PROSPECTUS SUPPLEMENT
AMERICAN CENTURY MUTUAL FUNDS, INC.
PROSPECTUS SUPPLEMENT
FUNDAMENTAL EQUITY FUND
SUPPLEMENT DATED JUNE 13, 2008 * PROSPECTUS DATED MARCH 1, 2008
THE FOLLOWING REPLACES THE What are the fund's primary investment strategies and
principal risks? SECTION ON PAGE 2 OF THE PROSPECTUS.
WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
The fund will generally invest in larger-sized companies using a
quantitative model that combines fundamental measures of a stock's value
and growth potential. The portfolio managers attempt to build a portfolio
of stocks that provides better returns than, and a dividend yield
comparable to, the S&P 500® Index, without taking on significant
additional risk.
The fund's principal risks include
* STYLE RISK - If at any time the market is not favoring the fund's
investment process, the fund's gains may not be as big as, or its
losses may be bigger than, other equity funds using different
investment styles.
* BENCHMARK CORRELATION - The fund's performance will be tied to the
performance of its benchmark. If the fund's benchmark goes down, it is
likely that the fund's performance will go down.
* FOREIGN SECURITIES - The fund may invest in foreign securities, which
can be riskier than investing in U.S. securities.
* IPO RISK - Although the fund's performance has historically benefited
from investments in initial public offerings (IPOs), future IPO
exposure likely will be limited by the fund's investment process.
* PORTFOLIO TURNOVER - The fund's PORTFOLIO TURNOVER may be high. This
could result in relatively high commission costs, which could hurt the
fund's performance, and capital gains tax liabilities for the fund's
shareholders.
* PORTFOLIO TURNOVER IS A MEASURE OF HOW FREQUENTLY A FUND BUYS
AND SELLS PORTFOLIO SECURITIES.
* MARKET RISK - The value of the fund's shares will go up and down based
on the performance of the companies whose securities it owns and other
factors generally affecting the securities market.
* PRINCIPAL LOSS - At any given time your shares may be worth less than
the price you paid for them. In other words, it is possible to lose
money by investing in the fund.
A more detailed description of the fund's investment strategies and risks
may be found under the heading OBJECTIVES, STRATEGIES AND RISKS, which
begins on page 8.
* AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT, AND IT IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
OR ANY OTHER GOVERNMENT AGENCY.
THE FOLLOWING REPLACES THE FIRST TWO PARAGRAPHS OF THE How does the fund pursue
its investment objectives? SECTION ON PAGE 8 OF THE PROSPECTUS.
The fund generally will invest in larger-sized companies, although it may
invest in companies of any size. The fund's investment strategy utilizes
quantitative management techniques in a three-step process. In the first
step, the portfolio managers rank stocks from most attractive to least
attractive. This is determined by using a quantitative model that combines
fundamental measures of a stock's value and growth potential. To measure
value, the managers may use ratios of stock price-to-earnings and stock
price-to-cash flow, among others. To measure growth, the managers may use
the rate of growth of a company's earnings and cash flow and changes in its
earnings estimates, as well as other factors. The model also considers
price momentum.
In the second step, the managers build a portfolio of stocks from the
ranking described above that they believe will provide the optimal balance
between risk and expected return. The goal is to create a fund that
provides better returns than, and a dividend yield comparable to, its
benchmark, the S&P 500® Index, without taking on significant
additional risk.
Finally, the portfolio managers validate the output of the quantitative
model using additional fundamental analysis.
THE FOLLOWING REPLACES THE What are the principal risks of investing in the
fund? SECTION ON PAGE 9 OF THE PROSPECTUS.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
Market performance tends to be cyclical, and, in the various cycles,
certain investment styles may fall in and out of favor. If the market is
not favoring the fund's investment process, the fund's gains may not be as
big as, or its losses may be bigger than, other equity funds using
different investment styles.
The fund's performance will be tied to the performance of its benchmark. If
the fund's benchmark goes down, it is likely that the fund's performance
will go down.
Although the portfolio managers intend to invest the fund's assets
primarily in U.S. stocks, the fund may invest in securities of foreign
companies. Foreign investment involves additional risks, including
fluctuations in currency exchange rates, less stable political and economic
structures, reduced availability of public information, and lack of uniform
financial reporting and regulatory practices similar to those that apply in
the United States. These factors make investing in foreign securities
generally riskier than investing in U.S. stocks. To the extent the fund
invests in foreign securities, the overall risk of the fund could be
affected.
Although the fund's performance has historically benefited from investments
in IPOs, future IPO exposure likely will be limited by the fund's
investment process.
The fund's portfolio turnover rate also may be high. This could result in
relatively high commission costs, which could hurt the fund's performance,
and capital gains tax liabilities for the fund's shareholders.
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns
will go up and down depending on the performance of the companies that
issued them, general market and economic conditions, and investor
confidence.
At any given time your shares may be worth less than the price you paid for
them. In other words, it is possible to lose money by investing in the
fund.
THE FOLLOWING REPLACES The Fund Management Team SECTION ON PAGE 11 OF THE
PROSPECTUS.
THE FUND MANAGEMENT TEAM
The advisor uses teams of portfolio managers and analysts to manage funds.
The teams meet regularly to review portfolio holdings and discuss purchase
and sale activity. Team members buy and sell securities for a fund as they
see fit, guided by the fund's investment objective and strategy.
The portfolio managers on the investment team who are jointly and primarily
responsible for the day-to-day management of the fund are identified below.
GREGORY J. WOODHAMS
Mr. Woodhams, Vice President and Senior Portfolio Manager, has been a
member of the team that manages the fund since June 2008. He joined
American Century in September 1997. He has a bachelor's degree in economics
from Rice University and an M.A. in economics from the University of
Wisconsin. He is a CFA charterholder.
E. A. PRESCOTT LEGARD
Mr. LeGard, Vice President and Portfolio Manager, has been a member of the
team that manages the fund since June 2008. He joined American Century in
March 1999 and became a portfolio manager in April 2000. He has a
bachelor's degree in economics from DePauw University. He is a CFA
charterholder.
JUSTIN M. BROWN
Mr. Brown, Portfolio Manager, has been a member of the team that manages
the fund since June 2008. He joined American Century in 2000 as an
investment analyst and became a portfolio manager in 2006. He has a
bachelor's degree in business administration and finance from Texas
Christian University. He is a CFA charterholder.
JOE REILAND
Mr. Reiland, Portfolio Manager, has been a member of the team that manages
the fund since June 2008. He joined American Century in September 2000 as
an investment analyst and became a senior investment analyst in February
2004 and a portfolio manager in February 2005. He has a bachelor's degree
in business administration from Washington University. He is a CFA
charterholder.
Additional information about the accounts managed by the portfolio
managers, the structure of their compensation, and their ownership of fund
securities will be available in a statement of additional information
supplement.
AMERICAN CENTURY INVESTMENT SERVICES, INC., DISTRIBUTOR
©2008 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SPL61111 0806