AMERICAN CENTURY MUTUAL FUNDS, INC.
PROSPECTUS SUPPLEMENT
Limited-Term Bond - Intermediate-Term Bond - Bond
Investor Class - Advisor Class
SUPPLEMENT DATED DECEMBER 24, 1998
Prospectus dated March 1, 1998
The seventh paragraph on page 8 of the Investor Class Prospectus and page 10 of
the Advisor Class Prospectus under the heading "LIMITED-TERM BOND,
INTERMEDIATE-TERM BOND AND BOND" is replaced with the following:
Under normal market conditions, each fund will maintain at least 65% of the
value of its total assets in investment-grade bonds and other debt instruments
(for example, securities rated in the four highest categories by an independent
rating organization). In addition, up to 15% of a fund's assets may be invested
in securities rated in the fifth highest category, or determined to be of
comparable quality by the fund's manager. The remainder of the fund's assets
will be invested in short-term money market instruments. For temporary defensive
purposes, 100% of a fund's assets may be invested in money market instruments.
In the same section of the Prospectus, the following new paragraph is inserted
as the tenth paragraph of the section:
Each fund may invest up to 15% of its assets in securities rated in the
fifth highest category by an independent rating organization (for example, at
least Ba by Moody's or BB by S&P), or determined to be of comparable quality by
the fund's manager. A Ba rating by Moody's indicates that the bonds have some
speculative characteristics. A BB rating by S&P indicates that the security
faces major uncertainties or exposure to adverse business, financial or economic
conditions that could lead to inadequate capacity to meet timely interest and
principal payments.
The following disclosure is added to the PROSPECTUS under the heading
"Management" following the subsection "Transfer and Administrative Services on
page 24 of the Investor Class Prospectus and page 20 of the Advisor Class
Prospectus."
YEAR 2000 ISSUES
Many of the world's computer systems currently cannot properly recognize or
process date-sensitive information relating to the Year 2000 and beyond. Because
this may impact the computer systems of various American Century-affiliated and
external service providers for the funds, American Century formally initiated a
Year 2000 readiness project in July 1997. It involves a team of information
technology professionals assisted by outside consultants and guided by a
senior-level steering committee. The team's goal is to assess the impact of the
Year 2000 on American Century's systems, renovate or replace noncompliant
critical systems and test those systems. In addition, the team has been working
to gather information about the Year 2000 efforts of the funds' other major
service providers. Although American Century believes its critical systems will
function properly in the Year 2000, this is not guaranteed. If the efforts of
American Century or its external service providers are not successful, the
funds' business, particularly the provision of shareholder services, may be
hampered.
In addition, the issuers of securities the funds own could have Year 2000
computer problems. These problems could negatively affect the value of their
securities, which, in turn, could impact the funds' performance. The manager has
established a process to gather publicly available information about the Year
2000 readiness of these issuers. However, this process may not uncover all
relevant information, and the information gathered may not be complete and
accurate. Moreover, an issuer's Year 2000 readiness is only one of many factors
the manager may consider when making investment decisions, and other factors may
receive greater weight.
SH-SPL-15078 9812
P.O. Box 419200
Kansas City, Missouri
64141-6200
1-800-345-2021 or 816-531-5575
[american century logo(reg.sm)]
American Century
