funds for five years,
and 3% out of 182 funds for 10 years. Lipper rankings are based on average
annual total returns. Past performance is no guarantee of future results.

[left margin]

PORTFOLIO AT A GLANCE
4/30/98 10/31/97

NO. OF COMPANIES 216 137

MEDIAN P/E RATIO 27.3 24.7

MEDIAN MARKET $13.09 $13.1
CAPITALIZATION BILLION BILLION

PORTFOLIO TURNOVER 63%(1) 107%(2)

EXPENSE RATIO (FOR
INVESTOR CLASS) 1.00%(3) 1.00%

Ultra will continue to take concentrated
positions in stocks and industries with
an accelerating trend in earnings. But
on the whole, the portfolio is more
likely to be spread across a broad
spectrum of industry groups.

(1) Six months ended 4/30/98.
(2) Year ended 10/31/97.
(3) Annualized.

Investment terms are defined in the Glossary on page 34.

6 1-800-345-2021

Ultra--Q&A (continued)
- --------------------------------------------------------------------------------

We also added to our retail holdings due to a healthy environment for
retailers. For example, we purchased Sears, Roebuck & Co. after the stock pulled
back in the wake of charge-offs in the credit card division. We viewed the
related credit issues surrounding the company as short-term and not material to
our long-term earnings outlook. We will continue to look for opportunities such
as this to buy quality growth companies.

We decreased weightings in pharmaceutical and computer component stocks to
reallocate assets into the areas described above.

WHICH STOCKS OR SECTORS CONTRIBUTED TO PERFORMANCE THIS PAST SIX MONTHS?

America Online was our top performing stock. The shares climbed early in
1998 after AOL announced a 10% increase in its monthly unlimited access fee.
AOL's subscriber base continues to grow with the increasing popularity of the
Internet. The company has also been a leader in the sales of advertising space
on the World Wide Web.

The second-best performing stock was Pfizer. This company continues to
benefit from a dominant product pipeline, more predictable earnings and a strong
balance sheet. A successful new product is Viagra, a treatment for impotence.

Software providers and retailers were also among Ultra's best performing
industry categories. Despite negative press, Microsoft continued to dominate the
operating software marketplace, pricing remained firm, deferred revenue
continued to expand, and a new product cycle will emerge in 1999. The company's
Office 97 software and Windows NT server software are examples of products that
helped generate earnings growth of 45.2% for the 12 months ended March 31, 1998

WHICH STOCKS OR SECTORS HURT PERFORMANCE?

We were in contact with Cendant's senior management shortly after the
announcement regarding its accounting difficulties. Although we were
disappointed by the findings, we felt that the underlying businesses were
capable of continued growth and that concern over near-term problems had already
been reflected in the price of the stock.

The energy services sector had the biggest negative impact on performance.
Ultra held several companies that provide technology and equipment to oil
drillers. Falling oil prices led to expectations of diminished capital
expenditures by the oil companies, and consequently diminished earnings
visibility for energy services companies.

ULTRA PAID A LARGE DISTRIBUTION IN 1997. WILL THAT BE A RECURRING EVENT?

In late 1997, we sold many longtime, core holdings at a substantial profit
because we felt their growth rates were slowing. In selling them, we recognized
large capital gains, which we are required by law to distribute to shareholders.
Going forward, we don't foresee distributions of this size every year, however
larger than normal distributions are one of the consequences of a long-running
bull market.

[left margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

GENERAL ELECTRIC
CO. (U.S.) 3.1% 2.7%
AMERICA ONLINE INC. 3.0% 2.1%
TIME WARNER INC. 2.4% 1.7%
CENDANT CORP. 2.3% --
MICROSOFT CORP. 2.3% 1.0%
SEARS, ROEBUCK & CO. 2.3% --
TELE-COMMUNICATIONS,
INC. CL A 2.2% 1.0%
WAL-MART STORES, INC. 2.2% 1.0%
WORLDCOM, INC. 2.2% 1.6%
AMERICAN EXPRESS CO. 1.9% 1.6%

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

COMMUNICATIONS
SERVICES 13.7% 6.6%
FINANCIAL SERVICES 8.8% 7.9%
COMPUTER SOFTWARE
& SERVICES 8.3% 5.9%
RETAIL (GENERAL
MERCHANDISE) 6.7% 2.0%
DIVERSIFIED COMPANIES 6.6% 5.0%

www.americancentury.com 7

Ultra--Q&A (continued)
- --------------------------------------------------------------------------------

ULTRA HAD 216 HOLDINGS AT APRIL 30 COMPARED TO 137 SIX MONTHS EARLIER. WHY?

Several reasons explain this increase. First, Ultra grew from $22 billion
to over $26 billion during that period. That alone led us to increase the number
of securities in the portfolio. In addition, as mentioned earlier, we sold
several very large positions that had been in the portfolio for upwards of seven
years. One such position represented more than 6% of total assets. The proceeds
of these sales were then invested in new companies as well as existing holdings.

As part of our effort to broaden the range of companies in Ultra, we
established numerous small positions in a broad cross-section of industries that
were exhibiting good earnings and revenue acceleration. Collectively, these
holdings represent a small percentage of fund assets.

YOU HAVE DESCRIBED A PORTFOLIO THAT HOLDS MORE NAMES AND IS MORE BROADLY
DIVERSIFIED. ARE THERE ANY OTHER CHANGES IN HOW ULTRA IS BEING MANAGED?

We have increased the number of investment personnel overseeing the
portfolio to a total of eight. In addition, there are significant resources
beyond this immediate group in the form of analysts, traders and dedicated
information technology specialists who work with us on a regular basis. This
core of dedicated professionals has one goal -- the long-term success of Ultra
shareholders.

Ultra also is invested in much larger companies today than 10 years ago,
when it was one-hundredth ($279 million) its current size. In fact, most of the
rating services now accurately classify Ultra as a "large-cap growth" fund.

Regardless of these changes, we want to stress that Ultra remains true to
its investment philosophy. We still want to own the shares of successful
businesses that are demonstrating above-average earnings and revenue
acceleration. We believe that, over time, these growth characteristics can
translate into the strong performance our shareholders have come to expect.

[left margin]

[pie charts]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF APRIL 30, 1998
Cash 0.6%
U.S. & Foreign Preferred Stock 1.1%
Foreign Stocks 3.3%
U.S. Stocks 95.0%

AS OF OCTOBER 31, 1997
Cash 2.7%
U.S. & Foreign Preferred Stock 0.3%
Foreign Stocks 6.7%
U.S. Stocks 90.3%

8 1-800-345-2021

Ultra's Schedule of Investments
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------

COMMON STOCKS

AEROSPACE & DEFENSE--1.8%

1,907,500 Textron Inc. $ 149,262

3,109,000 United Technologies Corp. 306,042
----------------

455,304
----------------

AIRLINES--0.3%

185,000 AMR Corp.(1) 28,189

680,000 Northwest Airlines Corp. Cl A(1) 35,721
----------------

63,910
----------------

AUTOMOBILES & AUTO PARTS--0.7%

65,000 Chrysler Corp. 2,612

11,000 Dana Corp. 650

1,250,000 Ford Motor Co. 57,266

1,775,000 General Motors Corp. Cl H 98,069

375,000 Magna International Inc. Cl A 27,961
----------------

186,558
----------------

BANKING--6.5%

3,390,440 Banc One Corp. 199,400

25,000 Bank of Boston Corp. 2,698

3,800,000 Bank of New York Co., Inc. (The) 224,438

2,020,000 BankAmerica Corp. 171,700

15,000 BB & T Corp. 1,009

1,335,000 Chase Manhattan Corp. 184,981

1,265,000 Citicorp 190,382

25,000 Fifth Third Bancorp 1,372

39,000 First Chicago NBD Corp. 3,622

2,020,640 First Union Corp. 121,996

32,000 Fleet Financial Group, Inc. 2,764

6,000 Golden West Financial Corp. (Del.) 632

11,000 Marshall & Ilsley Corp. 643

1,630,000 Mellon Bank Corp. 117,360

13,000 Mercantile Bancorporation Inc. 720

23,000 National City Corp. 1,593

3,264,000 NationsBank Corp. 247,248

10,000 Providian Financial Corp. 602

13,000 Regions Financial Corp. 565

7,000 Republic New York Corp. 936

15,000 SouthTrust Corp. 640

25,000 SunTrust Banks, Inc. 2,036

20,000 Synovus Financial Corp. 704

1,055,000 U.S. Bancorp 133,985

20,000 Wachovia Corp. 1,699

1,065,000 Washington Mutual, Inc. 74,583
----------------

1,688,308
----------------

BROADCASTING & MEDIA--4.6%

12,450,000 CBS Corporation 443,531

2,725,000 Chancellor Media Corp.(1)(2) 129,182

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------

19,300 Clear Channel Communications, Inc.(1) $ 1,819

8,100,000 Time Warner Inc. 635,850
----------------

1,210,382
----------------

BUILDING & HOME IMPROVEMENTS--0.2%

1,055,000 Masco Corp. 61,190
----------------

BUSINESS SERVICES & SUPPLIES--2.5%

24,466,300 Cendant Corp.(1) 611,658

10,000 Interpublic Group of Companies, Inc. 639

580,000 Omnicom Group Inc. 27,477

30,000 Paychex, Inc. 1,630
----------------

641,404
----------------

CHEMICALS & RESINS--0.1%

475,000 Monsanto Co. 25,116

25,000 PPG Industries, Inc. 1,767
----------------

26,883
----------------

COMMUNICATION EQUIPMENT--2.9%

928,900 Advanced Fibre
Communications, Inc.(1) 39,304

750,000 Ericsson (L.M.) Telephone Co. ADR 38,531

3,525,000 Loral Space & Communications Ltd.(1) 110,377

3,325,000 Lucent Technologies Inc. 253,116

1,800,000 Newbridge Networks Corp.(1) 52,762

40,000 Tellabs, Inc.(1) 2,834

6,555,000 US West Media Group(1) 247,451
----------------

744,375
----------------

COMMUNICATION SERVICES--13.5%

4,336,000 AirTouch Communications, Inc.(1) 230,350

2,887,800 Ameritech Corp. 122,912

4,114,000 AT&T Corp. 247,097

3,850,000 Bell Atlantic Corp. 360,216

2,397,000 BellSouth Corp. 153,857

9,975,000 Comcast Corp. Cl A 356,295

45,000 Cox Communications, Inc. Cl A(1) 2,008

1,168,900 GTE Corp. 68,307

4,675,200 Liberty Media Group Cl A(1) 155,012

500,000 MCI Communications Corp. 25,141

1,625,000 Nextel Communications, Inc.(1) 46,566

2,000,000 Omnipoint Corp.(1) 48,938

25,000 PanAmSat Corp.(1) 1,461

6,750,000 SBC Communications Inc. 279,703

50,000 Sprint Corp. 3,416

4,000,000 TCI Communications, Inc. Cl A(1) 65,375

3,700,000 Tel-Save Holdings, Inc.(1)(2) 84,291

18,054,000 Tele-Communications, Inc. Cl A(1) 582,806

1,000,000 Telecomunicacoes Brasileiras
S.A. ADR 121,813

13,170,000 WorldCom, Inc.(1) 563,429
----------------

3,518,993
----------------

See Notes to Financial Statements.

www.americancentury.com 9

Ultra's Schedule of Investments (continued)
- ------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------

COMPUTER PERIPHERALS--2.6%

3,063,000 Cisco Systems Inc.(1) $ 224,460

9,860,000 EMC Corp. (Mass.)(1) 454,793
----------------

679,253
----------------

COMPUTER SOFTWARE & SERVICES--8.3%

9,898,400 America Online Inc.(1)(2) 791,872

30,000 Automatic Data Processing, Inc. 2,008

2,305,000 BMC Software, Inc.(1)(2) 215,589

1,675,000 Cadence Design Systems, Inc.(1) 60,823

1,420,500 Citrix Systems, Inc.(1) 88,293

40,000 Computer Associates International, Inc. 2,342

1,470,000 Computer Sciences Corp. 77,542

323,400 Compuware Corp.(1) 15,796

1,885,000 HBO & Co. 112,688

1,381,000 Intuit Inc.(1) 73,409

6,686,000 Microsoft Corp.(1) 602,785

594,300 Network Associates Inc.(1) 40,747

115,000 Oracle Systems Corp.(1) 2,979

2,005,000 Parametric Technology Corp.(1) 64,097

34,000 PeopleSoft, Inc.(1) 1,580
----------------

2,152,550
----------------

COMPUTER SYSTEMS--1.5%

1,366,000 Dell Computer Corp.(1) 110,262

20,000 Digital Equipment Corp.(1) 1,113

30,000 Gateway 2000, Inc.(1) 1,760

2,043,800 Hewlett-Packard Co. 153,924

1,140,000 International Business Machines Corp. 132,097
----------------

399,156
----------------

CONSUMER PRODUCTS--4.4%

1,837,000 Avon Products, Inc. 150,978

1,544,000 Colgate-Palmolive Co. 138,477

15,000 Estee Lauder Companies, Inc. 997

3,742,000 Gillette Company 431,967

4,995,000 Procter & Gamble Co. (The) 410,527

243,200 Ralston Purina Co. 25,779
----------------

1,158,725
----------------

DIVERSIFIED COMPANIES--6.6%

9,397,000 General Electric Co. (U.S.) 799,920

1,638,000 Honeywell Inc. 152,539

5,981,600 Tyco International Ltd. 325,997

6,045,000 Unilever N.V. 451,108
----------------

1,729,564
----------------

ELECTRICAL & ELECTRONIC
COMPONENTS--1.4%

25,000 Analog Devices, Inc.(1) 973

1,660,000 Intel Corp. 134,201

936,100 Maxim Integrated Products, Inc.(1) 37,766

1,200,000 Micron Technology, Inc.(1) 37,275

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------

1,325,000 Philips Electronics N.V. 119,250

660,000 Texas Instruments Inc. 42,281
----------------

371,746
----------------

ENERGY (PRODUCTION & MARKETING)--0.4%

1,408,000 Enron Corp. 69,256

775,000 Williams Companies, Inc. (The) 24,509
----------------

93,765
----------------

ENERGY (SERVICES)(3)

25,000 Halliburton Co. 1,375
----------------

ENVIRONMENTAL SERVICES--1.1%

1,857,000 USA Waste Services, Inc.(1) 91,109

5,632,100 Waste Management, Inc. 188,675
----------------

279,784
----------------

FINANCIAL SERVICES--8.8%

4,887,000 American Express Co. 498,474

2,819,116 Associates First Capital Corp. 210,729

13,000 Bear Stearns Companies Inc. 742

10,000 Capital One Financial Corp. 961

989,000 Equitable Companies Inc. 60,700

2,775,000 Fannie Mae 166,153

4,575,000 Federal Home Loan Mortgage
Corporation 211,880

6,065,966 ING Groep N.V. ORD 394,034

13,000 Lehman Brothers Holdings, Inc. 924

3,124,000 MBNA Corp. 105,825

175,000 Merrill Lynch & Co., Inc. 15,356

2,650,000 Morgan Stanley Dean Witter,
Discover & Co. 209,019

15,000 Paine Webber Group, Inc. 672

1,783,000 Skandia Forsakrings AB ORD 124,136

20,000 State Street Corp. 1,430

4,955,000 Travelers Group, Inc. 303,184
----------------

2,304,219
----------------

FOOD & BEVERAGE--2.3%

4,906,700 Coca-Cola Company (The) 372,296

1,000,000 Heinz (H.J.) Co. 54,500

3,025,000 PepsiCo, Inc. 120,054

60,000 Sara Lee Corp. 3,574

925,000 Seagram Co. Ltd. (The) 39,486

10,000 Wrigley (Wm.) Jr. Company 890
----------------

590,800
----------------

FURNITURE & FURNISHINGS(3)

15,000 Newell Co. 725
----------------

HEALTHCARE(3)

11,000 Cardinal Health, Inc. 1,059

15,000 Healthsouth Rehabilitation Corp.(1) 453

45,000 Tenet Healthcare Corp.(1) 1,684
----------------

3,196
----------------

See Notes to Financial Statements.

10 1-800-345-2021

Ultra's Schedule of Investments (continued)
- ------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------

INDUSTRIAL EQUIPMENT & MACHINERY--0.1%

24,190 Mannesmann AG ORD $ 19,190
----------------

INSURANCE--4.2%

20,000 AFLAC Inc. 1,300

2,485,000 Allstate Corp. 239,181

34,000 American General Corp. 2,265

3,381,000 American International Group, Inc. 444,813

2,587,000 Chubb Corp. (The) 204,211

3,719,800 Conseco Inc. 184,595

12,000 Hartford Financial Services Group
Inc. (The) 1,329

13,000 Hartford Life, Inc. Cl A 643

11,000 Lincoln National Corp. 977

12,000 MBIA Inc. 896

18,000 SunAmerica, Inc. 899

7,000 Transamerica Corp. 809

18,000 UNUM Corp. 968
----------------

1,082,886
----------------

LEISURE--2.5%

50,000 Carnival Corp. Cl A 3,478

1,740,000 Disney (Walt) Co. 216,304

123,000 Viacom, Inc. Cl A(1) 7,103

7,244,000 Viacom, Inc. Cl B(1) 420,152
----------------

647,037
----------------

MACHINERY & EQUIPMENT--0.1%

665,000 Deere & Co. 38,861
----------------

MEDICAL EQUIPMENT & SUPPLIES--2.0%

700,000 Arterial Vascular Engineering, Inc.(1) 24,741

2,390,800 Becton, Dickinson and Co. 166,459

1,510,000 Guidant Corp. 100,981

4,400,000 Medtronic, Inc. 231,550
----------------

523,731
----------------

METALS & MINING--0.1%

407,900 Aluminum Co. of America 31,612
----------------

OFFICE EQUIPMENT & SUPPLIES--0.8%

1,815,000 Xerox Corp. 206,003
----------------

PAPER & FOREST PRODUCTS(3)

26,000 Fort James Corporation 1,290

10,000 Georgia-Pacific Corp. 772

20,000 Weyerhaeuser Co. 1,153
----------------

3,215
----------------

PHARMACEUTICALS--6.1%

40,000 American Home Products Corp. 3,725

3,308,000 Bristol-Myers Squibb Co. 350,234

600,000 Dura Pharmaceuticals, Inc.(1) 15,881

1,450,000 Elan Corp., plc ADR(1) 90,081

10,000 Genentech, Inc.(1) 692

2,885,000 Lilly (Eli) & Co. 200,688

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------

1,977,900 Merck & Co., Inc. $ 238,337

3,099,000 Pfizer, Inc. 352,705

1,599,100 Schering-Plough Corp. 128,128

1,155,000 Warner-Lambert Co. 218,512
----------------

1,598,983
----------------

PRINTING & PUBLISHING--0.5%

15,000 Gannett Co., Inc. 1,019

11,000 McGraw-Hill Companies, Inc. (The) 852

725,000 New York Times Co. (The) Cl A 51,430

2,650,000 News Corp. Ltd. (The) ADR 72,378

20,000 Tribune Co. 1,320
----------------

126,999
----------------

RETAIL (APPAREL)--0.6%

55,000 Gap, Inc. (The) 2,829

1,250,000 Jones Apparel Group, Inc.(1) 74,766

25,000 Limited, Inc. (The) 839

1,820,000 TJX Companies, Inc. (The) 80,535
----------------

158,969
----------------

RETAIL (FOOD & DRUG)--1.1%

10,000 Albertson's, Inc. 500

1,500,000 General Nutrition Companies, Inc.(1) 53,766

3,000,000 Koninklijke Ahold NV ORD 93,504

3,990,000 Safeway Inc.(1) 152,617
----------------

300,387
----------------

RETAIL (GENERAL MERCHANDISE)--6.7%

5,364,000 Costco Companies, Inc.(1) 299,378

2,537,000 Dayton Hudson Corp. 221,512

21,250 Dollar General Corp. 805

25,000 May Department Stores Co. (The) 1,542

15,000 Meyer (Fred), Inc(.(1)) 673

2,200,000 Office Depot, Inc.(1) 72,875

10,025,000 Sears, Roebuck & Co. 594,608

11,169,300 Wal-Mart Stores, Inc. 564,748
----------------

1,756,141
----------------

RETAIL (SPECIALTY)--1.1%

3,343,000 Home Depot, Inc. 232,756

24,000 Lowe's Companies, Inc. 1,678

1,150,000 Tandy Corp. 57,213
----------------

291,647
----------------

RUBBER & PLASTICS--1.0%

3,536,700 Goodyear Tire & Rubber Co. (The) 247,569

25,000 Illinois Tool Works Inc. 1,763
----------------

249,332
----------------

TEXTILES & APPAREL--0.2%

1,675,000 Polo Ralph Lauren Corp.(1) 47,110
----------------

TRANSPORTATION(3)

60,000 Republic Industries, Inc.(1) 1,669
----------------

See Notes to Financial Statements.

www.americancentury.com 11

Ultra's Schedule of Investments (continued)
- ------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------

UTILITIES--0.7%

3,387,600 AES Corp. (The)(1) $ 186,953

20,000 Consolidated Edison Co. of
New York, Inc. 905

25,000 Houston Industries Inc. 727
----------------

188,585
----------------

TOTAL COMMON STOCKS--98.3% 25,634,522
----------------
(Cost $18,660,924)

PREFERRED STOCKS

COMMUNICATIONS SERVICES--0.2%

325,000 WorldCom, Inc. 48,384
----------------

PRINTING & PUBLISHING--0.9%

10,302,000 News Corp. Ltd. ADR 240,165
----------------

TOTAL PREFERRED STOCKS--1.1% 288,549
----------------
(Cost $239,114)

TEMPORARY CASH INVESTMENTS

$40,000 par value FHLMC Discount Note,
5.42%, 5/18/98(4) 39,898

Repurchase Agreement, Merrill Lynch & Co.,
Inc., (U.S. Treasury obligations), in a joint trading
account at 5.375%, dated 4/30/98, due
5/1/98 (Delivery Value $105,916) 105,900

Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------

Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 5.44%, dated 4/30/98,
due 5/1/98 (Delivery value $10,302) 10,300
----------------

TOTAL TEMPORARY CASH INVESTMENTS--0.6% $ 156,098
----------------
(Cost $156,098)

TOTAL INVESTMENT SECURITIES--100.0% $26,079,169
================
(Cost $19,056,136)

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS ($ in Thousands)

Contracts Settlement Unrealized
to Sell Date Value Loss
- ---------------------------------------------------------------------

1,354,488,120 NLG 5/29/98 $671,089 $(12,816)
806,420,631 SEK 5/29/98 104,241 (1,949)
------------------------------------
$775,330 $(14,765)
====================================
(Value on Settlement Date $760,565)

Forward foreign currency exchange contracts are used by the portfolio management
team in an effort to protect foreign investments against declines in foreign
currencies. This is also known as hedging. The contracts are called "forward"
because they allow your fund to exchange a foreign currency for U.S. dollars at
a date in the future--and at a price agreed upon when the contract is initially
entered into.

The Schedule of Investments shows (as of the last day of the period):

* the amount of foreign currency bought or sold
* the ending dates of the contracts
* the market value of each contract in U.S. dollars
* the (unrealized or "paper") gain or loss on the contract

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt ORD = Foreign Ordinary Share
FHLMC = Federal Home Loan Mortgage Corporation SEK = Swedish Krona
NLG = Netherlands Guilder
(1) Non-income producing.
(2) Affiliated Company: represents ownership of at least 5% of the voting
securities of the issuer and is, therefore, an affiliate as defined in the
Investment Company Act of 1940. (See Note 5 in Notes to Financial Statements
for a summary of transactions for each issuer which is or was an affiliate
at or during the six months ended April 30, 1998.)
(3) Industry is less than 0.05% of the Fund's total investment securities.
(4) The rate disclosed is the yield to maturity at purchase.

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS -- This schedule shows you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

* the percentage of total investments in each industry

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percent and dollar breakdown of each investment category

* the dollar value of other short-term investments that are considered the same
as cash

See Notes to Financial Statements.

12 1-800-345-2021

Performance--Vista
- --------------------------------------------------------------------------------
<TABLE>
TOTAL RETURNS AS OF APRIL 30, 1998
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 11/25/83) (INCEPTION 10/2/96) (INCEPTION 11/14/96)
RUSSELL 2500 RUSSELL 2500 RUSSELL 2500
VISTA GROWTH VISTA GROWTH VISTA GROWTH

<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) ............ -0.44% 10.04% -0.58% 10.04% -0.30% 10.04%

1 YEAR ................. 26.13% 39.27% 25.79% 39.27% 26.45% 39.27%
- ------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS

3 YEARS ................ 12.41% 21.72% -- -- -- --

5 YEARS ................ 13.31% 18.16% -- -- -- --

10 YEARS ............... 13.71% 14.82% -- -- -- --

LIFE OF FUND ........... 12.42% N/A(2) -4.84% 21.59%(3) -0.08% 19.91%(4)
</TABLE>

(1) Returns for periods less than one year are not annualized.

(2) Benchmark began 1/1/86.

(3) Return from 10/31/96, the date nearest the class's inception for which data
are available.

(4) Return from 11/30/96, the date nearest the class's inception for which data
are available.

See pages 32, 33 and 34 for information about share classes, the Russell 2500
Growth and returns.

These charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see the Total Returns
table above). The chart at left shows the growth of a $10,000 investment in the
fund over 10 years, while the chart below shows the fund's year-by-year
performance. The Russell 2500 Growth is provided for comparison in each chart.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. Vista's total returns include operating expenses (such as
transaction costs and management fees) that reduce returns, while the total
returns of the Russell 2500 Growth do not.

[mountain graph - data below]

GROWTH OF $10,000 OVER 10 YEARS

VISTA RUSSELL 2500 GROWTH
4/30/88 $10,000 $10,000
4/30/89 $12,076 $11,511
4/30/90 $13,896 $11,953
4/30/91 $15,914 $13,967
4/30/92 $18,714 $16,170
4/30/93 $19,356 $17,284
4/30/94 $20,947 $19,769
4/30/95 $25,443 $22,080
4/30/96 $37,507 $30,733
4/30/97 $28,671 $28,588
4/30/98 $36,158 $39,815

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING APRIL 30)

VISTA RUSSELL 2500 GROWTH
4/30/89 20.76 15.11
4/30/90 15.07 3.84
4/30/91 14.52 16.85
4/30/92 17.60 15.77
4/30/93 3.43 6.89
4/30/94 8.22 14.38
4/30/95 21.46 11.69
4/30/96 47.42 39.19
4/30/97 -23.56 -6.98
4/30/98 26.13 39.27

www.americancentury.com 13

Vista--Q&A
- --------------------------------------------------------------------------------

An interview with Glenn Fogle and Arnold Douville, portfolio managers on
the Vista investment team.

HOW DID VISTA PERFORM DURING THE SIX MONTHS ENDED APRIL 30?

Vista was flat for the period with a total return of -0.44%.* Its
benchmark, the Russell 2500 Growth, returned 10.04% for the six-month period.
Our overweighting in energy and technology companies explains much of the
difference. Vista's lighter weighting in financial stocks also hurt its
performance relative to its benchmark, due to the strong performance of this
sector.

Vista has traditionally had a technology flavor because many of these
stocks have very good earnings acceleration. But this sector was hit
indiscriminately by the meltdown among Southeast Asian economies. A few Vista
holdings fell because they do a significant amount of business in Southeast Asia
- -- home to the world's fastest-growing economies until late last year. Most
other holdings fell in sympathy with the market, and many have since rebounded.

Another significant factor hurting performance was the fund's large
weighting in energy service stocks. This industry, which provides services and
equipment to oil and gas companies, was one of the best performing during the
prior six-month period but saw earnings slow in the fourth quarter. Investors
worried that falling oil prices might force energy producers to cut capital
expenditures.

VISTA LAGGED ITS BENCHMARK IN EACH OF THE LAST TWO YEARS ENDED APRIL 30. WHAT
HAVE YOU DONE TO IMPROVE PERFORMANCE?

Vista's returns are not up to either our shareholders' or American
Century's expectations, and the company has taken steps in an effort to enhance
performance. First, as many of you know, Arnie joined the team in December, and
we have added another stock analyst, increasing the resources devoted to the
fund. Second, we have diversified the portfolio to include a broader mix of
industries that are showing earnings and revenue acceleration. In the past, our
stock selections have tended to focus on companies and, in turn, industry
sectors such as technology where earnings growth can be very high. This left the
fund underexposed, relative to its benchmark, in sectors with slower growth but
occasionally better share price performance. Going forward, we shall attempt to
more effectively balance these alternatives and thereby provide shareholders
with returns that are more representative of the benchmark.

In addition, there were instances in 1997 in which we were not as quick as
we could have been in buying companies demonstrating accelerating growth or
eliminating those that had lost their forward progress. We intend to move more
quickly and decisively in response to changes in a company's earnings trends.

We are optimistic that these changes will result in better performance.

IS THIS STRATEGY WORKING?

It worked very well during the period under discussion, although gains from
the stocks we added to during the period were offset by losses on stocks that
have mostly been eliminated from the portfolio. The largest three positions on
April 30 -- USA Waste Services, Stage Stores and Parametric Technology -- also
were the fund's top performers. USA Waste has been a successful

* All fund returns referenced in this interview are for Investor Class shares.

[left margin]

PORTFOLIO AT A GLANCE

4/30/98 10/31/97
NO. OF COMPANIES 72 59

MEDIAN P/E RATIO 27.6 32.1

MEDIAN MARKET $2.06 $1.86
CAPITALIZATION BILLION BILLION

PORTFOLIO TURNOVER 103%(1) 96%(2)

EXPENSE RATIO (FOR
INVESTOR CLASS) 1.00%(3) 1.00%

(1) Six months ended 4/30/98.
(2) Year ended 10/31/97.
(3) Annualized.

Investment terms are defined in the Glossary on page 34.

14 1-800-345-2021

Vista--Q&A (continued)
- --------------------------------------------------------------------------------

consolidator in the solid waste industry, buying many of its competitors and
operating them much more profitably. Stage Stores operates department stores in
smaller towns, growing their sales and profits by sophisticated merchandising
practices. Stage recently bought a bankrupt chain in Texas and Oklahoma and is
implementing its retail formula. Parametric Technology makes computer software
tools that help engineers design cars, planes and industrial equipment. Its
acquisition last year of a financially troubled competitor gave the company a
dominant, fully integrated computer-aided design system.

These all are examples of the type of companies we like. Their growth rates
are not as high as some of the holdings we sold, but they have a growth pattern
that the market has rewarded in recent years -- a lower growth rate with a
sharper upward trend. Investors have preferred these companies because they are
more liquid and their earnings are thought to have greater visibility. In other
words, the earnings appear to be more predictable and the stock is less likely
to be hit as hard when a competitor introduces a new technology or quarterly
earnings fall slightly short of analysts' projections.

WHICH STOCKS OR SECTORS HURT PERFORMANCE?

Green Tree Financial Corp. suffered when it revalued the mortgage-backed
assets it had sold to bond investors. The company's forecasts of the rate at
which mortgage holders would pre-pay their obligations were too low. As interest
rates fell, prepayments rose and Green Tree had to increase its payments to bond
holders to make up for the lost interest payments.

Jabil Circuit benefited in the past from computer makers' desire to
outsource circuit board manufacturing. However, its stock dropped as orders fell
in the wake of the Southeast Asian economic collapse. Asia accounts for about a
quarter of all personal computer sales.

The two groups that hurt performance most were energy services and
biotechnology and research. In each, we repositioned the portfolio in areas
where we thought there were better opportunities. In energy, we continue to hold
companies that provide high-tech drilling equipment and services. But we have
shifted away from companies with significant business on shore and in shallow
waters in favor of those focused on deepwater exploration in the Gulf of Mexico
and the North Sea. There are more independent oil companies working where oil
and gas are cheaper to find, and these customers are more likely to reduce
spending on equipment and services when oil prices are low. In the more
expensive deepwater environment, only the major oil companies are drilling and
demand is still strong. The four- and five-year contracts being awarded to
equipment and technology providers is unprecedented in the 15 years we have
followed the energy industry.

In biotechnology, we realigned holdings to favor companies with good
product pipelines and significant new products on the brink of approval. This
industry has been volatile as speculative investors move in and out of promising
but risky stocks. We see a lot of potential growth here and have maintained our
exposure while selecting stocks that we believe have the highest likelihood of
generating sustainable accelerating growth.

[left margin]

TOP TEN HOLDINGS % OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

USA WASTE SERVICES,
INC. 5.1% 3.6%

STAGE STORES, INC. 4.2% 2.5%

PARAMETRIC TECHNOLOGY
CORP. 3.7% --

ELECTRONIC ARTS INC. 3.7% --

STERIS CORP. 3.7% --

CKE RESTAURANTS, INC. 2.8% 2.0%

ANALOG DEVICES, INC. 2.5% --

EVI, INC. 2.4% --

PETROLEUM GEO-
SERVICES ASA ADR 2.2% 2.2%

AMRESCO, INC. 2.0% --

TOP FIVE INDUSTRIES % OF FUND INVESTMENTS
AS OF AS OF
4/30/98 10/31/97

COMPUTER SOFTWARE &
SERVICES 14.0% 7.4%

ELECTRICAL & ELECTRONIC
COMPONENTS 11.1% 17.2%

ENERGY SERVICES 9.7% 14.1%

BIOTECHNOLOGY 5.8% 7.5%

ENVIRONMENTAL
SERVICES 5.1% 5.2%

www.americancentury.com 15

Vista--Q&A (continued)
- --------------------------------------------------------------------------------

WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE OCTOBER 31, 1997?

As mentioned earlier, we increased the portfolio's diversification. We
still take substantial positions in the fastest growing companies we find, but
we are spreading our investments across a broader array of industries. We hope
this strategy will result in less volatility in the fund's returns.

In terms of specific changes over the last six months, we decreased our
holdings among companies that make components for the computer industry, such as
semiconductor chips and circuit boards, and we increased holdings in software
companies. In addition to Parametric, Electronic Arts is another large holding
in this category. The company makes computer games for such platforms as Sega
Genesis, Nintendo 64 and Sony Playstation. Last year was an expensive year for
computer game enthusiasts because many of them upgraded to the new 64-bit
platforms, which cost about $250. This year, we see pent-up demand for games,
and Electronic Arts has the leading market share in Europe and America, with
such titles as Sim City 2000, Madden NFL Football and Tiger Woods Golf.

YOUR TEAM NOW FOCUSES EXCLUSIVELY ON VISTA. HAS THAT MADE A DIFFERENCE IN
RETOOLING THE PORTFOLIO?

Clearly, the ability of our investment team to focus on Vista has helped us
think through the adjustments and changes we are implementing in an effort to
improve performance. In fact, we think we have made several positive moves in
repositioning the portfolio while staying true to our strategy -- investing in
smaller and mid-cap companies whose earnings are accelerating. As we watch
earnings slow at the largest companies in the S&P 500 -- the companies that
investors have favored for the past three years -- we remain confident that we
are in a market segment that is poised for genuine earnings growth going
forward.

[left margin]

[pie charts]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF APRIL 30, 1998
Foreign Stocks 2.2%
Cash 3.8%
U.S. Stocks 94.0%

AS OF OCTOBER 31, 1997
Foreign Stocks 2.2%
Cash 3.8%
U.S. Stocks 94.0%

16 1-800-345-2021

<TABLE>
<CAPTION>
Vista's Schedule of Investments
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ in Thousands) Value
- -----------------------------------------------------------------------------------------------

COMMON STOCKS

<S> <C> <C>
AEROSPACE & DEFENSE--1.0%

350,000 Gulfstream Aerospace Corp.(1) $ 14,678
----------------------

AUTOMOBILES & AUTO PARTS--1.0%

255,000 PACCAR Inc. 15,077
----------------------

BANKING--4.8%

156,300 Community First Bankshares, Inc. 7,874

320,000 First Security Corp. 7,830

335,000 Golden State Bancorp Inc.(1) 13,065

450,000 Peoples Heritage Financial Group, Inc. 21,769

350,000 Providian Financial Corp. 21,066

61,000 Zions Bancorporation 3,119
----------------------

74,723
----------------------

BIOTECHNOLOGY--5.8%

358,000 COR Therapeutics, Inc.(1) 6,746

500,000 Heska Corp.(1) 6,437

840,700 IDEC Pharmaceuticals Corp.(1)(2) 30,108

280,000 Immunex Corp.(1) 19,233

94,200 PathoGenesis Corp.(1) 3,736

750,000 Protein Design Labs, Inc.(1) 23,742
----------------------

90,002
----------------------

BUILDING & HOME IMPROVEMENTS--0.3%

100,400 American Standard Companies Inc.(1) 4,888
----------------------

BUSINESS SERVICES & SUPPLIES--1.5%

300,000 Cognizant Corp. 15,431

37,200 Metamor Worldwide, Inc.(1) 1,422

460,000 Quanta Services, Inc.(1) 6,756
----------------------

23,609
----------------------

COMMUNICATION EQUIPMENT--1.4%

520,000 Advanced Fibre
Communications, Inc.(1) 22,003
----------------------

COMPUTER PERIPHERALS--2.8%

550,000 FORE Systems, Inc.(1) 12,564

1,100,000 Xylan Corp.(1) 31,316
----------------------

43,880
----------------------

COMPUTER SOFTWARE & SERVICES--14.0%

600,000 At Home Corp. Series A(1) 20,044

300,000 Avant! Corp.(1) 8,681

1,225,000 Electronic Arts Inc.(1) 56,580

250,000 HBO & Co. 14,945

700,000 Hyperion Software Corp.(1)(2) 30,450

790,000 J.D. Edwards & Company(1) 28,243

1,800,000 Parametric Technology Corp.(1) 57,544
----------------------

216,487
----------------------

CONSUMER PRODUCTS--1.6%

490,000 Maytag Corp. 25,235
----------------------

Shares ($ in Thousands) Value
- -----------------------------------------------------------------------------------------------

CONTROL & MEASUREMENT--1.9%

530,000 Credence Systems Corp.(1) $ 14,575

385,000 Teradyne, Inc.(1) 14,052

9,100 Waters Corp.(1) 487
----------------------

29,114
----------------------

ELECTRICAL & ELECTRONIC
COMPONENTS--11.1%

990,000 Analog Devices, Inc.(1) 38,548

403,700 Jabil Circuit, Inc.(1) 14,155

970,000 Level One Communications, Inc.(1) 30,252

345,000 Sanmina Corp.(1)(2) 31,007

540,000 Uniphase Corp.(1) 29,396

500,000 Vitesse Semiconductor Corp.(1) 28,797
----------------------

172,155
----------------------

ENERGY (SERVICES)--9.7%

340,000 Diamond Offshore Drilling, Inc. 17,213

690,000 EVI, Inc.(1) 36,742

109,200 Global Industries, Ltd.(1) 2,474

835,000 Noble Drilling Corp.(1) 26,981

525,000 Petroleum Geo-Services ASA ADR(1) 34,519

417,100 Sante Fe International 16,345

270,000 Transocean Offshore 15,086
----------------------

149,360
----------------------

ENVIRONMENTAL SERVICES--5.1%

1,605,000 USA Waste Services, Inc.(1) 78,745
----------------------

FINANCIAL SERVICES--3.4%

870,000 AMRESCO, INC.(1) 31,483

700,000 Sirrom Capital Corp.(1) 20,912
----------------------

52,395
----------------------

FURNITURE & FURNISHINGS--1.1%

600,000 Furniture Brands International, Inc.(1) 17,625
----------------------

INSURANCE--1.7%

100,000 Ace, Ltd. 3,787

350,000 CMAC Investment Corp. 22,597
----------------------

26,384
----------------------

LEISURE--2.6%

350,000 Avid Technology, Inc.(1) 15,159

1,125,000 Mirage Resorts, Inc.(1) 24,820
----------------------

39,979
----------------------

MACHINERY & EQUIPMENT--0.4%

350,000 TriStar Aerospace Co.(1) 5,775
----------------------

MEDICAL EQUIPMENT & SUPPLIES--4.9%

197,800 AmeriSource Health Corp.(1) 10,780

342,900 Physio-Control International Corp.(1) 7,865

960,000 STERIS Corp.(1) 56,460
----------------------

75,105
----------------------

See Notes to Financial Statements.

www.americancentury.com 17

Vista's Schedule of Investments (continued)
- -------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

Shares ($ in Thousands) Value
- -----------------------------------------------------------------------------------------------

PAPER & FOREST PRODUCTS--3.8%

530,000 Bowater Inc. $ 29,647

270,000 Champion International Corp. 14,529

225,000 Consolidated Papers, Inc. 14,892
----------------------

59,068
----------------------

PHARMACEUTICALS--4.3%

655,000 Bergen Brunswig Corp. Cl A 29,721

830,000 Forest Laboratories, Inc.(1) 30,036

156,100 Jones Medical Industries, Inc. 4,585

102,540 Nutraceuticals International, Inc.(1)(2) 1,862
----------------------

66,204
----------------------

RESTAURANTS--2.8%

1,230,000 CKE Restaurants, Inc. 42,589
----------------------

RETAIL (APPAREL)--4.2%

1,255,000 Stage Stores, Inc.(1) 64,554
----------------------

RETAIL (FOOD & DRUG)--1.3%

910,000 Food Lion, Inc. Cl A 9,242

1,050,000 Food Lion, Inc. Cl B 10,598
----------------------

19,840
----------------------

RETAIL (GENERAL MERCHANDISE)--1.7%

600,000 Meyer (Fred), Inc.(1) 26,925
----------------------

TEXTILES & APPAREL--1.0%

670,000 North Face, Inc. (The)(1)(2) 15,012
----------------------

TRANSPORTATION--1.0%

425,000 USFreightways Corp. 15,167
----------------------

TOTAL COMMON STOCKS--96.2% 1,486,578
----------------------
(Cost $1,251,558)

TEMPORARY CASH INVESTMENTS--3.8%

Repurchase Agreement, Goldman Sachs & Co.,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.48%, dated 4/30/98,
due 5/1/98 (Delivery value $59,509)
(Cost $59,500) $ 59,500
----------------------

TOTAL INVESTMENT SECURITIES--100.0% $1,546,078
======================
(Cost $1,311,058)
</TABLE>

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt
(1) Non-income producing.
(2) Affiliated Company: represents ownership of at least 5% of the voting
securities of the issuer and is, therefore, an affiliate as defined in the
Investment Company Act of 1940. (See Note 5 in Notes to Financial Statements for
a summary of transactions for each issuer which is or was an affiliate at or
during the six months ended April 30, 1998.)

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS -- This schedule shows you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

* the percentage of total investments in each industry

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percent and dollar breakdown of each investment category

* the dollar value of other short-term investments that are considered the
same as cash

See Notes to Financial Statements.

18 1-800-345-2021

Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
APRIL 30, 1998 (UNAUDITED)

ULTRA VISTA
ASSETS
(In Thousands Except Per-Share Amounts)
<S> <C> <C>
Investment securities, at value
(identified cost of $18,652,423
and $1,233,226, respectively) (Note 3) ........................... $ 24,858,235 $ 1,437,639

Investment securities--affiliated, at value
(identified cost of $403,713 and $77,832,
respectively) (Note 5) ........................................... 1,220,934 108,439

Cash ............................................................. 20,357 6,690

Receivable for investments sold .................................. 186,990 64,833

Dividends and interest receivable ................................ 24,625 206
--------------- ---------------
26,311,141 1,617,807
--------------- ---------------
LIABILITIES

Disbursements in excess of demand deposit cash ................... 17,794 3,346

Payable for forward foreign currency exchange contracts .......... 14,765 --

Payable for investments purchased ................................ 194,246 93,466

Payable for capital shares redeemed .............................. 16,767 1,659

Accrued management fees (Note 2) ................................. 21,300 1,253

Distribution fees payable (Note 2) ............................... 14 1

Service fees payable (Note 2) .................................... 14 1

Payable for directors' fees and expenses ......................... 15 1
--------------- ---------------
264,915 99,727
--------------- ---------------

Net Assets ....................................................... $ 26,046,226 $ 1,518,080
=============== ===============

NET ASSETS CONSIST OF:

Capital (par value and paid in surplus) ......................... $ 16,519,888 $ 1,094,366

Undistributed net investment income (loss) ....................... 5,152 (3,567)

Accumulated undistributed net realized gain on

investment and foreign currency transactions ..................... 2,512,915 192,261

Net unrealized appreciation on
investments and translation
of assets and liabilities in foreign
currencies (Note 3) .............................................. 7,008,271 235,020
--------------- ---------------

$26,046,22 $ 1,518,080
=============== ===============

Investor Class, $0.01 Par Value
($ and shares in full)

Net assets ....................................................... $25,967,173,019 $ 1,511,882,235

Shares outstanding ............................................... 808,663,409 111,530,659

Net asset value per share ........................................ $ 32.11 $ 13.56

Advisor Class, $0.01 Par Value
($ and shares in full)

Net assets ....................................................... $ 77,542,595 $ 6,113,594

Shares outstanding ............................................... 2,417,132 452,434

Net asset value per share ........................................ $ 32.08 $ 13.51

Institutional Class, $0.01 Par Value
($ and shares in full)

Net assets ....................................................... $ 1,510,257 $ 83,965

Shares outstanding ............................................... 46,996 6,169

Net asset value per share ........................................ $ 32.14 $ 13.61
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF ASSETS AND LIABILITIES -- This page details what
the fund owns (assets), what it owes (liabilities), and its net assets as of the
last day of the period. If you subtract what the fund owes from what it owns,
you get the fund's net assets. The net assets by class divided by the number of
shares outstanding by class gives you the price of an individual share, or the
net asset value per share -- for each class of shares.

NET ASSETS are also broken out by capital (money invested by shareholders),
income (or loss) not yet paid to shareholders, gains earned but not yet paid to
shareholders (known as realized gains); and gains or losses on securities still
owned by the fund (known as unrealized gains or losses). This breakout tells you
the value of net assets that are performance-related, such as income and
investment gains or losses, and the value of net assets that are not related to
performance, such as shareholder investments and redemptions.

See Notes to Financial Statements.

www.americancentury.com 19

Statements of Operations
- --------------------------------------------------------------------------------

<TABLE>
FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
ULTRA VISTA
INVESTMENT INCOME (LOSS) (In Thousands)

Income:
<S> <C> <C>
Dividends (net of foreign taxes withheld
of $1,326 and $0, respectively) .............. $ 108,411 $ 1,625

Interest ..................................... 9,685 2,907
----------- -----------
118,096 4,532
----------- -----------

Expenses (Note 2):

Management fees .............................. 116,237 8,074

Distribution fees -- Advisor Class ........... 59 8

Service fees -- Advisor Class ................ 59 8

Directors' fees and expenses ................. 128 9
----------- -----------
116,483 8,099
----------- -----------
Net investment income (loss) ................. 1,613 (3,567)
----------- -----------

REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)

Net realized gain on:
Investments (includes $300,727 and
$65,254, respectively, from affiliates) ..... 2,494,693 196,322

Foreign currency transactions ................ 50,643 --
----------- -----------
2,545,336 196,322
----------- -----------

Change in net unrealized appreciation on:

Investments .................................. 2,087,813 (213,552)

Translation of assets and liabilities
in foreign currencies ........................ (8,647) --
----------- -----------
2,079,166 (213,552)
----------- -----------

Net realized and unrealized gain
(loss) on investments ........................ 4,624,502 (17,230)
----------- -----------

Net Increase (Decrease) in Net
Assets Resulting from Operations ............. $ 4,626,115 $ (20,797)
=========== ===========
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF OPERATIONS -- These statements break out how
each fund's net assets changed during the period as a result of the fund's
operations. This page tells you how much money the fund made or lost after
taking into account income, fees and expenses, and investment gains or losses.
It does not include shareholder transactions and distributions.

Fund OPERATIONS include:

* income earned from investments (dividends and interest)
* management fees and expenses
* gains or losses from selling investments (known as realized gains or losses)
* gains or losses on current fund holdings (known as unrealized gains or losses

See Notes to Financial Statements.

20 1-800-345-2021

Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

<TABLE>
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 1997

ULTRA VISTA
Increase (Decrease) in Net Assets: 1998 1997 1998 1997

OPERATIONS (In Thousands)

<S> <C> <C> <C> <C>
Net investment income (loss) ............ $ 1,613 $ 7,130 $ (3,567) $ (14,409)

Net realized gain on
investments and
foreign currency transactions ........... 2,545,336 4,609,668 196,322 96,402

Change in net unrealized
appreciation on
investments and translation
of assets and
liabilities in foreign currencies ....... 2,079,166 (1,018,159) (213,552) (87,061)
---------- ---------- --------- ---------

Net increase (decrease)
in net assets resulting
from operations ......................... 4,626,115 3,598,639 (20,797) (5,068)
---------- ---------- --------- ---------

DISTRIBUTIONS TO SHAREHOLDERS

From net investment income:

Investor Class ....................... (8,662) -- -- --

Institutional Class .................. (1) -- -- --

From net realized gains from
investment transactions:

Investor Class ....................... (4,593,554) (1,044,611) (98,425) (168,260)

Advisor Class ........................ (6,944) (778) (378) (449)

Institutional Class .................. (73) (547) (750) (225)
---------- ---------- --------- ---------

Decrease in net assets from distributions (4,609,234) (1,045,936) (99,553) (168,934)
---------- ---------- --------- ---------
CAPITAL SHARE TRANSACTIONS (NOTE 4)

Net increase (decrease) in
net assets from capital
share transactions ...................... 4,303,429 894,267 (209,792) (259,254)
---------- ---------- --------- ---------

Net increase (decrease)
in net assets ........................... 4,320,310 3,446,970 (330,142) (433,256)

NET ASSETS

Beginning of period ..................... 21,725,916 18,278,946 1,848,222 2,281,478
---------- ---------- --------- ---------

End of period ........................... $ 26,046,226 $ 21,725,916 $ 1,518,080 $ 1,848,222
============ ============ ============ ============

Undistributed net investment
income (loss) ........................... $ 5,152 $ 12,202 $ (3,567) --
============ ============ ============ ============
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS -- These statements show
how each fund's net assets changed over the past two reporting periods. They
detail how much a fund grew or shrank as a result of:

* performance

* distributions to shareholders

* shareholders investing or reinvesting distributions or withdrawing money

The changes are broken out into:

* operations--a summary of the Statements of Operations from the previous page
for the most recent period

* distributions--income and gains distributed to shareholders

* share transactions--shareholders' purchases, reinvestment of distributions
and redemptions

These statements also take net assets at the beginning of the period to the end
of the period.

See Notes to Financial Statements.

www.americancentury.com 21

Notes to Financial Statements
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century--Twentieth Century Ultra Fund
(Ultra) and American Century--Twentieth Century Vista Fund (Vista) (the Funds)
are two of the thirteen series of funds issued by the Corporation. The Funds'
investment objective is to seek capital growth by investing primarily in equity
securities. The Funds are authorized to issue three classes of shares: the
Investor Class, the Advisor Class, and the Institutional Class. The three
classes of shares differ principally in their respective shareholder servicing
and distribution expenses and arrangements. All shares of each Fund represent an
equal pro rata interest in the assets of the class to which such shares belong,
and have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except for class specific expenses and exclusive rights to
vote on matters affecting only individual classes. The following significant
accounting policies, related to all classes of the Funds, are in accordance with
accounting policies generally accepted in the investment company industry.

SECURITY VALUATIONS -- Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. Debt securities are
valued through a commercial pricing service. When valuations are not readily
available, securities are valued at fair value as determined in accordance with
procedures adopted by the Board of Directors.

Net realized foreign currency exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability amounts
initially stated in foreign currencies and the U.S. dollar value of the amounts
actually received or paid. Net unrealized foreign currency exchange gains or
losses arise from changes in the value of assets and liabilities, other than
investment securities, resulting from changes in the exchange rates.

Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of investment securities are a component of
realized gain (loss) on investments and unrealized appreciation (depreciation)
on investments, respectively.

22 1-800-345-2021

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

transfer uninvested cash balances into a joint trading account. These balances
are invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Agency obligations.

DISTRIBUTIONS TO SHAREHOLDERS -- Distribu-tions to shareholders are
recorded on the ex- dividend date. Distributions from net investment income and
net realized gains are declared and paid annually.

ADDITIONAL INFORMATION -- Effective January 15, 1998, Funds Distributor,
Inc. (FDI) became the Corporation's distributor. Certain officers of FDI are
also officers of the Corporation.

- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The Corporation has entered into a Management Agreement with ACIM that
provides the Funds with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreement provides that all
expenses of the Funds, except brokerage commissions, taxes, interest, expenses
of those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on each Fund's class average daily closing net assets during the previous month.
The annual management fee for each class is 1.00%, 0.75% and 0.80% for the
Investor, Advisor, and Institutional Classes, respectively.

The Board of Directors has adopted the Advisor Class Master Distribution
and Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Plan provides that the Funds will pay ACIM
an annual distribution fee equal to 0.25% and service fee equal to 0.25%. The
fees are computed daily and paid monthly based on the Advisor Class's average
daily closing net assets during the previous month. The distribution fee
provides compensation for distribution expenses incurred in connection with
distributing shares of the Advisor Class including, but not limited to, payments
to brokers, dealers, and financial institutions that have entered into sales
agreements with respect to shares of the Funds. The service fee provides
compensation for shareholder and administrative services rendered by ACIM, its
affiliates or independent third party providers. Fees incurred under the Plan
during the six months ended April 30, 1998, were $117,173 for Ultra and $15,212
for Vista.

Certain officers and directors of the Corpora-tion are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, the
Corporation's transfer agent, American Century Services Corporation, and the
registered broker-dealer, American Century Investment Services, Inc.

- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases of investment securities, excluding short-term investments, for
Ultra and Vista totaled $14,851,382,636 and $1,593,032,044, respectively. Sales
of investment securities, excluding short-term investments, totaled
$14,739,333,153 and $1,872,643,949, respectively.

As of April 30, 1998, accumulated net unrealized appreciation for Ultra and
Vista was $6,991,889,551 and $230,999,079, respectively, based on the aggregate
cost of investments for federal income tax purposes of $19,087,279,842 and
$1,315,079,107, respectively. Accumulated net unrealized appreciation consisted
of unrealized appreciation of $7,011,136,637 and $253,295,404 for Ultra and
Vista, respectively, and unrealized depreciation of $19,247,086 and $22,296,325,
respectively.

www.americancentury.com 23

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS

There are 750,000,000 shares of the Investor Class, 312,500,000 shares of
the Advisor Class, and 125,000,000 shares of the Institutional Class authorized
for issuance in Ultra. There are 500,000,000 shares of the Investor Class,
210,000,000 shares of the Advisor Class, and 80,000,000 shares of the
Institutional Class authorized for issuance in Vista. Transactions in shares of
the Funds were as follows:
<TABLE>

ULTRA VISTA
SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS
(IN THOUSANDS)

Six months ended April 30, 1998
<S> <C> <C> <C> <C>
Sold ........................... 110,691 $ 3,365,748 52,234 $ 680,156
Issued in reinvestment of
distributions ................ 170,507 4,526,261 7,926 95,322
Redeemed ....................... (120,852) (3,632,996) (74,454) (973,892)
----------- ----------- ----------- -----------

Net increase (decrease) ........ 160,346 $ 4,259,013 (14,294) $ (198,414)
=========== =========== =========== ===========

Year ended
October 31, 1997

Sold ........................... 189,167 $ 5,961,963 77,210 $ 1,099,918
Issued in reinvestment of
distributions ................ 35,345 1,024,466 11,437 164,509
Redeemed ....................... (194,910) (6,109,186) (107,997) (1,538,006)
----------- ----------- ----------- -----------

Net increase (decrease) ........ 29,602 $ 877,243 (19,350) $ (273,579)
=========== =========== =========== ===========

ADVISOR CLASS
(IN THOUSANDS)

Six months ended April 30, 1998
Sold ........................... 1,699 $ 50,977 98 $ 1,302
Issued in reinvestment of
distributions ................ 261 6,944 32 378
Redeemed ....................... (467) (14,041) (129) (1,672)
----------- ----------- ----------- -----------

Net increase ................... 1,493 $ 43,880 1 $ 8
=========== =========== =========== ===========

Year ended
October 31, 1997

Sold ........................... 793 $ 25,705 389 $ 5,265
Issued in reinvestment of
distributions ................ 27 778 31 449
Redeemed ....................... (338) (10,568) (328) (4,446)
----------- ----------- ----------- -----------

Net increase ................... 482 $ 15,915 92 $ 1,268
=========== =========== =========== ===========

INSTITUTIONAL CLASS
(IN THOUSANDS)

Six months ended April 30, 1998
Sold ........................... 1,348 $ 40,244 996 $ 12,294
Issued in reinvestment of
distributions ................ 2 49 62 750
Redeemed ....................... (1,313) (39,757) (1,985) (24,430)
----------- ----------- ----------- -----------

Net increase (decrease) ........ 37 $ 536 (927) $ (11,386)
=========== =========== =========== ===========

November 14, 1996(1)
through October 31, 1997

Sold ........................... 334 $ 10,284 1,145 $ 15,662
Issued in reinvestment of
distributions ................ 19 547 16 226
Redeemed ....................... (343) (9,722) (228) (2,831)
----------- ----------- ----------- -----------

Net increase ................... 10 $ 1,109 933 $ 13,057
=========== =========== =========== ===========
</TABLE>

(1) Commencement of sale of the Institutional Class.

24 1-800-345-2021

Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------

APRIL 30, 1998 (UNAUDITED)

- --------------------------------------------------------------------------------
5. AFFILIATED COMPANY TRANSACTIONS

A summary of transactions for each issuer which is or was an affiliate at or
during the period ended April 30, 1998, follows:

<TABLE>

APRIL 30, 1998
SHARE BALANCE PURCHASE SALES REALIZED
FUND/ISSUER 10/31/97 COST COST GAIN (LOSS) INCOME SHARE BALANCE MARKET VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
ULTRA
- ------------------------------------------------------------------------------------------------------------------------------------
($ in Thousands)

<S> <C> <C> <C> <C>
Altera Corp. 4,732,000 $ 12,211 $214,620 $ (25,109) -- -- --

America Online Inc. 6,059,300 34,788 111,518 62,970 -- 9,898,400(1) $791,872

BMC Software, Inc. 3,550,000 13,342 50,329 40,922 -- 2,305,000 215,589

Chancellor Media Corp.(2) 1,700,000 -- 8,204 14,197 -- 2,725,000(1) 129,182

Starbucks Corp. 900,000 -- 13,496 16,017 -- -- --

Sun Microsystems, Inc. 6,800,600 -- 69,739 215,006 -- -- --

Tel-Save Holdings, Inc. -- 67,932 -- -- -- 3,700,000 84,291

Teva Pharmaceutical
Industries Ltd. ADR 2,450,000 -- 133,342 (23,276) $164 -- --
------------------------------------------------- -------------
$128,273 $601,248 $300,727 $164 $1,220,934
================================================= =============

- ------------------------------------------------------------------------------------------------------------------------------------
VISTA
- ------------------------------------------------------------------------------------------------------------------------------------
($ in Thousands)

Brightpoint, Inc.(1) 1,350,000 -- $29,277 $ 18,104 -- -- --

Comverse Technology, Inc. 750,000 -- 21,844 4,322 -- -- --

Dura Pharmaceuticals, Inc. 425,000 $ 5,835 10,975 4,190 -- -- --

Hyperion Software Corp. 1,400,000 3,625 19,386 13,001 -- 700,000 $30,450

IDEC Pharmaceuticals Corp. 650,000 15,436 8,093 2,172 -- 840,700 30,108

Medicis Pharmaceutical Corp. 810,000 -- 28,926 8,657 -- -- --

North Face, Inc. (The) -- 17,602 -- -- -- 670,000 15,012

Nutraceuticals
International, Inc. -- 4,589 2,661 (154) -- 102,540 1,862

P-COM, Inc. 2,100,000 -- 30,246 9,003 -- -- --

Sanmina Corp. 770,000 17,515 35,495 5,959 -- 345,000 31,007
------------------------------------------------- -------------
$64,602 $186,903 $65,254 -- $108,439
================================================= =============
</TABLE>

(1) Includes adjustments for shares received from stock split and/or stock
spinoff during the period.

(2) Formerly known as Evergreen Media Corporation.

www.americancentury.com 25

Ultra's Financial Highlights
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

<TABLE>
Investor Class
1998(1) 1997 1996 1995 1994 1993
PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period ....... $ 33.46 $ 29.52 $ 28.03 $ 21.16 $ 21.61 $ 15.46
------------ ------------ ------------ ------------ ------------ ------------

Income From
Investment Operations

Net Investment
Income (Loss) ........... --(2) 0.01(2) (0.05)(2) (0.07)(2) (0.03) (0.09)

Net Realized and
Unrealized Gain (Loss) on
Investment Transactions . 5.73 5.62 2.84 7.58 (0.42) 6.24
------------ ------------ ------------ ------------ ------------ ------------

Total From
Investment Operations ... 5.73 5.63 2.79 7.51 (0.45) 6.15
------------ ------------ ------------ ------------ ------------ ------------

Distributions

From Net
Investment Income ....... (0.01) -- -- -- -- --

From Net Realized
Gains on
Investment Transactions . (7.07) (1.69) (1.19) (0.64) -- --

Distributions in Excess
of Net Realized Gains ... -- -- (0.11) -- -- --
------------ ------------ ------------ ------------ ------------ ------------

Total Distributions ..... (7.08) (1.69) (1.30) (0.64) -- --
------------ ------------ ------------ ------------ ------------ ------------

Net Asset Value,
End of Period ............. $ 32.11 $ 33.46 $ 29.52 $ 28.03 $ 21.16 $ 21.61
============ ============ ============ ============ ============ ============

Total Return(3) ......... 21.58% 19.95% 10.79% 36.89% (2.08)% 39.78%

RATIOS/SUPPLEMENTAL DATA

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

Ratio of Net Investment
Income to Average
Net Assets ................ 0.02%(4) 0.03% (0.20)% (0.30)% (0.10)% (0.60)%

Portfolio Turnover Rate ... 63% 107% 87% 87% 78% 53%

Average Commission Paid
per Share of Equity
Security Traded ........... $ 0.0422 $ 0.0398 $ 0.0350 $ 0.0330 --(5) --(5)

Net Assets, End of
Period (in millions) ...... $ 25,967 $ 21,695 $ 18,266 $ 14,376 $ 10,344 $ 8,037
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.

(5) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended October 31, 1995.

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS -- This page itemizes what contributed to
the class's change in share price during the period, and compares this to
changes over the last five fiscal years (or less, if the class is not five years
old).

On a per-share basis, it includes:

* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period

It also includes some key statistics for the period:

See Notes to Financial Statements.

26 1-800-345-2021

Ultra's Financial Highlights (continued)
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

Advisor Class
1998(1) 1997 1996(2)
PER-SHARE DATA

Net Asset Value,
Beginning of Period .............. $ 33.36 $ 29.52 $ 29.55
--------- --------- ---------

Income From
Investment Operations

Net Investment Loss(3) ......... (0.04) (0.07) (0.02)

Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ........ 5.74 5.60 (0.01)
--------- --------- ---------

Total From
Investment Operations .......... 5.70 5.53 (0.03)
--------- --------- ---------

Distributions

From Net Realized
Gains on
Investment Transactions ........ (6.98) (1.69) --
--------- --------- ---------

Net Asset Value,
End of Period .................... $ 32.08 $ 33.36 $ 29.52
========= ========= =========

Total Return(4) ................ 21.48% 19.59% (0.10)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating
Expenses to Average
Net Assets ....................... 1.25%(5) 1.25% 1.25%(5)

Ratio of Net Investment
Income to Average
Net Assets ....................... (0.23)%(5) (0.22)% (0.80)%(5)

Portfolio Turnover Rate .......... 63% 107% 87%

Average Commission Paid
per Share of Equity
Security Traded .................. $ 0.0422 $ 0.0398 $ 0.0350

Net Assets, End of
Period (in millions) ............. $ 78 $ 31 $ 13

(1) Six months ended April 30, 1998 (unaudited).

(2) October 2, 1996 (commencement of sale) through October 31, 1996.

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

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

(5) Annualized.

See Notes to Financial Statements.

www.americancentury.com 27

Ultra's Financial Highlights (continued)
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED

Institutional Class
1998(1) 1997(2)
PER-SHARE DATA

Net Asset Value, Beginning of Period ......... $ 33.53 $ 30.78
----------- -----------

Income From Investment Operations

Net Investment Income(3) .................. 0.02 0.06

Net Realized and Unrealized Gain on
Investment Transactions ................... 5.75 4.38
----------- -----------

Total From Investment Operations .......... 5.77 4.44
----------- -----------

Distributions

From Net Investment Income ................ (0.09) --

From Net Realized Gains on
Investment Transactions ................... (7.07) (1.69)
----------- -----------

Total Distributions ....................... (7.16) (1.69)
----------- -----------

Net Asset Value, End of Period ............... $ 32.14 $ 33.53
=========== ===========

Total Return(4) ........................... 21.71% 15.28%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average
Net Assets ................................... 0.80%(5) 0.80%(5)

Ratio of Net Investment Income to Average
Net Assets ................................... 0.22%(5) 0.23%(5)

Portfolio Turnover Rate ...................... 63% 107%

Average Commission Paid per Share of Equity
Security Traded .............................. $ 0.0422 $ 0.0398

Net Assets, End of Period (in thousands) ..... $ 1,510 $ 334

(1) Six months ended April 30, 1998 (unaudited).

(2) November 14, 1996 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.

See Notes to Financial Statements.

28 1-800-345-2021

Vista's Financial Highlights
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

<TABLE>
Investor Class
1998(1) 1997 1996 1995 1994 1993
PER-SHARE DATA

Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period ............ $14.53 $15.68 $15.73 $10.94 $12.24 $11.01
------ ------ ------ ------ ------ ------

Income From
Investment Operations

Net Investment Loss .........(0.03)(2) (0.10)(2) (0.11)(2) (0.08)(2) (0.08) (0.07)

Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ..... (0.14) 0.13 1.09 4.90 0.45 1.95
------ ------ ------ ------ ------ ------

Total From
Investment Operations ....... (0.17) 0.03 0.98 4.82 0.37 1.88
------ ------ ------ ------ ------ ------

Distributions

From Net Realized Gains on
Investment Transactions ..... (0.80) (1.18) (1.02) (0.03) (1.66) (0.64)

Distributions in Excess
of Net Realized Gains ....... -- -- (0.01) -- (0.01) (0.01)
------ ------ ------ ------ ------ ------

Total Distributions ......... (0.80) (1.18) (1.03) (0.03) (1.67) (0.65)
------ ------ ------ ------ ------ ------

Net Asset Value,
End of Period .................. $13.56 $14.53 $15.68 $15.73 $10.94 $12.24
====== ====== ====== ====== ====== ======

Total Return(3) ............. (0.44)% 0.29% 6.96% 44.20% 4.16% 17.71%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating
Expenses to Average
Net Assets ..................... 1.00%(4) 1.00% 0.99% 0.98% 1.00% 1.00%

Ratio of Net Investment
Income to Average
Net Assets .....................(0.44)%(4) (0.73)% (0.70)% (0.60)% (0.80)% (0.60)%

Portfolio Turnover Rate ........ 103% 96% 91% 89% 111% 133%

Average Commission Paid
per Share of Equity
Security Traded ................ $0.0308 $0.0292 $0.0280 $0.0330 --(5) --(5)

Net Assets, End of
Period (in millions) ........... $1,512 $1,828 $2,276 $1,676 $792 $847
</TABLE>

(1) Six months ended April 30, 1998 (unaudited).

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

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

(4) Annualized.

(5) Disclosure of average commission paid per share of equity security traded
was not required prior to the year ended October 31, 1995.

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS -- This page itemizes what contributed to
the class's change in share price during the period, and compares this to
changes over the last five fiscal years (or less, if the class is not five years
old).

On a per-share basis, it includes:

* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period

It also includes some key statistics for the period:

See Notes to Financial Statements.

www.americancentury.com 29

Vista's Financial Highlights (continued)
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

Advisor Class
1998(1) 1997 1996(2)
PER-SHARE DATA

Net Asset Value,
Beginning of Period .............. $ 14.50 $ 15.67 $ 16.87
--------- --------- ---------

Income From
Investment Operations

Net Investment Loss(3) ......... (0.05) (0.14) (0.02)

Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ........ (0.14) 0.15 (1.18)
--------- --------- ---------

Total From
Investment Operations ............ (0.19) 0.01 (1.20)
--------- --------- ---------

Distributions

From Net Realized Gains on
Investment Transactions ........ (0.80) (1.18) --
--------- --------- ---------

Net Asset Value,
End of Period .................... $ 13.51 $ 14.50 $ 15.67
========= ========= =========

Total Return(4) ................ (0.58)% 0.15% (7.11)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating
Expenses to Average
Net Assets ....................... 1.25%(5) 1.25% 1.25%(5)

Ratio of Net Investment
Income to Average
Net Assets ....................... (0.69)%(5) (0.98)% (1.20)%(5)

Portfolio Turnover Rate .......... 103% 96% 91%

Average Commission
Paid per Share of Equity
Security Traded .................. $ 0.0308 $ 0.0292 $ 0.0280

Net Assets, End of
Period (in millions) ............. $ 6 $ 7 $ 6

(1) Six months ended April 30, 1998 (unaudited).

(2) October 2, 1996 (commencement of sale) through October 31, 1996.

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

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

(5) Annualized.

See Notes to Financial Statements.

30 1-800-345-2021

Vista's Financial Highlights (continued)
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED

Institutional Class
1998(1) 1997(2)
PER-SHARE DATA

Net Asset Value, Beginning of Period .... $ 14.56 $ 15.73
------------ ------------

Income From Investment Operations

Net Investment Loss(3) ............... (0.01) (0.07)

Net Realized and
Unrealized Gain (Loss) on
Investment Transactions .............. (0.14) 0.08
------------ ------------

Total From Investment Operations ..... (0.15) 0.01
------------ ------------

Distributions

From Net Realized Gains on
Investment Transactions .............. (0.80) (1.18)
------------ ------------

Net Asset Value, End of Period .......... $ 13.61 $ 14.56
============ ============

Total Return(4) ...................... (0.30)% 0.17%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ................... 0.80%(5) 0.80%(5)

Ratio of Net Investment
Income to Average
Net Assets .............................. (0.24)%(5) (0.53)%(5)

Portfolio Turnover Rate ................. 103% 96%

Average Commission Paid
per Share of Equity
Security Traded ......................... $ 0.0308 $ 0.0292

Net Assets, End of
Period (in thousands) ................... $ 84 $ 13,581

(1) Six months ended April 30, 1998 (unaudited).

(2) November 14, 1996 (commencement of sale) through October 31, 1997.

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

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

(5) Annualized.

See Notes to Financial Statements.

www.americancentury.com 31

Share Class and Retirement Account Information
- --------------------------------------------------------------------------------

SHARE CLASSES

In addition, there is an ADVISOR CLASS, which is sold through banks,
broker-dealers, insurance companies and financial advisors. Advisor Class shares
are subject to a 0.50% Rule 12b-1 service and distribution fee. Half of that fee
is available to pay for recordkeeping and administrative services, and half is
available to pay for distribution services provided by the financial
intermediary through which the Advisor Class shares are purchased. The total
expense ratio of the Advisor Class shares is 0.25% higher than the total expense
ratio of the Investor Class shares.

All classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.

RETIREMENT ACCOUNT INFORMATION

32 1-800-345-2021

Background Information
- --------------------------------------------------------------------------------

INVESTMENT PHILOSOPHY AND POLICIES

In addition to these principles, each fund has its own investment policies:

TWENTIETH CENTURY ULTRA generally invests in the securities of mid-sized
and larger companies that exhibit growth. It will typically have significant
price fluctuations.

TWENTIETH CENTURY VISTA invests mainly in the securities of smaller and
medium-sized firms that exhibit growth. The fund is subject to significant price
volatility but offers high long-term growth potential.

COMPARATIVE INDICES

The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.

The S&P 500 is a capitalization-weighted index of the stocks of 500
publicly traded U.S. companies that are considered to be leading firms in
dominant industries. Created by Standard & Poor's Corporation, it is considered
to be a broad measure of U.S. stock market performance.

The S&P MIDCAP 400 is a capitalization-weighted index of the stocks of the
400 largest leading U.S. companies not included in the S&P 500. Created by
Standard & Poor's Corporation, it is considered to represent the performance of
mid-cap stocks generally.

The RUSSELL 2000 INDEX was created by the Frank Russell Company. It
measures the performance of the 2,000 smallest of the 3,000 largest publicly
traded U.S. companies based on total market capitalization. The Russell 2000
represents approximately 10% of the total market capitalization of the top 3,000
companies. The average market capitalization of the index is approximately $420
million.

The RUSSELL 2500 INDEX was created by the Frank Russell Company. It
measures the performance of the 2,500 smallest of the 3,000 largest publicly
traded U.S. companies based on total market capitalization. The Russell 2500
represents approximately 23% of the total market capitalization of the top 3,000
companies. The average market capitalization of the index is approximately $650
million. The RUSSELL 2500 GROWTH INDEX measures the performance of those Russell
2500 companies with higher price-to-book ratios and higher forecasted growth
rates.

[right margin]

INVESTMENT TEAM LEADERS

ULTRA
- -------------------------------------------
PORTFOLIO MANAGER: JIM STOWERS III
PORTFOLIO MANAGER: BRUCE WIMBERLY
PORTFOLIO MANAGER: JOHN SYKORA, CFA

VISTA
- -------------------------------------------
PORTFOLIO MANAGER: GLENN FOGLE, CFA
PORTFOLIO MANAGER: ARNOLD DOUVILLE

www.americancentury.com 33

Glossary
- --------------------------------------------------------------------------------

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year total returns, please refer to the "Financial
Highlights" on pages 26-31.

PORTFOLIO STATISTICS

* NUMBER OF COMPANIES-- the number of different companies held by a fund on a
given date.

* PRICE/EARNINGS (P/E) RATIO-- a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)

* EXPENSE RATIO-- the operating expenses of the fund, expressed as a percentage
of average net assets. Share-holders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)

TYPES OF STOCKS

* CYCLICAL STOCKS-- generally considered to be stocks whose price and earnings
fluctuations tend to follow the ups and downs of the business cycle. Examples
include the stocks of automobile manufacturers, steel producers and textile
operators.

* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS -- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P 400.

* VALUE STOCKS-- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

STATISTICAL TERMINOLOGY

34 1-800-345-2021

Notes
- --------------------------------------------------------------------------------

www.americancentury.com 35

Notes
- --------------------------------------------------------------------------------

36 1-800-345-2021

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American
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INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
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1-800-634-4113 OR 816-444-3485

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY MUTUAL FUNDS INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

THIS REPORT AND THE STATEMENTS IT
CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE
REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.

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[back cover]

[40 Years logo]
Four Decades of Serving Investors
American Century
1958-1998

American Century Investments
P.O. Box 419200
Kansas City, MO 64141-6200
www.americancentury.com

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9806 (c)1998 American Century Services Corporation
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