SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Co-Registrants __X__
Filed by a Party other than the Registrant _____
Check the appropriate box:
_____ Preliminary Proxy Statement
_____ Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
__X__ Definitive Proxy Statement
_____ Definitive Additional materials
_____ Soliciting Material Pursuant to ss.240.14a-l l(c) or ss.240.14a-12
AMERICAN CENTURY MUTUAL FUNDS, INC.
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
AMERICAN CENTURY PREMIUM RESERVES, INC.
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Co-Registrant as Specified in Their Charters)
Payment of Filing Fee (Check the appropriate box):
__X__ No fee required.
_____ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
_____ Fee paid previously with preliminary materials.
<PAGE>
[american century logo]
American
Century(sm)
Proxy
Statement
AMERICAN CENTURY MUTUAL FUNDS, INC.
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
AMERICAN CENTURY PREMIUM RESERVES, INC.
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
JUNE 2, 1997
Important Voting Information Inside!
TABLE OF CONTENTS
Letter from the President .............................................. 1
Proxy Statement Summary ................................................ 2
Notice of Annual Meeting of Shareholders ............................... 5
Detailed Discussion of Proxy Issues .................................... 7
Share Ownership ........................................................ 8
Proposal 1: Election of Directors ......................................10
Proposal 2: Approval of Management Agreements ..........................15
Proposal 3: Ratification of Independent Auditors .......................22
Proposal 4: Adoption of Standardized
Fundamental Investment Restrictions .................................23
Change #1: Diversification of Investments ...........................24
Change #2: Senior Securities ........................................25
Change #3: Borrowing ................................................26
Change #4: Lending ..................................................27
Change #5: Industry Concentration ...................................28
Change #6: Illiquid Securities ......................................28
Change #7: Other Investment Companies ...............................29
Change #8: Real Estate ..............................................30
Change #9: Underwriting .............................................31
Change #10: Commodities .............................................31
Change #11: Unseasoned Issuer .......................................32
Change #12: Short Sales .............................................33
Change #13: Margin ..................................................34
Proposal 5: Amend a Fundamental Investment Policy
of Twentieth Century Heritage Fund .....................................35
Other Matters ..........................................................37
Schedule I: Number of Outstanding Votes as of May 5, 1997 ..............38
Appendix I: Management Agreement .......................................41
Appendix II: Proposed Standard Fundamental
Investment Restrictions ................................................46
Appendix III: Current Fundamental Investment Restrictions
of American Century Mutual Funds, Inc. .................................47
Appendix IV: Current Fundamental Investment Restrictions
of American Century World Mutual Funds, Inc. ...........................49
Appendix V: Current Fundamental Investment Restrictions
of American Century Capital Portfolios, Inc. ...........................51
Appendix VI: Current Fundamental Investment Restrictions
of American Century Strategic Asset Allocations, Inc. ..................52
Appendix VII: Current Fundamental Investment Restrictions
of American Century Premium Reserves, Inc. .............................54
Table of Contents American Century Investments
LETTER FROM THE PRESIDENT
American Century Investments
4500 Main Street
Kansas City, Missouri 64111
June 2, 1997
Dear American Century Shareholder,
I am writing to inform you of the upcoming annual meeting of the shareholders of
your fund. At this meeting, you are being asked to vote on important proposals
effecting your fund. The Board of Directors of your fund, including myself,
unanimously believes that these proposals are in the fund's and your best
interest.
I'm sure that you, like most people, lead a busy life and are tempted to put
this proxy aside for another day. Please don't. When shareholders do not return
their proxies, additional expenses are incurred to pay for follow-up mailings
and telephone calls. PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY STATEMENT
AND SIGN AND RETURN ALL PROXY CARDS TODAY. If you hold shares in more than one
fund, you will receive a separate proxy card for each fund you hold. Please be
sure to sign and return each proxy card regardless of how many you receive.
The Board of Directors of your fund has unanimously approved these proposals and
recommends a vote "FOR" each proposal. If you have any questions regarding the
issues to be voted on or need assistance in completing your proxy card, please
contact our proxy solicitor D.F. King & Co., Inc. at 1-800-755-3107.
Thank you for your time in considering these important proposals. Thank you for
investing with American Century and for your continuing support.
Sincerely,
/s/James E. Stowers III
James E. Stowers III
President and Chief Executive Officer
1
PROXY STATEMENT SUMMARY
The following Q&A is a brief summary of the proposals to be considered at the
annual meeting. The information below is qualified in its entirety by the more
detailed information contained elsewhere in this proxy statement. Accordingly,
please read all the enclosed proxy materials before voting.
If you own other American Century funds and/or accounts, you may receive
additional proxy statements and voting cards in a separate mailing. It is
important that you vote ALL proxy cards that you receive. Please remember to
vote your shares as soon as possible.
WHEN WILL THE ANNUAL MEETING BE HELD? WHO IS ELIGIBLE TO VOTE?
The meeting will be held on Wednesday, July 30, 1997, at 10 a.m. Central time at
the Companies' offices at 4500 Main Street, Kansas City, Missouri. Please note
that this will be a business meeting only. There will be no presentations about
the Funds. The record date for the meeting is the close of business on May 16,
1997. Only shareholders who own shares at that time are entitled to vote at the
meeting.
WHAT IS BEING VOTED ON AT THE ANNUAL MEETING?
Your Board of Directors is recommending that shareholders consider the following
proposals:
Proposal Funds Affected
- --------------------------------------------------------------------------------
1. To elect a Board of Directors of nine members; all
2. To approve a Management Agreement with
American Century Investment Management, Inc.; all
3. To ratify the selection of Deloitte & Touche LLP all
as independent auditors;
4. To approve the adoption of standardized all
fundamental investment limitations;
5. To approve the amendment of a fundamental Heritage only
investment policy of the Twentieth Century
Heritage Fund; and
6. To transact such other business which may come all
before the meeting, although we are not aware
of any other items to be considered.
HOW DO THE DIRECTORS RECOMMEND THAT I VOTE ON THESE PROPOSALS?
The Directors unanimously recommend that you vote "FOR" each proposal.
WHO ARE THE NOMINEES FOR DIRECTOR? HAVE ALL OF THEM BEEN ELECTED BEFORE?
The Nominating Committee of your Board of Directors has proposed that
shareholders elect nine members to the Board of Directors. The nominees are:
2 Proxy Statement Summary American Century Investments
Thomas A. Brown Lloyd T. Silver, Jr.
Robert W. Doering, M.D. James E. Stowers, Jr.
D.D. (Del) Hock James E. Stowers III
Linsley L. Lundgaard M. Jeannine Strandjord
Donald H. Pratt
Mr. Hock and Mr. Pratt are being considered by shareholders for the first
time. A full discussion of the proposal to elect Directors begins on page 10.
WHAT CHANGES ARE BEING PROPOSED TO THE MANAGEMENT AGREEMENT?
The proposed Management Agreement is only slightly different from the current
Management Agreement. First, the proposed Management Agreement will reduce the
fee for the Benham Cash Reserve Fund and change the fee schedule for the
Twentieth Century International Growth and Twentieth Century International
Discovery Funds to reflect voluntary fee waivers by ACIM which have been in
effect since August 1, 1996. The proposed Management Agreement does not change
the fee payable by any of the remaining Funds. The proposed Management Agreement
also formalizes an agreement between the Funds and ACIM with respect to the Fund
names.
A full discussion of the proposal to approve Management Agreements begins on
page 15.
WHAT IS THE "RATIFICATION" OF THE INDEPENDENT AUDITORS? HAVE SHAREHOLDERS VOTED
ON DELOITTE & TOUCHE LLP BEFORE?
The Investment Company Act requires your Board of Directors to select
independent auditors for the Funds and also requires them to submit their
selection to the shareholders for approval (technically called a "ratification")
in any year that an annual shareholders meeting is being held. Your Board of
Directors, in part to provide uniform auditors for the Funds, selected Deloitte
& Touche LLP in late 1996. This meeting is the first opportunity for
shareholders to vote on the selection of Deloitte & Touche.
A full discussion of the proposal to ratify the selection of Deloitte & Touche
begins on page 22.
WHY AM I BEING ASKED TO ADOPT STANDARDIZED FUNDAMENTAL INVESTMENT RESTRICTIONS?
Currently the Funds have fundamental investment restrictions which vary between
Companies and between Funds within the same Company. The funds also have
investment restrictions which reflect legal and other requirements which are no
longer applicable to the Funds. In the interest of efficiency in fund management
and compliance, ACIM has analyzed the fundamental investment restrictions and
policies of the Funds in an effort to formulate a standard set of policies for
all Funds which reflect current industry practice and will allow the Funds to
respond to changes in regulatory and industry practice without the expense and
delay of a shareholder vote.
Proxy Statement Proxy Statement Summary 3
It should be noted that the adoption of the proposed changes is not expected to
materially affect the way the Funds are managed.
Some of the proposed changes sound quite technical. A full discussion of the
specific changes, as well as a further discussion of the benefits of
standardization, begins on page 23.
YOU ARE PROPOSING A CHANGE TO THE HERITAGE FUND'S POLICY REGARDING INVESTMENTS
IN DIVIDEND PAYING COMPANIES. WHAT IS THAT ABOUT?
We are proposing that the percentage of fund assets that can be invested in
nondividend paying companies be increased from 20% to 40%. This will allow the
fund to own a broader variety of investments while retaining its primary
concentration on firms paying cash dividends.
WHEN WILL THE PROPOSALS TAKE EFFECT IF THEY ARE APPROVED?
If approved, the proposed Management Agreement and the proposed changes to the
fundamental investment restrictions will be effective on August 1, 1997. The
other proposals do not involve any changes from the Funds' current operations,
so they will be effective immediately upon approval.
WHO IS ASKING FOR MY VOTE?
Your Board of Directors is asking you to sign and return the enclosed proxy so
your votes can be cast at the annual meeting. In the unlikely event your Fund's
meeting is adjourned, these proxies would also be voted at the reconvened
meeting.
HOW DO I VOTE MY SHARES?
We've made it easy for you. You can vote by mail, phone, fax or in person at the
annual meeting. To vote by mail, sign and send us the enclosed proxy voting card
in the envelope provided. You can fax your vote by signing the proxy voting card
and faxing both sides of the card to 1-888-PROXY-FAX (1-888-776-9932). D.F. King
& Co., our proxy solicitor, can accept your vote over the phone -- simply call
1-800-755-3107. Or, you can vote in person at the annual meeting on July 30,
1997.
IF I SEND MY PROXY IN NOW AS REQUESTED, CAN I CHANGE MY VOTE LATER?
A proxy can be revoked at any time by writing to us, by sending us another
proxy, or by attending the meeting and voting in person. Even if you plan to
attend the meeting and vote in person, we ask that you return the enclosed
proxy. Doing so will help us ensure that an adequate number of shares are
present at the meeting.
If you have any questions regarding the proxy statement or need assistance in
voting your shares, please call D.F. King & Co., Inc. at 1-800-755-3107.
4 Proxy Statement Summary American Century Investments
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
To be held on July 30, 1997
American Century Investments
4500 Main Street
P. O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021
NOTICE IS HEREBY GIVEN that a joint Annual Meeting of Shareholders of the
various series ("Funds" and, individually, a "Fund") of American Century Mutual
Funds, Inc., American Century World Mutual Funds, Inc., American Century Capital
Portfolios, Inc., American Century Premium Reserves, Inc. and American Century
Strategic Asset Allocations, Inc., each a Maryland corporation (individually a
"Company" and, collectively, the "Companies"), will be held at the Companies'
offices at 4500 Main Street, Kansas City, Missouri, on Wednesday, July 30, 1997,
at 10 a.m. Central time, for the following purposes:
1. To elect a Board of Directors of nine members to hold office until their
successors are duly elected and qualified;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc.;
3. To ratify the selection of Deloitte & Touche LLP as the independent
auditors of the Companies;
4. To approve the adoption of standardized investment limitations by amending
or eliminating certain of the Companies' current fundamental investment
restrictions; and
5. ONLY FOR TWENTIETH CENTURY HERITAGE FUND. To approve an amendment to its
fundamental investment policy.
6. To transact such other business as may properly come before the meeting or
any adjournment thereof.
This is a combined Notice and Proxy Statement for the Funds. The shareholders of
each Fund will vote only on those matters being considered by their Fund. If you
own shares of more than one of the Funds (or more than one class of a Fund), you
have received a separate proxy for each Fund (or class). Please complete, sign
and return all proxies.
Proxy Statement Notice of Annual Meeting of Shareholders 5
Shareholders of record as of the close of business on May 16, 1997, are the only
persons entitled to notice of and to vote at the meeting and any adjournments
thereof. Your attention is directed to the attached Proxy Statement.
We urge you to mark, sign, date and mail the enclosed proxy in the postage-paid
envelope provided so you will be represented at the meeting.
The Board of Directors of each company unanimously recommends that you cast your
vote "FOR" each of the proposals.
June 2, 1997 BY ORDER OF THE BOARDS OF DIRECTORS
William M. Lyons
Executive Vice President
6 Notice of Annual Meeting of Shareholders American Century Investments
DETAILED DISCUSSION
OF PROXY ISSUES
June 2, 1997
The enclosed proxy is solicited by the Board of Directors of the American
Century investment companies listed on the cover of this proxy statement in
connection with a joint annual meeting of shareholders to be held on Wednesday,
July 30, 1997, at the Companies' offices at 4500 Main Street, Kansas City,
Missouri, at 10 a.m. Central time, and any adjournments thereof. In this proxy
statement, an individual company will be referred to as a "Company," while, as a
group, they will be called the "Companies." The shares of the capital stock of
each Company entitled to vote at the meeting are issued in series representing
different investment portfolios. A single series is called a "Fund," while the
series as a group will be called the "Funds."
The costs of soliciting proxies, including the cost of preparing and mailing the
notice of meeting and this proxy statement, will be paid by American Century
Investment Management, Inc. (referred to in this Proxy Statement as "ACIM"), the
investment manager of each Fund. This notice of meeting and proxy statement are
first being mailed to shareholders around June 2, 1997. ACIM, at its expense,
has hired the proxy solicitation firm of D. F. King & Co., Inc. to help solicit
proxies for the meeting. Supplemental solicitations for the meeting may be made
by D. F. King & Co., Inc. or by ACIM, either personally or by mail, telephone or
facsimile.
VOTING OF PROXIES. If you provide a proxy, you may revoke it before the meeting
by mailing written notice of revocation to the Secretary of the respective
Company before the meeting, or personally delivering your revocation to the
Secretary any time prior to the taking of the vote at the meeting. Unless
revoked, Proxies that have been returned by shareholders without instructions
will be voted in favor of all proposals. In instances where choices are
specified on the proxy, those proxies will be voted as the shareholder has
instructed.
Each Fund may be divided into one or more classes. All classes of shares of a
Fund have identical voting rights, except that where a proposal affects only one
class, only that class gets to vote on it. Of the Proposals to be considered at
the meeting, only Proposal 2, the approval of management agreements, will be
voted upon separately by class. The number of outstanding votes of each Fund and
each class of a Fund, where applicable, as of the close of business on May 5,
1997, are shown on Schedule I, which you will find at the end of this proxy
statement.
Only those shareholders owning shares as of the close of business on May 16,
1997, may vote at the meeting or any adjournments thereof. Each share of each
series or class gets one vote for each dollar of a Fund's net asset value the
share represents. If we do not receive enough "for" votes by
Proxy Statement 7
July 30, 1997, to approve the proposals being considered at the meeting, the
named proxies may propose adjourning the meeting to allow the gathering of more
proxy votes. An adjournment requires a vote "for" by a majority of the votes
present at the meeting (whether in person or by proxy). The named proxies will
vote the "for" votes they have received in favor of the adjournment, and any
"against" or "abstain" votes will count as votes against adjournment. An
abstention on any proposal will be counted as present for purposes of
determining whether a quorum of shares is present at the meeting with respect to
the proposal on which the abstention is noted, but will be counted as a vote
against such proposal.
Abstentions and broker non-votes (i.e., proxies sent in by brokers and other
nominees that cannot be voted on a proposal because instructions have not been
received from the beneficial owners) will be counted for purposes of determining
whether or not a quorum is present for purposes of the meeting. Abstentions and
broker non-votes will, however, be considered to be votes against the proposals.
INVESTMENT MANAGER. ACIM is each Fund's investment manager. American Century
Services Corporation ("ACSC"), an affiliate of ACIM, provides each Fund with
transfer agency services. ACIM and ACSC are wholly owned subsidiaries of
American Century Companies, Inc. ("ACC"). The mailing address of ACC, ACIM, ACSC
and the Funds is P.O. Box 419200, Kansas City, Missouri 64141-6200.
ANNUAL REPORT. Each Fund will furnish, without charge, a copy of its most recent
annual report and semiannual report upon request. To request these materials,
please call American Century at 1-800-345-2021.
SHARE OWNERSHIP
The following table sets forth, as of May 5, 1997, the share ownership of those
shareholders known by ACIM to own more than 5% of a Fund's outstanding shares.
<TABLE>
Percent of
Outstanding
Name of Record Owner Shares Owned Shares
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co., Inc. 57,005,257 (Ultra) 8.8%
San Francisco, CA 8,907,177 (Vista) 6.4%
4,987,919 (Heritage) 5.6%
103,182 (Intermediate-Term Bond) 5.8%
4,491,963 (Equity Income) 13.7%
34,291,545 (Value) 12.5%
17,382,227 (International Growth) 9.8%
143,593 (Intermediate-Term Government) 5.5%
- -------------------------------------------------------------------------------------------------------
8 Share Ownership American Century Investments
Percent of
Outstanding
Name of Record Owner Shares Owned Shares
- -------------------------------------------------------------------------------------------------------
Nationwide Life Insurance 22,326,081 (Growth) 11.7%
Company 39,082,250 (Ultra) 6.0%
Columbus, OH 3,611,496 (Short-Term Government) 10.4%
- -------------------------------------------------------------------------------------------------------
American Century Investment 449,486 (Limited-Term Bond) 47.7%
Management, Inc. 405,852 (Intermediate-Term Bond) 23.0%
Kansas City, MO 3,526,322 (Strategic Allocations: Conservative) 33.6%
331,489 (Intermediate-Term Government) 12.8%
713,388 (Limited-Term Tax-Exempt) 15.8%
329,001 (Premium Bond) 6.6%
379,909 (Long-Term Tax-Exempt) 7.1%
- -------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank N.A. 4,715,345 (Strategic Allocations: Moderate) 19.0%
Trustee for 1,697,053 (Strategic Allocations: Conservative) 16.2%
GEC-USA Employees Savings 3,329,774 (Strategic Allocations: Aggressive) 20.8%
and Investment
New York, NY
- -------------------------------------------------------------------------------------------------------
UMB Bank NA Trustee for 1,359,029 (Strategic Allocations: Moderate) 5.5%
Lincare, Inc. Employees Salary
Reduction Thrift Plan and Trust
Kansas City, MO
- -------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank Trustee 95,145 (Intermediate-Term Bond) 5.4%
for GZA GEO Environmental, Inc.
Restated 401(k) Profit Sharing
Plan & Trust
New York, NY
- -------------------------------------------------------------------------------------------------------
Bankers Trust Company Trustee 9,917,770 (Heritage) 11.1%
for Kraft General Foods, Inc.
Master Savings Plan and Trust
New Jersey, NJ
- -------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank 346,692 (Intermediate-Term Government) 13.3%
Trustee for
Robert Bosch Corporation
Star Plan and Trust
New York, NY
- -------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank N.A. 23,751,475 (Premium Capital Reserve) 15.8%
Trustee for
CTS Corporation Retirement
Savings Plan and Trust
New York, NY
- -------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank N.A. 10,147,211 (Premium Government Reserve) 24.4%
Trustee for
Lorillard Inc. Hourly Paid
Employee Profit Sharing
and Trust
New York, NY
- -------------------------------------------------------------------------------------------------------
Proxy Statement Share Ownership 9
Percent of
Outstanding
Name of Record Owner Shares Owned Shares
- -------------------------------------------------------------------------------------------------------
UMB Bank NA Trustee for 3,403,108 (Premium Government Reserve) 8.2%
Insilco Corporation Employee
Thrift Plan and Trust
Kansas City, MO
- -------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank N.A. 3,017,175 (Premium Government Reserve) 7.3%
Trustee for
Newport Service Corporation
Money Purchase Pension Trust
New York, NY
- -------------------------------------------------------------------------------------------------------
Trustees for 2,690,778 (Premium Bond) 53.9%
Presbyterian Healthcare
Retirement Plan and Trust
Distributions
Reinvested
Kansas City, MO
- -------------------------------------------------------------------------------------------------------
</TABLE>
PROPOSAL 1:
ELECTION OF DIRECTORS
NOMINEES
At the meeting, the shareholders of each Company will be asked to elect nine
members of that Company's Board of Directors. It is intended that the enclosed
Proxy will be voted for the election of the nine persons named below as
Directors, unless such authority has been withheld in the Proxy. The term of
office of each person elected will be or until his or her successor is duly
elected and shall qualify. The Companies do not intend to hold regular annual
meetings of shareholders. Information regarding each nominee is set forth
following his or her name below.
Name Age Principal Occupation
- ------------------------------------------------------------------------
Thomas A. Brown 57 Chief Executive Officer,
Associated Bearing Company
Robert W. Doering, M.D. 64 Retired, formerly General
Surgeon
D.D. (Del) Hock 62 Chairman, Public Service
Company of Colorado;
Director, Serv-Tech, Inc.;
Director, Hathaway Corporation
10 Proposal 1 American Century Investments
Name Age Principal Occupation
- --------------------------------------------------------------------------------
Linsley L. Lundgaard 72 Retired, formerly Vice President
and National Sales Manager,
Flour Milling Division, Cargill, Inc.
Donald H. Pratt 59 President and Director, Butler
Manufacturing Company
Lloyd T. Silver, Jr. 69 President, LSC, Inc.,
Manufacturers Representative
James E. Stowers, Jr.* 73 Chairman of the Board and
Director, ACC, ACSC and ACIM
James E. Stowers III* 38 President, Chief Executive Officer
and Director, ACC, ACSC and ACIM
M. Jeannine Strandjord 51 Senior Vice President and
Treasurer, Sprint Corporation;
Director, DST Systems, Inc.
* Denotes directors who are "interested persons" (as defined by the Investment
Company Act) of ACIM. Messrs. Stowers, Jr. And Stowers III are considered
interested persons since they serve as officers of, and have ownership interests
in, ACC and its affiliated entities. Messrs. Stowers, Jr. and Stowers III also
serve in similar capacities for other funds managed by ACIM and its affiliates.
Mr. Stowers, Jr. controls ACC by virtue of his ownership of a majority of its
voting stock. Mr. Stowers, Jr. is the father of Mr. Stowers III.
The following table sets forth the year each nominee became a Director:
<TABLE>
Brown Doering Hock Lundgaard Pratt Silver Stowers, Jr. Stowers III Strandjord
- ---------------------------------------------------------------------------------------------------------------------
American Century
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mutual Funds, Inc. 1980 1968 1996 1958 1995 1979 1958 1990 1994
American Century
World Mutual
Funds, Inc. 1991 1991 1996 1991 1995 1991 1991 1991 1994
American Century
Capital
Portfolios, Inc. 1993 1993 1996 1993 1995 1993 1993 1993 1994
American Century
Premium
Reserves, Inc. 1993 1993 1996 1993 1995 1993 1993 1993 1994
American Century
Strategic Asset
Allocations, Inc. 1996 1996 1996 1996 1996 1996 1996 1996 1996
- ---------------------------------------------------------------------------------------------------------------------
Each of the nominees was unanimously nominated by the Board of Directors' and
each has agreed to serve as a Director. If any unforeseen event prevents one or
more of the nominees from serving as a Director, your votes will be cast (unless
you have elected to withhold authority as to the election of Directors) for the
election of such person or persons as the Board of Directors shall nominate.
Unless otherwise instructed, the proxies will vote for the re-election of each
Director.
</TABLE>
Proxy Statement Proposal 1 11
COMMITTEES
The Board of Directors of each Company has established four standing
committees: an Executive Committee, an Audit Committee, a Compliance Committee
and a Nominating Committee.
Messrs. Stowers, Jr., Stowers III and Lundgaard serve on the Executive Committee
of the Board of Directors. The committee performs the functions of the Board of
Directors between meetings of the Board, subject to the limitations on its power
set out in the Maryland Corporation Law, and except for matters required by the
Investment Company Act to be acted upon by the whole Board.
Messrs. Lundgaard (chairman), Doering and Hock and Ms. Strandjord serve on the
Audit Committee. The functions of the Audit Committee include recommending the
engagement of the funds' independent auditors, reviewing the arrangements for
and scope of the annual audit, reviewing comments made by the independent
auditors with respect to internal controls and the considerations given or the
corrective action taken by management and reviewing nonaudit services provided
by the independent auditors.
Messrs. Brown (chairman), Pratt and Silver serve on the Compliance Committee.
The functions of the Compliance Committee include reviewing the results of the
Funds' compliance testing program, reviewing quarterly reports from ACIM to the
Board regarding various compliance matters and monitoring compliance with the
Funds' Code of Ethics.
The Nominating Committee has as its principal role the consideration and
recommendation of individuals for nomination as directors. This committee also
reviews and makes recommendations to the Board with respect to the composition
of Board committees and other Board-related matters, including its organization,
size, composition, responsibilities, functions and compensation. The members of
the nominating committee are Messrs. Pratt (chairman), Lundgaard and Stowers
III.
For the twelve months ended December 31, 1996, the Board of Directors of each
Company met eleven times. During the same period, the Audit Committee met six
times and the Compliance Committee met three times. The Nominating Committee did
not meet during the period. No director attended fewer than 75% of the total
number of Board meetings or meetings of committees on which such Director
served.
EXECUTIVE OFFICERS
In addition to Messrs. Stowers, Jr. and Stowers III, the following individuals,
except as noted, are executive officers of each of the Companies:
WILLIAM M. LYONS, 41, Executive Vice President, Chief Operating Officer, and
General Counsel. Prior to 1996, Mr. Lyons was Executive Vice President and
General Counsel. Mr. Lyons is also Executive Vice President, Chief Operating
Officer, and General Counsel of ACIM, ACSC, and ACC.
12 Proposal 1 American Century Investments
ROBERT T. JACKSON, 51, Executive Vice President and Principal Financial Officer.
Prior to 1995, Mr. Jackson was Executive Vice President of Kemper Corporation.
Mr. Jackson is also Executive Vice President and Principal Financial Officer of
ACIM, ACSC, and ACC.
MARYANNE ROEPKE CPA, 41, Vice President, Treasurer, and Principal Accounting
Officer. Ms. Roepke is also Vice President of ACSC.
PATRICK A. LOOBY, 38, Vice President and Associate General Counsel. Mr. Looby is
also Vice President and Associate General Counsel of ACSC.
MERELE A. MAY, 34, Controller of American Century Mutual Funds, Inc., American
Century Capital Portfolios, Inc., and American Century Strategic Asset
Allocations, Inc.
C. JEAN WADE CPA, 33, Controller of American Century Mutual Funds, Inc.,
American Century Premium Reserves, Inc., and American Century Strategic Asset
Allocations, Inc.
ROBERT J. LEACH CPA, 31, Controller of American Century World Mutual Funds, Inc.
COMPENSATION
The Directors of the Companies serve as Directors for 32 of the 69 funds advised
by ACIM and its affiliates. Each non-interested Director, i.e., all directors
other than Mr. Stowers, Jr. and Mr. Stowers III, receives for service as a
member of the Board of all 32 funds an annual director's fee of $44,000, and an
additional fee of $1,000 per regular Board meeting attended and $500 per special
Board meeting and committee meeting attended. In addition, these directors that
also serve as chairman of a committee of the Board of Directors receive an
additional $2,000 for acting as chairman. These fees and expenses are divided
among the 32 funds based upon their relative net assets. Under the terms of the
management agreement with ACIM, the Funds are responsible for paying such fees
and expenses.
The following table sets forth the total compensation received by each
non-interested Director from each Company for its most recent fiscal year, as
well as the total compensation received by each Director from the American
Century family of funds as a whole for the twelve months ended December 31,
1996. Messrs. Stowers, Jr. and Stowers III receive no compensation from the
Funds for serving as a Director. The salaries of Messrs. Stowers, Jr. and
Stowers III are paid by ACIM. No officer of the Funds received compensation from
the Funds during its most recent fiscal year. No director receives pension or
retirement benefits from the Funds.
<TABLE>
Fund Brown Doering Hock Lundgaard Pratt Silver Strandjord
- ------------------------------------------------------------------------------------------------------
American Century
<S> <C> <C> <C> <C> <C> <C> <C>
Mutual Funds, Inc.* 40,881 38,046 0 41,179 39,389 39,389 39,389
American Century
World Mutual
Funds, Inc. 2,120 1,968 236 2,128 2,044 2,036 2,014
Proxy Statement Proposal 1 13
Fund Brown Doering Hock Lundgaard Pratt Silver Strandjord
- ------------------------------------------------------------------------------------------------------
American Century
Capital
Portfolios, Inc. 2,411 2,260 1,075 2,436 2,352 2,310 2,310
American Century
Premium
Reserves, Inc. 249 233 111 251 243 238 238
American Century
Strategic Asset
Allocations, Inc. 243 225 27 244 234 233 231
TOTAL COMPENSATION
FROM ALL AMERICAN
CENTURY FUNDS 45,904 42,732 1,449 46,238 42,262 44,206 44,182
- ---------------------
* Includes amounts deferred at the election of the Directors under the
American Century Mutual Funds Deferred Compensation Plan for Non-Interested
Directors. The total amount of deferred compensation included in the
preceding table is as follows: Mr. Brown, $7,500; Mr. Lundgaard, $15,200;
Mr. Pratt, $11,880; Mr. Silver, $10,800; and Ms. Strandjord, $31,800.
</TABLE>
DEFERRED COMPENSATION
In December 1992, American Century Mutual Funds, Inc. adopted the American
Century Mutual Funds Deferred Compensation Plan for Non-Interested Directors
(the "Plan"). Under the Plan, the non-interested person Directors may defer
receipt of all or any part of the fees to be paid to them for serving as
Directors of American Century Mutual Funds, Inc.
Under the Plan, all deferred fees are credited to an account established in the
name of the participating Director. The amounts credited to the account then
increase or decrease, as the case may be, in accordance with the performance of
one or more of the Funds issued by American Century Mutual Funds, Inc. that are
selected by the participating Director. The account balance continues to
fluctuate in accordance with the performance of the selected Fund or Funds until
final payment of all amounts credited to the account. Directors are allowed to
change their designation of Funds from time to time.
No deferred fees are payable until such time as a participating Director
resigns, retires or otherwise ceases to be a member of the Board of Directors.
Directors may receive deferred fee account balances in either a lump sum payment
or in payments made over a period not to exceed ten years. Upon the death of a
Director, all remaining deferred fee account balances are paid to the Director's
beneficiary or, if none, to the Director's estate.
The Plan is an unfunded plan and, accordingly, American Century Mutual Funds,
Inc. has no obligation to segregate assets to secure or fund the deferred fees.
The rights of Directors to receive their deferred fee account balances are the
same as rights of a general unsecured creditor of
14 Proposal 1 American Century Investments
the Company. The Plan may be terminated at any time by the administrative
committee of the Plan. If terminated, all deferred fee account balances will be
paid in a lump sum.
VOTING INFORMATION
Each nominee will be re-elected to the Board of Directors of a Company if he or
she receives the approval of a majority of the votes of that Company represented
at the meeting, provided at least a quorum (50% of the outstanding votes), is
represented in person or by proxy. By completing the proxy, you give the named
proxies the right to cast your votes. If you elect to withhold authority for any
nominees, you may do so by striking a line through the nominee name on the
proxy, as further explained on the proxy itself.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
ALL NOMINEES.
PROPOSAL 2:
APPROVAL OF MANAGEMENT
AGREEMENTS
SUMMARY
ACIM has served as investment manager to the Companies since their inception.
Each Company currently has a separate Management Agreement with ACIM with
respect to each class of shares offered by the Company. With respect to each
class of shares offered, these agreements are identical in all respects with the
exception of the management fee, pursuant to which ACIM provides, or arranges
for the provision of, all services required by a Fund, and pays essentially all
of the expenses of a fund in exchange for one "all-inclusive" management fee.
The proposal would also consolidate the Management Agreements into one
management agreement between a Company and ACIM which would include all classes
of shares offered. With respect to the Investor Class of Twentieth Century
International Growth and Twentieth Century International Discovery funds issued
by American Century World Mutual Funds, Inc., the proposal would change the
management fee charged to each Fund. In addition, the proposal would add a
provision which formalizes an agreement between the Funds and ACIM with respect
to ACSC's ownership of the names "American Century," "Twentieth Century" and
"Benham" which appear as part of the names of the Funds. The complete text of
the proposed Management Agreement is set forth in Appendix I to this proxy
statement.
Proxy Statement Proposal 2 15
The current Management Agreements between ACIM and American Century Mutual
Funds, Inc., American Century World Mutual Funds, Inc., and American Century
Premium Reserves, Inc. were last approved by the respective shareholders of
those corporations on July 29, 1994. The current Management Agreements between
ACIM and American Century Capital Portfolios, Inc. and American Century
Strategic Asset Allocations, Inc. were approved by the shareholders of those
corporations on August 18, 1993, and February 1, 1996, respectively.
DESCRIPTION OF MANAGEMENT AGREEMENT
The functions and responsibilities of ACIM under the existing agreements and the
proposed Management Agreement are identical. All of the agreements require ACIM
to:
(1) supervise and manage the investment portfolios of the Funds and direct the
purchase and sale of investment securities, subject only to any directions
of the Boards of Directors, and
(2) pay all the expenses of the Funds except brokerage, taxes, interest,
portfolio insurance, fees and expenses of the non-interested person
Directors (including counsel fees) and extraordinary expenses.
As manager, ACIM provides the Companies with the physical facilities and
personnel required to carry on the business, such as office space, office
furniture, fixtures and equipment, office supplies, computer hardware and
software, and salaried and hourly paid personnel. In exchange for the services
it provides, ACIM receives a specified percentage fee of the assets of each Fund
managed. ACIM may at its expense employ others to supply all or any part of the
required facilities and personnel.
With the exception of the Benham Cash Reserve Fund and the Investor Class of the
Twentieth Century International Growth and Twentieth Century International
Discovery Funds discussed below, the proposed Management Agreements retain the
currently existing management fees on all series of shares, which are as
follows:
Fund Management Fee
- --------------------------------------------------------------------------------
American Century Balanced Fund
Advisor Class .75%
Investor Class 1.00%
Institutional Class .80%
American Century Equity Income Fund
Advisor Class .75%
Investor Class 1.00%
Institutional Class .80%
American Century Value Fund
Advisor Class .75%
Investor Class 1.00%
Institutional Class .80%
16 Proposal 2 American Century Investments
Fund Management Fee
- --------------------------------------------------------------------------------
American Century Strategic Allocation: Aggressive
Advisor Class 0 to $1 billion - .95%
$1 billion and over - .85%
Investor Class 0 to $1 billion - 1.20%
$1 billion and over - 1.10%
American Century Strategic Allocation: Conservative
Advisor Class 0 to $1 billion - .75%
$1 billion and over - .65%
Investor Class 0 to $1 billion - 1.00%
$1 billion and over - .90%
American Century Strategic Allocation: Moderate
Advisor Class 0 to $1 billion - .85%
$1 billion and over - .75%
Investor Class 0 to $1 billion - 1.10%
$1 billion and over - 1.00%
Benham Bond Fund
Advisor Class .55%
Investor Class .80%
Benham Cash Reserve Fund
Advisor Class .45%
Investor Class .70%
Benham Intermediate-Term Bond Fund
Advisor Class .50%
Investor Class .75%
Benham Limited-Term Bond Fund
Advisor Class .45%
Investor Class .70%
Benham Premium Bond Fund .45%
Benham Premium Capital Reserve Fund .45%
Benham Premium Government Reserve Fund .45%
Twentieth Century Giftrust 1.00%
Twentieth Century Growth Fund
Advisor Class .75%
Investor Class 1.00%
Institutional Class .80%
Twentieth Century Heritage Fund
Advisor Class .75%
Investor Class 1.00%
Institutional Class .80%
Proxy Statement Proposal 2 17
Fund Management Fee
- --------------------------------------------------------------------------------
Twentieth Century International Discovery Fund
Advisor Class 0 to $500 million - 1.50%
$500 million to $1 billion - 1.15%
$1 billion and over .95%
Institutional Class 0 to $500 million - 1.55%
$500 million to $1 billion - 1.20%
$1 billion and over 1.00%
Twentieth Century International Growth Fund
Advisor Class 0 to $1 billion - 1.25%
$1 billion to $2 billion - .95%
$2 billion and over .85%
Institutional Class 0 to $1 billion - 1.30%
$1 billion to $2 billion - 1.00%
$2 billion and over .90%
Twentieth Century New Opportunities Fund 1.50%
Twentieth Century Select Fund
Advisor Class .75%
Investor Class 1.00%
Institutional Class .80%
Twentieth Century Ultra Fund
Advisor Class .75%
Investor Class 1.00%
Institutional Class .80%
Twentieth Century Vista Fund
Advisor Class .75%
Investor Class 1.00%
Institutional Class .80%
The difference in fees among the various classes of the Funds is the result of
their separate arrangements for shareholder and distribution services and not
the result of any difference in amounts charged by ACIM for core investment
advisory services. In addition to the management fee, the Advisor Class of each
Fund, where applicable, also pays ACIM a services and distribution fee equal to
0.50% per annum of the net assets of that class. A portion of this fee is used
by ACIM to compensate broker-dealers, banks, insurance companies and other
financial intermediaries for ongoing recordkeeping, distribution and other
shareholder services.
The following table sets forth the management fee, as a percentage of a Fund's
average daily net assets, paid by each class of the Funds to ACIM under the
current Management Agreements during each Fund's most recent fiscal year:
18 Proposal 2 American Century Investments
<TABLE>
Fund Management Fees Average Net Assets
- ----------------------------------------------------------------------------------------------------
American Century Balanced Fund
<S> <C> <C>
Advisor Class $ 0 $ 0
Investor Class 8,345,585 844,937,283
Institutional Class 0 0
American Century Equity Income Fund
Advisor Class 0 18,497
Investor Class 1,579,946 158,247,723
Institutional Class 0 0
American Century Value Fund
Advisor Class 106,780 28,862,305
Investor Class 12,940,373 1,294,481,842
Institutional Class 0 0
American Century Strategic Allocation:
Aggressive
Advisor Class 8,332 5,442,751
Investor Class 209,001 22,009,181
American Century Strategic Allocation:
Conservative
Advisor Class 4,575 3,785,609
Investor Class 114,199 14,389,164
American Century Strategic Allocation:
Moderate
Advisor Class 9,815 7,167,054
Investor Class 283,056 32,474,152
Benham Bond Fund
Advisor Class 0 0
Investor Class 1,148,428 146,071,676
Benham Cash Reserve Fund
Advisor Class 0 0
Investor Class 9,593,595 1,375,448,677
Benham Intermediate-Term Bond Fund
Advisor Class 0 0
Investor Class 108,870 14,807,295
Benham Limited-Term Bond Fund
Advisor Class 0 0
Investor Class 52,116 7,680,716
Benham Premium Bond Fund 91,566 20,468,595
Benham Premium Capital Reserve Fund 640,040 142,439,917
Benham Premium Government
Reserve Fund 138,640 30,981,550
Twentieth Century Giftrust 7,161,935 731,222,156
Proxy Statement Proposal 2 19
Fund Management Fees Average Net Assets
- ----------------------------------------------------------------------------------------------------
Twentieth Century Growth Fund
Advisor Class $ 0 $ 0
Investor Class 47,632,557 4,789,339,586
Institutional Class 0 0
Twentieth Century Heritage Fund
Advisor Class 0 0
Investor Class 10,572,605 1,065,351,654
Institutional Class 0 0
Twentieth Century International
Discovery Fund
Advisor Class 0 0
Investor Class 4,421,277 235,583,479
Institutional Class 0 0
Twentieth Century International
Growth Fund
Advisor Class 6,276 3,308,713
Investor Class 21,265,343 1,288,998,651
Institutional Class 0 0
Twentieth Century
New Opportunities Fund 0 0
Twentieth Century Select Fund
Advisor Class 0 0
Investor Class 39,305,054 3,935,124,830
Institutional Class 0 0
Twentieth Century Ultra Fund
Advisor Class 7,146 12,020,524
Investor Class 162,200,631 16,285,148,217
Institutional Class 0 0
Twentieth Century Vista Fund
Advisor Class 3,127 5,245,789
Investor Class 20,195,923 2,040,246,662
Institutional Class 0 0
</TABLE>
CASH RESERVE, INTERNATIONAL GROWTH AND INTERNATIONAL DISCOVERY.
Effective August 1, 1996, ACIM voluntarily waived a portion of its management
fee with respect to the Investor Class of the Twentieth Century International
Growth and Twentieth Century International Discovery Funds issued by American
Century World Mutual Funds, Inc. The proposed Management Agreement between
American Century World Mutual Funds, Inc. and ACIM would make this reduced fee
structure permanent. In addition, the management fee for the Benham Cash Reserve
Fund would decrease by 0.10% of the fund's average daily net assets under the
proposed Management Agreement. If approved, the proposed Management Agreements
provide for the following management fees for those Funds:
20 Proposal 2 American Century Investments
<TABLE>
Fund Current Fee Proposed Fee
- ---------------------------------------------------------------------------------------------------------
Benham Cash Reserve
<S> <C> <C>
Advisor Class .45% .35%
Investor Class .70% .60%
Twentieth Century
International Growth
Investor Class 1.90% of the first $1 billion 1.50% of the first $1 billion
1.25% of the next $1 billion 1.20% of the next $1 billion
1.00% over $2 billion 1.10% over $2 billion
Twentieth Century
International Discovery
Investor Class 2.00% 1.75% of the first $500 million
1.40% of the next $500 million
1.20% over $1 billion
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Due to the 0.1% increase in the third breakpoint of the proposed management fee
for the Investor Class of Twentieth Century International Growth, if the fund
grows to more than approximately $6 billion in net assets, the proposed fee will
result in higher management fees being paid by the Fund. As of April 30, 1997,
the net assets of International Growth were approximately $1.5 billion.
The following table sets forth for the Benham Cash Reserve Fund and for the
Investor Class of the Twentieth Century International Growth and Twentieth
Century International Discovery, the total fees and expenses paid for the most
recent fiscal year, what that total would have been had the proposed Management
Agreements been in effect, and the difference between the two.
<TABLE>
Aggregate Fees and
Aggregate Fees and Expenses Under Change
Expenses Under Proposed from
Current Management Current
Fund Agreements* Agreements Agreements
- ---------------------------------------------------------------------------------------------------------
Benham Cash Reserve Fund
<S> <C> <C> <C>
Advisor Class -- -- --
Investor Class 9,612,851 8,242,338 (1,370,514)
Twentieth Century
International Growth Fund
Investor Class 22,653,068 17,305,620 (5,347,448)
Twentieth Century
International Discovery Fund
Investor Class 4,692,943 3,795,232 (897,711)
- ---------------------------------------------------------------------------------------------------------
*Does not include ACIM's voluntary fee waiver, which resulted in actual net fees
of $21,277,062 and $4,423,396 for Twentieth Century International Growth and
Twentieth Century International Discovery, respectively.
</TABLE>
Proxy Statement Proposal 2 21
ADDITIONAL INFORMATION REGARDING ACIM
ACIM is a wholly owned subsidiary of American Century Companies, Inc. ("ACC"), a
financial services firm headquartered in Kansas City, Missouri. ACC's principal
offices are located at 4500 Main Street, Kansas City, Missouri 64111. James E.
Stowers, Jr., James E. Stowers III, and Dennis von Waaden, Senior Vice President
of ACSC, constitute the Board of Directors of ACIM. Mr. Stowers, Jr., Chairman
of the Board of the Companies and ACC, controls ACC by virtue of his ownership
of a majority of its voting stock.
VOTING INFORMATION
For a class of a Fund to approve the Management Agreements the proposal must
receive an affirmative vote of a majority of the outstanding votes of each
class. For this purpose, the term "majority of the outstanding votes" means the
vote of (i) 67% or more of the votes of a class present at the meeting, so long
as the holders of more than 50% of a class' outstanding votes are present or
represented by proxy; or (ii) more than 50% of the outstanding votes of the
class, whichever is less.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE APPROVAL OF THE MANAGEMENT AGREEMENTS.
PROPOSAL 3:
RATIFICATION OF INDEPENDENT
AUDITORS
The Investment Company Act, which is the primary federal law that regulates the
Companies, requires every registered investment company be audited at least once
a year by independent auditors selected by the Board of Directors including a
majority of the Directors who are not "interested persons" (as defined in the
Investment Company Act). The Investment Company Act also requires that the
selection be submitted for ratification by the shareholders at their next
meeting following the selection.
At the meeting, the shareholders of each Company will be asked to ratify the
selection of Deloitte & Touche LLP as each Company's independent auditors. The
Board of Directors chose Deloitte & Touche upon the recommendation of the Audit
Committee of the Board following an exhaustive selection process during which
the Audit Committee reviewed proposals and conducted interviews with
representatives from each of the so-called "big six" accounting firms and one
regional firm with significant investment company experience. The Board selected
Deloitte & Touche based upon its
22 Proposal 3 American Century Investments
expertise as an auditor of investment companies, the quality of its audit
services, its commitment of experienced audit personnel to the Funds, its tax
and international experience in the mutual fund area, and its use and commitment
of technology in performing its audit functions.
Deloitte & Touche has no direct or material indirect financial interest in the
Companies, ACIM, or ACC, other than receipt of fees for services to the
Companies. Deloitte & Touche representatives will be present at the meeting and
will have an opportunity to make a statement to the shareholders and to respond
to questions.
The approval of a majority of the votes of each Company represented at the
meeting, provided at least a quorum is represented in person or by proxy, is
necessary to ratify the selection of the independent auditors. Unless otherwise
instructed, the proxies will vote for the ratification of the selection of
Deloitte & Touche LLP as each Company's independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP.
PROPOSAL 4:
ADOPTION OF STANDARDIZED
FUNDAMENTAL
INVESTMENT RESTRICTIONS
BENEFITS OF ADOPTING STANDARDIZED INVESTMENT RESTRICTIONS
The primary purpose of this Proposal is to revise the Funds' investment
restrictions to conform to restrictions which are expected to become standards
for similar types of funds managed by ACIM. The Directors have concurred with
ACIM's efforts to analyze the fundamental and non-fundamental investment
restrictions of the various funds offered by the American Century family of
mutual funds and, where practical and appropriate to a Fund's investment
objective and policies, propose to shareholders adoption of standard fundamental
restrictions. In many cases, when fundamental restrictions are eliminated, a
similar non-fundamental restriction will replace them. It should be noted that,
when these restrictions are non-fundamental, the Board of Directors must approve
any amendment to the restrictions. The Board of Directors may approve an
amendment, for example, to respond to developments in the marketplace, or
changes in federal or state law.
It is NOT anticipated that any of the changes will substantially affect the way
the Funds are currently managed. ACIM is presenting them to shareholders for
approval because ACIM believes that increased standardization
Proxy Statement Proposal 4 23
will help to promote operational efficiencies and facilitate monitoring of
compliance with both fundamental and non-fundamental investment restrictions.
Set forth below, as a sub-section of this Proposal, is a detailed description of
each of the proposed changes. You will be given the option to approve all, some,
or none of the proposed changes on the proxy card enclosed with this proxy
statement.
A listing of the proposed standard fundamental investment restrictions to be
adopted by each Company is set forth in Appendix II. A listing of the current
fundamental investment restrictions of each Company is set forth in Appendices
III through VII.
CHANGE #1 TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING DIVERSIFICATION OF INVESTMENTS (ALL FUNDS)
The current fundamental investment limitation of the Funds issued by American
Century Mutual Funds, Inc. and American Century World Mutual Funds, Inc.
regarding diversification of investments provides that a Fund cannot purchase
the securities of an issuer if the purchase would cause more than 5% of the
corporation's assets at market to be invested in the securities of such issuer,
except United States government securities, or if the purchase would cause more
than 10% of the outstanding voting securities of any one issuer to be held in
the corporation's portfolio. The remaining Funds apply this limitation to 75% of
their total assets. It is proposed that shareholders approve eliminating this
fundamental investment limitation.
The Funds have elected to be "diversified open-end management investment
companies" under the Investment Company Act, which requires the limitations
contained in the current fundamental restriction to apply to 75% of the total
assets of the Funds. The current policy of certain of the Funds is more
restrictive, applying the limitations on ownership to 100% of its portfolio. The
primary purpose of the proposed change with respect to those Funds applying the
more restrictive standard is to allow the funds to invest in accordance with the
limits contained in the Investment Company Act for diversified companies.
This would allow large funds the flexibility to purchase larger amounts of
issuers' securities when ACIM deems an opportunity attractive. The new policy
would allow the investment policies of the Funds to conform with the definition
of "diversified" as it appears in the Investment Company Act. Please note that
the Funds could not change their election to be a diversified company without a
further shareholder vote.
With respect to those Funds currently applying the Investment Company Act
standard, the elimination of the fundamental policy will allow the Funds to
respond more quickly to changes of that standard, as well as to other legal,
regulatory, and market developments without the delay or expense of a
shareholder vote. The elimination of the fundamental policy would also conform
the limitations of the Funds with the limitation which is expected to
24 Proposal 4 American Century Investments
become standard for all diversified funds managed by ACIM. Adoption of this
change is not expected to materially affect the operation of the Funds.
CHANGE #2 TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING THE ISSUANCE OF SENIOR SECURITIES (ALL FUNDS)
The Funds' current fundamental investment limitation regarding the issuance of
senior securities states that a Fund shall not issue any senior security.
It is proposed that shareholders approve replacing the Funds' current
fundamental investment limitation with the following fundamental investment
limitation governing the issuance of senior securities:
"The Fund shall not issue senior securities, except as permitted under the
Investment Company Act of 1940."
The primary purpose of this proposed change is to revise the Fund's fundamental
senior securities limitation to conform to a limitation that is expected to
become the standard for all funds managed by ACIM. If the proposal is approved,
the new fundamental senior securities limitation will also require shareholder
approval to modify.
The proposed limitation clarifies that the Funds may issue senior securities to
the full extent permitted under the Investment Company Act. Although the
definition of a "senior security" involves complex statutory and regulatory
concepts, a senior security is generally thought of as an obligation of a fund
which has a claim to the fund's assets or earnings that takes precedence over
the claims of the fund's shareholders. The Investment Company Act generally
prohibits mutual funds from issuing any such security; however, mutual funds are
permitted to engage in certain types of transactions that might be considered
"senior securities" as long as certain conditions are met. For example, a
transaction which obligates a fund to pay money at a future date (e.g., the
purchase of securities to be settled on a date that is farther away than the
normal settlement period) may be considered a "senior security." A mutual fund
is permitted to enter into this type of transaction if it maintains a segregated
account containing liquid securities in an amount to its obligation to pay cash
for the securities at a future date. Funds would utilize transactions that may
be considered "senior securities" only in accordance with applicable regulatory
requirements under the Investment Company Act.
Adoption of the proposed limitation on senior securities is not expected to
materially affect the operation of the Funds. However, adoption of a
standardized fundamental investment limitation will facilitate ACIM's investment
compliance efforts and will allow the Fund to respond to developments in the
mutual fund industry and the law which may make the use of permissible senior
securities advantageous.
Proxy Statement Proposal 4 25
CHANGE #3 TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING BORROWING (ALL FUNDS)
The Funds' current fundamental investment limitation concerning borrowing states
generally that a Fund shall not borrow money with respect to any series of its
stock, except in an amount not in excess of 5% of the total assets of the fund,
and then only for emergency and extraordinary purposes, which shall not prohibit
the escrow and collateral arrangements in connection with investment in interest
rate futures contracts and related options.
It is proposed that shareholders approve replacing the Fund's current
fundamental investment limitation with the following fundamental investment
limitation governing borrowing:
"The Fund shall not borrow money, except that the Fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 331/3% of the Fund's total assets (including the
amount borrowed) less liabilities (other than borrowings)."
If the proposal is approved, the Funds would also adopt a non-fundamental
limitation intended to prevent leveraging of the Funds. The non-fundamental
limitation could be changed without a shareholder vote and would state as
follows:
"As an operating policy, the Fund shall not purchase additional investment
securities at any time during which outstanding borrowings exceed 5% of the
total assets of the Fund."
The primary purpose of the proposed change to the fundamental investment
limitation concerning borrowing is to conform it to a limitation that is
expected to become standard for all funds managed by ACIM. If the proposal is
approved, the amended fundamental borrowing limitation could not be changed
without a shareholder vote.
Adoption of the proposed limitation is not currently expected to materially
affect the operations of the Funds. However, the funds' current limitation
restricts borrowing to 5% of total assets, rather than the 331/3% in the
proposed limitation. The proposed limitation therefore would allow a Fund to
purchase a security while borrowings representing more than 5% of total assets
are outstanding. While the funds have no current intention to purchase
securities while borrowings equal to 5% of its total assets are outstanding, the
flexibility to do so may be beneficial to the Fund at a future date.
26 Proposal 4 American Century Investments
CHANGE #4 TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING LENDING (ALL FUNDS)
The Funds' current fundamental investment limitations concerning lending states
generally that a Fund shall not lend its portfolio securities except to
unaffiliated persons, and is subject to the rules and regulations adopted under
the Investment Company Act. No such rules and regulations have been promulgated,
but it is the Fund's current policy that such loans must be secured continuously
by cash collateral maintained on a current basis in an amount at least equal to
the market value of the securities loaned, or by irrevocable letters of credit.
During the existence of the loan, the Fund must continue to receive the
equivalent of the interest and dividends paid by the issuer on the securities
loaned and interest on the investment of the collateral; the Fund must have the
right to call the loan and obtain the securities loaned at any time on five
days' notice, including the right to call the loan to enable the Fund to vote
the securities. To comply with the requirements of certain state securities
administrators, such loans may not exceed one-third of the corporation's net
assets taken at market. It is also the current policy of the Funds not to permit
interest on loaned securities of any Fund to exceed 10% of the annual gross
income of that Fund (without offset for realized capital gains).
It is proposed that shareholders approve the replacement of the foregoing
investment limitations with the following amended fundamental limitation
concerning lending (which, if approved, could not be changed without a
shareholder vote):
"The Fund may not lend any security or make any other loan if, as a result,
more than 331/3% of the Fund's total assets would be lent to other parties,
except, (i) through the purchase of debt securities in accordance with its
investment objective, policies and limitations, or (ii) by engaging in
repurchase agreements with respect to portfolio securities."
The proposal is not expected to materially affect the operation of the Funds.
However, the proposed limitation would clarify the Funds' ability to invest in
direct debt instruments such as loans and loan participations, which are
interests in amounts owed to another party by a company, government or other
borrower. These types of securities may have additional risks beyond
conventional debt securities because they may provide less legal protection for
the Fund, or there may be a requirement that the Fund supply additional cash to
a borrower on demand.
Finally, the adoption of standardized investment limitations proposed will
advance the goals of investment limitation standardization.
Proxy Statement Proposal 4 27
CHANGE #5 TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING CONCENTRATION OF INVESTMENTS IN A PARTICULAR INDUSTRY
(ALL FUNDS)
The Funds currently have a fundamental investment limitation regarding the
concentration of investments in a particular industry which states generally
that a Fund shall not concentrate its investment in a particular company or a
particular industry by investing more than 25% of the assets of each series,
exclusive of cash and government securities, in securities of any one industry.
Shareholders are being asked to approve amendment of the above investment
limitation. As proposed, the Funds' current fundamental investment limitation
will be replaced by the following fundamental investment limitation which will
govern concentration of investments:
"The Fund shall not concentrate its investments in securities of issuers in
a particular industry (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities)."
The primary purpose of the proposed amendment is to adopt a concentration
limitation that is expected to become the standard for all funds managed by
ACIM. If the proposal is approved, the new fundamental investment limitation may
not be changed without a shareholder vote.
CHANGE #6 TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION
REGARDING INVESTMENTS IN ILLIQUID SECURITIES (ALL FUNDS)
Each Fund currently has a fundamental investment limitation concerning illiquid
securities that provides that a Fund shall not invest more than 15% of its
assets in illiquid investments, except for any fund intended to be a money
market fund, which shall not invest more than 10% of its assets in illiquid
investments.
It is proposed that shareholders approve replacing this fundamental limitation
with the following non-fundamental limitation:
"As an operating policy, The Fund may not purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of its net
assets (10% for money market funds) would be invested in repurchase
agreements not entitling the holder to payment of principal and interest
within seven days and in securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily available
market."
Under the rules established by the Securities and Exchange Commission, mutual
funds are required to price their shares daily and to offer daily redemptions
with payment to follow within seven days of the redemption request. In order to
ensure that funds can satisfy these requirements, the SEC requires mutual funds
to limit their holdings in illiquid securities to
28 Proposal 4 American Century Investments
15% of their net assets (10% for money market funds). This is due to the fact
that illiquid securities may be difficult to value daily and difficult to sell
promptly at an acceptable price.
The percentage limitation restricting the amount a mutual fund may invest in
illiquid securities has been changed by the SEC over time. For example, prior to
1993, the percentage limit on a fund's investment in illiquid securities was
10%.
In order to be able to respond to regulatory and market developments without the
delay and expense of a shareholder vote, we are asking that shareholders
eliminate this fundamental investment limitation and replace it with a similar
non-fundamental limitation. While non-fundamental investment limitations can be
changed without shareholder approval, such changes still require the approval of
your Board of Directors.
If this proposal is approved by shareholders, the specific types of securities
that may be deemed illiquid will be determined by ACIM, utilizing the guidelines
that it currently uses.
The types of securities that may be considered illiquid by ACIM will vary over
time based on changing market and regulatory conditions. In determining the
liquidity of each Fund's investments, ACIM may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of dealers
and prospective purchasers in the marketplace, (3) dealer undertakings to make a
market, (4) the nature of the security (including any demand or tender
features), or (5) the nature of the marketplace for trades (including the
ability to assign or offset the Fund's rights and obligations relating to the
investment). Currently, ACIM anticipates treating repurchase agreements maturing
in more than seven days, over-the-counter options, non-government stripped
fixed-rate mortgage backed securities, and some government stripped, fixed-rate
mortgage backed securities, loans and other direct debt instruments, and swap
agreements as illiquid securities.
The proposed change will not materially impact the operation of the Funds.
However, adoption of a standardized non-fundamental investment limitation will
facilitate ACIM's investment compliance efforts and will enable the Funds to
respond more promptly if circumstances suggest such a change in the future.
CHANGE #7 TO ELIMINATE THE FUNDAMENTAL LIMITATION CONCERNING
INVESTMENT IN OTHER INVESTMENT COMPANIES (ALL FUNDS EXCEPT
STRATEGIC ALLOCATION: CONSERVATIVE, STRATEGIC ALLOCATION: MODERATE
AND STRATEGIC ALLOCATION: AGGRESSIVE)
The Fund's current fundamental limitation concerning investment in other
investment companies states that a Fund shall not invest in the securities of
other investment companies except by purchases in the open market involving only
customary brokers' commissions and no sales charges. Shareholders are being
asked to approve the elimination of this policy.
Proxy Statement Proposal 4 29
The ability of mutual funds to invest in other investment companies is
restricted by the Investment Company Act, which requires that a fund not invest
more than 10% of its total assets in other investment companies. These
restrictions will remain applicable to the Funds whether or not they are recited
in a fundamental limitation. As a result, elimination of the above fundamental
limitation is not expected to have any material impact on the Funds' investment
practices, except to the extent that regulatory requirements may change in the
future.
The funds issued by American Century Strategic Asset Allocations, Inc. are not
currently subject to the fundamental restriction on investment in other
investment companies.
CHANGE #8 TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING INVESTMENTS IN REAL ESTATE (ALL FUNDS)
The Funds currently have a fundamental investment limitation regarding the
purchase of real estate which states generally that a fund shall not purchase or
sell real estate. In the opinion of management, this restriction does not
currently preclude investment in securities of corporations that deal in real
estate.
Shareholders are being asked to approve amendment of the above investment
limitation. As proposed, the Funds' current fundamental investment limitation
will be replaced by the following fundamental investment limitation which will
govern future purchases and sales of real estate:
"The Fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments. This policy shall not
prevent the Fund from investment in securities or other instruments backed
by real estate or securities of companies that deal in real estate or are
engaged in the real estate business."
The primary purpose of the proposed amendment is to clarify the types of
securities in which the Fund is authorized to invest and to conform the Fund's
fundamental real estate limitation to a limitation that is expected to become
the standard for all funds managed by ACIM. If the proposal is approved, the new
fundamental real estate limitation may not be changed without a shareholder
vote.
The proposed limitation would make it explicit that each of the Funds may
acquire a security or other instrument whose payments of interest and principal
may be secured by a mortgage or other right to foreclose on real estate, in the
event of default. Any investments in these securities are, of course, subject to
the Fund's investment objective and policies and to other limitations regarding
diversification and concentration. The proposed limitation also specifically
permits the Fund to sell real estate acquired as a result of ownership of
securities or other instruments. However, in light of the types of securities in
which the Funds regularly invest, ACIM considers this to be a remote
possibility.
30 Proposal 4 American Century Investments
To the extent that a Fund buys securities and instruments of companies in the
real estate business, the fund's performance will be affected by the condition
of the real estate market. This industry is sensitive to factors such as changes
in real estate values and property taxes, overbuilding, variations in rental
income, and interest rates. Performance could also be affected by the structure,
cash flow, and arrangement skill of real estate companies.
While the proposed change will have no current impact on the Funds, adoption of
the proposed standardized fundamental investment limitation will advance the
goals of standardization.
CHANGE #9 TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING UNDERWRITING (ALL FUNDS)
Each Fund is currently subject to a fundamental investment limitation concerning
underwriting which provides that a Fund shall not underwrite any securities.
It is proposed that shareholders approve replacing the current limitation with
the following fundamental investment limitation concerning underwriting:
"The Fund shall not act as an underwriter of securities issued by others,
except to the extent that the Fund may be considered an underwriter within
the meaning of the Securities Act of 1933 in the disposition of restricted
securities."
The primary purpose of the proposed amendment is to clarify that the Funds are
not prohibited from selling restricted securities if, as a result of the sale,
the Funds would be considered underwriters under federal securities law. It is
also intended to revise the Funds' fundamental limitation on underwriting so
that it conforms to a limitation which is expected to become standard for all
funds managed by ACIM. While the proposed change will have no current impact on
the Fund, adoption of the proposed standardized fundamental investment
limitation will advance the goals of standardization.
CHANGE #10 TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING COMMODITIES (ALL FUNDS)
Each Fund currently is subject to a fundamental investment limitation that
provides that a Fund shall not purchase or sell commodities or commodity
contracts, except that certain funds may, for non-speculative purposes, buy or
sell interest rate futures contracts on debt securities (debt futures and bond
index futures) and related options.
It is proposed that shareholders approve replacing the current limitation with
the following amended fundamental investment limitation concerning commodities:
Proxy Statement Proposal 4 31
"The Fund may not purchase or sell physical commodities unless acquired as
a result of ownership of securities or other instruments; provided that
this policy shall not prohibit the Fund from purchasing or selling options
and futures contracts or from investing in securities or other instruments
backed by physical commodities."
The proposed amendment is intended to allow appropriate Funds to have the
flexibility to invest in futures contracts and related options, including
financial futures such as interest rate and stock index futures (S&P 500, etc.).
Certain Funds currently have the ability to invest in financial futures, these
include the Funds issued by American Century Capital Portfolios, Inc. and
American Century Strategic Asset Allocations, Inc., as well as the tax-exempt
Funds issued by American Century Mutual Funds, Inc. Under the proposed
amendment, these types of securities may be used for hedging or for investment
purposes and involve certain risks.
ACIM recognizes that investment in futures contracts and related options may not
be appropriate for all funds. If the proposed amendment is approved, ACIM and
the Board of Directors will determine the appropriateness of investment in
futures contracts (including financial futures) and related options on a
fund-by-fund basis. ACIM would propose that the Board of Directors adopt a
non-fundamental limitation allowing investment in certain types of futures
contracts and related options for those Funds for which the Directors and ACIM
determine such investment is appropriate. The adoption of such a non-fundamental
limitation by the Board of Directors of a Fund will be accompanied by
appropriate disclosure of such policy in the Prospectus and/or Statement of
Additional Information of the Fund.
The proposed amendment will also serve the purpose of conforming the limitation
with the limitation which is expected to become standard for all funds managed
by ACIM. While the proposed change will have no material impact on the operation
of the Funds, adoption of the proposed standardized fundamental investment
limitation will advance the goals of standardization.
CHANGE #11 TO ELIMINATE THE FUNDAMENTAL LIMITATION CONCERNING
INVESTMENTS IN ISSUERS WITH LESS THAN THREE YEARS OF CONTINUOUS
OPERATIONS (ALL FUNDS EXCEPT STRATEGIC ALLOCATION: CONSERVATIVE,
STRATEGIC ALLOCATION: MODERATE AND STRATEGIC ALLOCATION: AGGRESSIVE)
Each Fund is currently subject to a fundamental investment limitation which
provides that a Fund shall not invest in securities of companies that, including
predecessors, have a record of less than three years of continuous operation
(often called "unseasoned issuers"). It is proposed that shareholders approve
the elimination of the above fundamental investment limitation.
This investment limitation was originally adopted in response to state "Blue
Sky" requirements in connection with the registration of shares of the
32 Proposal 4 American Century Investments
Funds for sale. These requirements are no longer applicable to the Funds. The
Investment Company Act does not contain a similar restriction. ACIM does not
believe that a blanket prohibition against these types of investments is in the
best interests of the Funds, especially for those funds that invest in smaller
companies. Accordingly, it is recommending the change. These smaller companies
may present greater opportunities for capital appreciation, but may also involve
greater risks than large, mature issuers. Such companies may have limited
product lines, markets or financial resources, and their securities may trade
less frequently and in more limited volume than the securities of larger
companies. In addition, available information regarding these smaller companies
may be less available and, when available, may be incomplete or inaccurate. The
securities of such companies may also be more likely to be delisted from trading
on their primary exchange. As a result, the securities of smaller companies may
experience significantly more price volatility and less liquidity than
securities of larger companies, and any resulting volatility and limited
liquidity will impact the Funds.
ACIM recognizes that the investment in securities of companies with less than
three years of continuous operating history may not be appropriate for all of
the Funds. If the proposed amendment is approved, ACIM and the Board of
Directors will determine the appropriateness of such investments on a
fund-by-fund basis. ACIM would propose that the Board of Directors adopt a
non-fundamental limitation allowing investment in securities of issuers with
less than three years continuous operating history for those Funds for which the
Directors and ACIM determine such investment is appropriate. The adoption of
such a non-fundamental limitation by the Board of Directors of a Fund will be
accompanied by appropriate disclosure of such policy in the Prospectus and/or
Statement of Additional Information of such Fund.
Funds issued by American Century Strategic Asset Allocations, Inc. are not
currently subject to the fundamental restriction on investment in companies with
less than three years continuous operating history.
CHANGE #12 TO ELIMINATE THE FUNDAMENTAL LIMITATION CONCERNING
SHORT SALES (ALL FUNDS)
Each Fund is currently subject to a fundamental investment restriction which
provides that a Fund shall not sell securities short (unless it owns, or by
virtue of its ownership of other securities, has the right to obtain securities
equivalent in kind and amount to the securities sold). It is proposed that
shareholders approve the elimination of this fundamental investment limitation.
If the proposal is approved, the current fundamental limitation will be replaced
with a non-fundamental limitation which could be changed
Proxy Statement Proposal 4 33
without a shareholder vote. The proposed non-fundamental limitation is as
follows:
"As an operating policy, the Fund shall not sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transaction in futures
contracts and options are not deemed to constitute selling securities
short."
In a short sale, an investor sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. In an investment
technique known as a short sale "against the box," an investor sells short while
owning the same securities in the same amount, or having the right to obtain
equivalent securities. The investor could have the right to obtain equivalent
securities, for example, through its ownership of warrants, options, or
convertible bonds.
ACIM recognizes that short sales may not be appropriate for all of the Funds. If
the proposal is approved, ACIM and the Board of Directors of the Funds will
determine the appropriateness of short sales on a fund-by-fund basis.
Appropriate disclosure of this practice will also be included in such Fund's
Prospectus and/or Statement of Additional Information.
While the proposed change will not materially impact the operation of the Funds,
elimination of the investment limitation will advance the goals of
standardization.
CHANGE #13 TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING MARGIN PURCHASES OF SECURITIES (ALL FUNDS)
The Funds' currently have a fundamental investment limitation concerning
purchasing securities on margin that generally provides that a Fund shall not
purchase securities on margin; however, the Fund may make margin deposits in
connection with the use of any financial instrument or any transaction in
securities permitted by its fundamental policies.
It is proposed that shareholders of the Fund approve the elimination of this
fundamental investment limitation. If the proposal is approved, the Directors
intend to replace the current fundamental limitation with a non-fundamental
limitation which could be changed without a shareholder vote. The proposed
non-fundamental limitation is as follows:
"As an operating policy, the Fund shall not purchase securities on margin,
except that the Fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin."
Margin purchases involve the purchase of securities with money borrowed from a
broker. "Margin" is the cash or eligible securities that the
34 Proposal 4 American Century Investments
borrower places with a broker as collateral against the loan. The current
fundamental limitation prohibits a Fund from purchasing securities on margin,
except to obtain such short-term credits as may be necessary for the clearance
of transactions. Mutual funds are generally prohibited from entering into most
types of margin purchase. However, policies of the SEC allow mutual funds to
purchase securities on margin for initial and variation margin payments made in
connection with the purchase and sale of futures contracts and options on
futures contracts. The proposed non-fundamental limitation would parallel the
SEC's policies.
Although elimination of the Funds' fundamental limitation on margin purchases is
unlikely to materially affect any Fund's investment techniques at this time, in
the event of a change in federal regulatory requirements, the Funds will be able
to alter their investment practices without the delay and expense of a
shareholder vote. We believe that efforts to standardize investment limitations
will also facilitate ACIM's investment compliance efforts.
It may seem to most shareholders that the 13 proposals to modify fundamental
investment policies are technical and somewhat difficult to understand. ACIM
believes, however, that adopting uniform limitations, as well as ones that are
appropriate to the Funds, are in the best interests of Fund shareholders. Your
Board of Directors supports those efforts.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
ADOPTION OF STANDARDIZED FUNDAMENTAL INVESTMENT RESTRICTIONS.
PROPOSAL 5:
AMEND A FUNDAMENTAL
INVESTMENT POLICY OF
TWENTIETH CENTURY HERITAGE FUND.
The investment strategy of the Twentieth Century Heritage Fund, as described in
its current prospectus, states as follows:
Securities of companies chosen for the Select and Heritage fund are chosen
primarily for their growth potential. ADDITIONALLY, AS A MATTER OF
FUNDAMENTAL POLICY, 80% OF THE ASSETS OF SELECT AND HERITAGE MUST BE
INVESTED IN SECURITIES OF COMPANIES THAT HAVE A RECORD OF PAYING DIVIDENDS,
OR HAVE COMMITTED THEMSELVES TO THE PAYMENT OF REGULAR DIVIDENDS, OR
OTHERWISE PRODUCE INCOME.
ACIM has proposed, and the Board of Directors of the Fund has approved, amending
the bolded statement of fundamental policy set forth above to
Proxy Statement Proposal 5 35
make the requirement to invest in dividend-paying companies applicable to only
60% of the Heritage fund's assets. Specifically, ACIM and the Board of Directors
recommend shareholders approve a revised policy that provides as follows:
Additionally, as a matter of fundamental policy, 80% of the assets of the
Select fund and 60% of the Heritage fund must be invested in securities of
companies that have a record of paying dividends or have committed
themselves to the payment of regular dividends, or otherwise produce
income.
The proposed amendment of Heritage's fundamental investment policy will not
change the basic growth objective of Heritage, nor will it change the type of
securities selected for its portfolio. Those securities will be, as they have
been in the past, securities (primarily common stocks) that ACIM believes have
better-than-average prospects for appreciation.
ACIM believes, however, that given the Heritage fund's focus on investing in
small- to medium-sized companies, the current 80% dividend payment requirement
unnecessarily limits the fund's choice of investment opportunities. In pursuing
its investment objective, Heritage looks for companies whose earning and
revenues are growing at an accelerating rate. Many of these companies, however,
have elected to forego paying dividends, and instead invest earnings back into
the growth of the company. In addition, numerous other firms have elected to use
the cash they would otherwise use to pay dividends to instead engage in share
buyback programs. By engaging in buyback programs, the companies create
additional earnings per share growth and additional value for existing
shareholders. Reducing the dividend payment requirement to 60% of fund assets
will allow the Fund to invest more of its assets in these growing
nondividend-paying companies if they represent attractive investment
opportunities. This will allow the Fund to own a broader and deeper variety of
investments while retaining its primary concentration on firms paying cash
dividends. This change is being proposed by ACIM with the intent of enhancing
the long-term performance potential of the Fund.
The proposed amendment will allow the Fund to invest more of its assets in
companies with greater appreciation potential than is currently possible.
However, such securities may also have greater downside risk, or depreciation
potential, as well. Because 60% of fund assets will still be invested in
dividend-paying or income producing securities, however, ACIM does not believe
that the general risk potential of the Fund will be materially increased by the
proposed change.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT.
36 Proposal 5 American Century Investments
OTHER MATTERS
OTHER BUSINESS TO BE BROUGHT BEFORE THE MEETING
The Board of Directors knows of no other business to be brought before the
meeting. However, if any other matters are properly brought before the meeting,
it is the intention that proxies which do not contain specific restrictions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named in the enclosed form of proxy.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Funds do not hold annual shareholder meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to William M. Lyons, Executive Vice
President, American Century Investments, P.O. Box 419200, Kansas City, Missouri
64141-6200.
NOTICE TO BANKS, BROKER-DEALERS, AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the applicable Fund(s), in care of American Century Investments,
P.O. Box 419200, Kansas City, Missouri 64141-6200, whether other persons are
beneficial owners of shares for which proxies are being solicited and, if so,
the number of copies of the proxy statement you wish to receive in order to
supply copies to the beneficial owners of the respective shares.
June 2, 1997 William M. Lyons
Executive Vice President
Proxy Statement Other Matters 37
Schedule I
Number of Outstanding Votes
as of May 5, 1997
Registered
Investment Investment Number of Votes
Company Company as of May 5, 1997
- --------------------------------------------------------------------------------
American Century
Capital Portfolios, Inc. American Century
Equity Income
Advisor Class 177,696.18
Investor Class 218,311,655.36
Institutional Class 0
-------------------------------------------------
American Century
Value Fund
Advisor Class 32,002,619.56
Investor Class 1,858,433,725.97
Institutional Class 0
-------------------------------------------------
American Century
Mutual Funds, Inc. American Century
Balanced Fund
Advisor Class 3,611,625.11
Investor Class 875,936,380.81
Institutional Class 0
-------------------------------------------------
Benham Bond Fund
Advisor Class 0
Investor Class 128,552,702.90
-------------------------------------------------
Benham Cash Reserve Fund
Advisor Class 650,109.60
Investor Class 1,225,062,056.16
-------------------------------------------------
Benham Intermediate-Term
Bond Fund
Advisor Class 0
Investor Class 17,281,842.69
-------------------------------------------------
Benham Limited-Term
Bond Fund
Advisor Class 0
Investor Class 9,316,007.28
-------------------------------------------------
Twentieth Century Giftrust 786,265,781.69
-------------------------------------------------
38 Schedule I American Century Investments
Registered
Investment Investment Number of Votes
Company Company as of May 5, 1997
- --------------------------------------------------------------------------------
American Century
Mutual Funds, Inc. Twentieth Century
(cont.) Growth Fund
Advisor Class 0
Investor Class 4,600,782,884.51
Institutional Class 0
-------------------------------------------------
Twentieth Century
Heritage Fund
Advisor Class 0
Investor Class 1,132,456,358.55
Institutional Class 0
-------------------------------------------------
Twentieth Century
New Opportunities Fund 159,793,610.66
-------------------------------------------------
Twentieth Century
Select Fund
Advisor Class 0
Investor Class 4,354,861,879.38
Institutional Class 11,018,265.73
-------------------------------------------------
Twentieth Century Ultra Fund
Advisor Class 18,583,520.45
Investor Class 19,759,992,185.49
Institutional Class 107,626.31
-------------------------------------------------
Twentieth Century
Vista Fund
Advisor Class 5,508,385.71
Investor Class 1,706,123,992.43
Institutional Class 14,322,696.81
-------------------------------------------------
American Century
Premium Reserves, Inc. Benham Premium Bond Fund 49,206,460.43
-------------------------------------------------
Benham Premium
Capital Reserve Fund 150,486,000.72
-------------------------------------------------
Benham Premium
Government Reserve Fund 41,599,553.17
-------------------------------------------------
Proxy Statement Schedule I 39
Registered
Investment Investment Number of Votes
Company Company as of May 5, 1997
- --------------------------------------------------------------------------------
American Century
Strategic Asset
Allocations, Inc. American Century
Strategic Allocation:
Aggressive
Advisor Class 5,776,713.82
Investor Class 83,417,713.70
-------------------------------------------------
American Century
Strategic Allocation:
Conservative
Advisor Class 3,840,998.42
Investor Class 50,891,901.79
-------------------------------------------------
American Century
Strategic Allocation:
Moderate
Advisor Class 7,156,880.52
Investor Class 127,578,094.77
-------------------------------------------------
American Century
World Mutual
Funds, Inc. Twentieth Century
International
Discovery Fund
Advisor Class 0
Investor Class 542,867,133.92
Institutional Class 0
-------------------------------------------------
Twentieth Century
International
Growth Fund
Advisor Class 5,580,799.83
Investor Class 1,541,221,833.09
Institutional Class 0
-------------------------------------------------
40 Schedule I American Century Investments
APPENDIX I
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") is made as of the 1st day of August,
1997, by and between [NAME OF COMPANY], a Maryland corporation (hereinafter
called the "Corporation"), and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC., a
Delaware corporation (hereinafter called the "Investment Manager").
WHEREAS, the Corporation has adopted a Multiple Class Plan dated as of September
3, 1996 (as the same may be amended from time to time, the "Multiple Class
Plan"), pursuant to Rule 18f-3 of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and
WHEREAS, the Multiple Class Plan establishes four classes of shares for certain
series of shares of the Corporation: the Investor Class, the Institutional
Class, the Service Class, and the Advisor Class; and
WHEREAS, the parties hereto desire to enter into this Agreement to arrange for
investment management services to be provided by Investment Manager for all
classes of shares issued by the Corporation.
NOW, THEREFORE, IN CONSIDERATION of the mutual promises and agreements herein
contained, the parties agree as follows:
1. INVESTMENT MANAGEMENT SERVICES. The Investment Manager shall supervise the
investments of each class of each series of shares of the Corporation
contemplated as of the date hereof, and each class of each subsequent
series of shares as the Corporation shall select the Investment Manager to
manage. In such capacity, the Investment Manager shall either directly, or
through the utilization of others as contemplated by Section 7 on page 43,
maintain a continuous investment program for each series, determine what
securities shall be purchased or sold by each series, secure and evaluate
such information as it deems proper and take whatever action is necessary
or convenient to perform its functions, including the placing of purchase
and sale orders. In performing its duties hereunder, the Investment Manager
will manage the portfolio of all classes of shares of a particular series
as a single portfolio.
2. COMPLIANCE WITH LAWS. All functions undertaken by the Investment Manager
hereunder shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and any rules and regulations promulgated
thereunder; (2) any other applicable provisions of law; (3) the Articles of
Incorporation of the Corporation as amended from time to time; (4) the
Bylaws of the Corporation as amended from time to time; (5) the Multiple
Class Plan; and (6) the registration
Proxy Statement Appendix I 41
statement(s) of the Corporation, as amended from time to time, filed under
the Securities Act of 1933 and the Investment Company Act.
3. BOARD SUPERVISION. All of the functions undertaken by the Investment
Manager hereunder shall at all times be subject to the direction of the
Board of Directors of the Corporation, its executive committee, or any
committee or officers of the Corporation acting under the authority of the
Board of Directors.
4. PAYMENT OF EXPENSES. The Investment Manager will pay all of the expenses of
each class of each series of the Corporation's shares that it shall manage
other than interest, taxes, brokerage commissions, extraordinary expenses,
the fees and expenses of those directors who are not "interested persons"
as defined in the Investment Company Act (hereinafter referred to as the
"Independent Directors") (including counsel fees), and expenses incurred in
connection with the provision of shareholder services and distribution
services under the Master Distribution and Shareholder Services Plan
adopted by the Corporation and dated September 3, 1996. The Investment
Manager will provide the Corporation with all physical facilities and
personnel required to carry on the business of each class of each series of
the Corporation's shares that it shall manage, including but not limited to
office space, office furniture, fixtures and equipment, office supplies,
computer hardware and software and salaried and hourly paid personnel. The
Investment Manager may at its expense employ others to provide all or any
part of such facilities and personnel.
5. ACCOUNT FEES. The Corporation, by resolution of the Board of Directors,
including a majority of the Independent Directors, may from time to time
authorize the imposition of a fee as a direct charge against shareholder
accounts of any class of one or more of the series, such fee to be retained
by the Corporation or to be paid to the Investment Manager to defray
expenses which would otherwise be paid by the Investment Manager in
accordance with the provisions of paragraph 4 of this Agreement. At least
sixty days prior written notice of the intent to impose such fee must be
given to the shareholders of the affected class and series.
6. MANAGEMENT FEES.
(a) In consideration of the services provided by the Investment Manager,
each class of each series of shares of the Corporation managed by the
Investment Manager shall pay to the Investment Manager a per annum
management fee (hereinafter, the "Applicable Fee") as follows:
42 Appendix I American Century Investments
NAME OF SERIES NAME OF CLASS APPLICABLE FEE RATE
---------------------------------------------------------------------------
[For a schedule of the proposed management fees payable by each Fund,
please refer to pages 16-18 of this proxy statement.]
---------------------------------------------------------------------------
(b) On the first business day of each month, each class of each series of
shares set forth above shall pay the management fee at the rate
specified by subparagraph (a) of this paragraph 6 to the Investment
Manager for the previous month. The fee for the previous month shall
be calculated by multiplying the Applicable Fee set forth above for
each class and series by the aggregate average daily closing value of
the net assets of each class and series during the previous month, and
further multiplying that product by a fraction, the numerator of which
shall be the number of days in the previous month, and the denominator
of which shall be 365 (366 in leap years).
(c) In the event that the Board of Directors of the Corporation shall
determine to issue any additional series or classes of shares for
which it is proposed that the Investment Manager serve as investment
manager, the Corporation and the Investment Manager may enter into an
Addendum to this Agreement setting forth the name of the series, the
Applicable Fee and such other terms and conditions as are applicable
to the management of such series of shares.
7. SUBCONTRACTS. In rendering the services to be provided pursuant to this
Agreement, the Investment Manager may, from time to time, engage or
associate itself with such persons or entities as it determines is
necessary or convenient in its sole discretion and may contract with such
persons or entities to obtain information, investment advisory and
management services, or such other services as the Investment Manager deems
appropriate. Any fees, compensation or expenses to be paid to any such
person or entity shall be paid by the Investment Manager, and no obligation
to such person or entity shall be incurred on behalf of the Corporation.
Any arrangement entered into pursuant to this paragraph shall, to the
extent required by law, be subject to the approval of the Board of
Directors of the Corporation, including a majority of the Independent
Directors, and the shareholders of the Corporation.
8. CONTINUATION OF AGREEMENT. This Agreement shall continue in effect, unless
sooner terminated as hereinafter provided, for a period of two years from
the execution hereof, and for as long thereafter as its continuance is
specifically approved at least annually (a) by the Board of Directors of
the Corporation or by the vote of a majority of the outstanding class of
voting securities of each series and (b) by the vote of
Proxy Statement Appendix I 43
a majority of the Directors of the Corporation, who are not parties to the
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
9. TERMINATION. This Agreement may be terminated by the Investment Manager at
any time without penalty upon giving the Corporation 60 days' written
notice, and may be terminated at any time without penalty by the Board of
Directors of the Corporation or by vote of a majority of the outstanding
voting securities of each class of each series on 60 days' written notice
to the Investment Manager.
10. EFFECT OF ASSIGNMENT. This Agreement shall automatically terminate in the
event of assignment by the Investment Manager, the term "assignment" for
this purpose having the meaning defined in Section 2(a)(4) of the
Investment Company Act.
11. OTHER ACTIVITIES. Nothing herein shall be deemed to limit or restrict the
right of the Investment Manager, or the right of any of its officers,
directors or employees (who may also be a director, officer or employee of
the Corporation), to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether
of a similar or dissimilar nature, or to render services of any kind to any
other corporation, firm, individual or association.
12. STANDARD OF CARE. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or duties hereunder on
the part of the Investment Manager, it, as an inducement to it to enter
into this Agreement, shall not be subject to liability to the Corporation
or to any shareholder of the Corporation for any act or omission in the
course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any
security.
13. SEPARATE AGREEMENT. The parties hereto acknowledge that certain provisions
of the Investment Company Act, in effect, treat each series of shares of an
investment company as a separate investment company. Accordingly, the
parties hereto hereby acknowledge and agree that, to the extent deemed
appropriate and consistent with the Investment Company Act, this Agreement
shall be deemed to constitute a separate agreement between the Investment
Manager and each series of shares of the Corporation managed by the
Investment Manager.
14. USE OF THE NAMES "AMERICAN CENTURY," "TWENTIETH CENTURY," AND "BENHAM." The
names "American Century," "Twentieth Century," and "Benham" and all rights
to the use of the names "American Century," "Twentieth Century," and
"Benham" are the exclusive property of American Century Services
Corporation ("ACSC"). ACSC has consented
44 Appendix I American Century Investments
to, and granted a non-exclusive license for, the use by the Corporation of
the names "American Century," "Twentieth Century," and "Benham" in the name
of the Corporation and any series of shares thereof. Such consent and
non-exclusive license may be revoked by ACSC in its discretion if ACSC, the
Investment Manager, or a subsidiary or affiliate of either of them is not
employed as the investment advisor of each series of shares of the
Corporation. In the event of such revocation, the Corporation and each
series of shares thereof using the names "American Century," "Twentieth
Century," or "Benham" shall cease using the names "American Century,"
"Twentieth Century," or "Benham," unless otherwise consented to by ACSC or
any successor to its interest in such names.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers as of the day and year first above
written.
[Name of Company] American Century Investment
Management, Inc.
By: By:
Name: Name:
Title: Title:
Attest: Attest:
Name: Name:
Title: Title:
Proxy Statement Appendix I 45
APPENDIX II
PROPOSED STANDARD FUNDAMENTAL
INVESTMENT RESTRICTIONS
1. The Fund shall not issue senior securities, except as permitted under the
Investment Company Act of 1940.
2. The Fund shall not borrow money, except that the Fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 331/3% of the Fund's total assets (including the
amount borrowed) less liabilities (other than borrowings).
3. The Fund shall not lend any security or make any other loan if, as a
result, more than 331/3% of the Fund's total assets would be lent to other
parties, except, (i) through the purchase of debt securities in accordance
with its investment objective, policies and limitations, or (ii) by
engaging in repurchase agreements with respect to portfolio securities.
4. The Fund shall not concentrate its investments in securities of issuers in
a particular industry (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities).
5. The Fund shall not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments. This policy shall not
prevent the Fund from investment in securities or other instruments backed
by real estate or securities of companies that deal in real estate or are
engaged in the real estate business.
6. The Fund shall not act as an underwriter of securities issued by others,
except to the extent that the Fund may be considered an underwriter within
the meaning of the Securities Act of 1933 in the disposition of restricted
securities.
7. The Fund shall not purchase or sell physical commodities unless acquired as
a result of ownership of securities or other instruments; provided that
this limitation shall not prohibit the Fund from purchasing or selling
options and futures contracts or from investing in securities or other
instruments backed by physical commodities.
8. The Fund shall not invest for purposes of exercising control over
management.
46 Appendix II American Century Investments
APPENDIX III
CURRENT FUNDAMENTAL
INVESTMENT RESTRICTIONS
AMERICAN CENTURY
MUTUAL FUNDS, INC.
Additional fundamental policies that may be changed only with shareholder
approval provide that, with the exception of New Opportunities, each series of
shares:
1. Shall not invest more than 15% of its assets in illiquid investments,
except for any fund intended to be a money market fund, which shall not
invest more than 10% of its assets in illiquid investments.
2. Shall not invest in the securities of companies that, including
predecessors, have a record of less than three years of continuous
operation.
3. Shall not lend its portfolio securities except to unaffiliated persons, and
is subject to the rules and regulations adopted under the Investment
Company Act. No such rules and regulations have been promulgated, but it is
the corporation's policy that such loans must be secured continuously by
cash collateral maintained on a current basis in an amount at least equal
to the market value of the securities loaned, or by irrevocable letters of
credit. During the existence of the loan, the corporation must continue to
receive the equivalent of the interest and dividends paid by the issuer on
the securities loaned and interest on the investment of the collateral; the
corporation must have the right to call the loan and obtain the securities
loaned at any time on five days' notice, including the right to call the
loan to enable the corporation to vote the securities. To comply with the
regulations of certain state securities administrators, such loans may not
exceed one-third of the corporation's net assets taken at market. It is the
policy of the corporation not to permit interest on loaned securities of
any series to exceed 10% of the annual gross income of that series (without
offset for realized capital gains).
4. Shall not purchase the security of any one issuer if such purchase would
cause more than 5% of the corporation's assets at market to be invested in
the securities of such issuer, except United States government securities,
or if the purchase would cause more than
Proxy Statement Appendix III 47
10% of the outstanding voting securities of any one issuer to be held in
the corporation's portfolio.
5. Shall not invest for control or for management, or concentrate its
investment in a particular company or a particular industry. No more than
25% of the assets of each series, exclusive of cash and government
securities, will be invested in securities of any one industry. The
corporation's policy in this respect includes the statement "The
management's definition of the phrase `any one industry' shall be
conclusive unless clearly unreasonable." That statement may be ineffective
because it may be an attempt to waive a provision of the law, and such
waivers are void.
6. Shall not buy securities on margin nor sell short (unless it owns, or by
virtue of its ownership of, other securities has the right to obtain
securities equivalent in kind and amount to the securities sold); however,
the corporation's funds may make margin deposits in connection with the use
of any financial instrument or any transaction in securities permitted by
their fundamental policies.
7. Shall not invest in the securities of other investment companies except by
purchases in the open market involving only customary brokers' commissions
and no sales charges.
8. Shall not issue any senior security.
9. Shall not underwrite any securities.
10. Shall not purchase or sell real estate. (In the opinion of management, this
restriction will not preclude the corporation from investing in securities
of corporations that deal in real estate.)
11. Shall not purchase or sell commodities or commodity contracts; except that
Limited-Term Bond, Intermediate-Term Bond, Benham Bond, Limited-Term
Tax-Exempt, Intermediate-Term Tax-Exempt and Long-Term Tax-Exempt may, for
non-speculative purposes, buy or sell interest rate futures contracts on
debt securities (debt futures and bond index futures) and related options.
12. Shall not borrow any money with respect to any series of its stock, except
in an amount not in excess of 5% of the total assets of the series, and
then only for emergency and extraordinary purposes; this does not prohibit
the escrow and collateral arrangements in connection with investment in
interest rate futures contracts and related options by Limited-Term Bond,
Intermediate-Term Bond, Benham Bond, Limited-Term Tax-Exempt,
Intermediate-Term Tax-Exempt and Long-Term Tax-Exempt.
48 Appendix III American Century Investments
Paragraphs 3, 5, 8 and 9 shall also apply as fundamental policies of New
Opportunities. Paragraphs 1, 2, 6, 7, 10, 11 and 12 shall also apply to New
Opportunities, but shall not be considered fundamental policies. Paragraph 4
shall apply to New Opportunities with respect to 75% of its portfolio and shall
not be considered a fundamental policy.
APPENDIX IV
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AMERICAN CENTURY WORLD
MUTUAL FUNDS, INC.
Additional fundamental policies that may be changed only with shareholder
approval provide that, with the exception of the Emerging Markets Fund, each
series of shares:
1. Shall not invest more than 15% of its assets in illiquid investments.
2. Shall not invest in the securities of companies that, including
predecessors, have a record of less than three years of continuous
operation.
3. Shall not lend its portfolio securities except to unaffiliated persons and
subject to the rules and regulations adopted under the Investment Company
Act. No such rules and regulations have been issued, but it is our policy
that such loans must be secured continuously by cash collateral maintained
on a current basis in an amount at least equal to the market value of the
securities loaned, or by irrevocable letters of credit. During the
existence of the loan, the fund must continue to receive the equivalent of
the interest and dividends paid by the issuer on the securities loaned and
interest on the investment of the collateral; the fund must have the right
to call the loan and obtain the securities loaned at any time on five days'
notice, including the right to call the loan to enable the fund to vote the
securities. To comply with the regulations of certain state securities
administrators, such loans may not exceed one-third of the fund's net
assets taken at market.
4. Shall not purchase the security of any one issuer if such purchase would
cause more than 5% of the fund's assets at market to be invested in the
securities of such issuer, except U.S. government securities, or if the
purchase would cause more than 10% of the
Proxy Statement Appendix IV 49
outstanding voting securities of any one issuer to be held in the fund's
portfolio.
5. Shall not invest for control or for management, or concentrate its
investment in a particular company or a particular industry. No more than
25% of the assets of the fund, exclusive of cash and U.S. government
securities, will be invested in securities of any open industry.
6. Shall not buy securities on margin nor sell short (unless it owns or by
virtue of its ownership of other securities has the right to obtain
securities equivalent in kind and amount to the securities sold); however,
the fund may make margin deposits in connection with the use of any
financial instrument or any transaction in securities permitted by its
fundamental policies.
7. Shall not invest in the securities of other investment companies except by
purchases in the open market involving only customary brokers' commissions
and no sales charges.
8. Shall not issue any senior security.
9. Shall not underwrite any securities.
10. Shall not purchase or sell real estate. (In the opinion of management, this
restriction will not preclude the corporation from investing in securities
of corporations that deal in real estate.)
11. Shall not purchase or sell commodities or commodity contracts.
12. Shall not borrow any money, except from banks or trust companies in an
amount not in excess of 5% of the total assets of the fund, and then only
for emergency and extraordinary purposes.
Paragraphs 3, 5, 8 and 9 shall apply as fundamental policies of the Emerging
Markets Fund. Paragraphs 1, 2, 6, 7, 10, 11 and 12 shall also apply to the
Emerging Markets Fund, but shall not be considered fundamental policies.
Paragraph 4 shall apply to the Emerging Markets Fund with respect to 75% of its
portfolio and shall not be considered a fundamental policy.
50 Appendix IV American Century Investments
APPENDIX V
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AMERICAN CENTURY
CAPITAL PORTFOLIOS, INC.
Additional fundamental policies that may be changed only with shareholder
approval provided that neither series of shares:
1. Shall invest more than 15% of its assets in illiquid investments.
2. Shall invest in the securities of companies that, including predecessors,
have a record of less than three years of continuous operation.
3. Shall lend its portfolio securities except to unaffiliated persons and
subject to the rules and regulations adopted under the Investment Company
Act of 1940. No such rules and regulations have been issued, but it is our
policy that such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market
value of the securities loaned or by irrevocable letters of credit. During
the existence of the loan, a fund must continue to receive the equivalent
of the interest and dividends paid by the issuer on the securities loaned
and interest on the investment of the collateral; the fund must have the
right to call the loan and obtain the securities loaned at any time on five
days' notice, including the right to call the loan to enable the fund to
vote the securities. To comply with the regulations of certain state
securities administrators, such loans may not exceed one-third of the
fund's net assets valued at market.
4. Shall with regard to 75% of its portfolio, purchase the security of any one
issuer if such purchase would cause more than 5%of the fund's assets at
market to be invested in the securities of such issuer, except U.S.
government securities or if the purchase would cause more than 10% of the
outstanding voting securities of any one issuer to be held in a fund's
portfolio.
5. Shall invest for control or for management or concentrate its investment in
a particular company or a particular industry. No more than 25% of the
assets of a fund, exclusive of cash and U.S. government securities, will be
invested in securities of any one industry.
6. Shall buy securities on margin and sell short (unless it owns or by virtue
of its ownership of other securities has the right to obtain
Proxy Statement Appendix V 51
securities equivalent in kind and amount to the securities sold without
additional cost); however, a fund may make margin deposits in connection
with the use of any financial instrument or any transaction securities
permitted by its fundamental policies.
7. Shall invest in the securities of other investment companies except by
purchases in the open market involving only customary brokers' commission
and no sales charges.
8. Shall issue any senior security.
9. Shall underwrite any securities.
10. Shall borrow any money, except in an amount not in excess of 5% of the
total assets of the series and then only for emergency and extraordinary
purposes. Note: This investment restriction does not prohibit escrow and
collateral arrangements in connections with investment in futures contracts
and related options by a fund.
11. Shall purchase or sell real estate, except that a fund may purchase
securities of issuers that deal in real estate and may purchase securities
that are secured by interests in real estate.
APPENDIX VI
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
Additional fundamental policies that may be changed only with shareholder
approval provide that each series of shares:
1. Shall not, with regard to 75% of its portfolio, purchase the security of
any one issuer if such purchase would cause more than 5% of the fund's
assets at market to be invested in the securities of such issuer, except
U.S. government securities, or if the purchase would cause more then 10% of
the outstanding voting securities of any one issuer to be held in a fund's
portfolio.
2. Shall not invest for control or for management or concentrate its
investment in a particular company or a particular industry. No more than
25% of the assets of a fund, exclusive of cash and U.S.
52 Appendix VI American Century Investments
government securities, will be invested in securities of any one industry.
3. Shall not buy securities on margin nor sell short (unless it owns or by
virtue of its ownership of other securities has the right to obtain
securities equivalent in kind and amount to the securities sold without
additional cost); however, a fund may make margin deposits in connection
with the use of any financial instrument or any transaction in securities
permitted by its fundamental policies.
4. Shall not issue any senior security.
5. Shall not underwrite any securities.
6. Shall not invest more than 15% of its assets in illiquid investments.
7. Shall not lend its portfolio securities except to unaffiliated persons and
subject to the rules and regulations adopted under the Investment Company
Act. No such rules and regulations have been issued, but it is American
Century's policy that such loans must be secured continuously by cash
collateral maintained on a current basis in an amount at least equal to the
market value of the securities loaned or by irrevocable letters of credit.
During the existence of the loan, a fund must continue to receive the
equivalent of the interest and dividends paid by the issuer on the
securities loaned an interest on the investment of the collateral; the fund
must have the right to call the loan and obtain the securities loaned at
any time on five days' notice, including the right to call the loan to
enable the fund to vote the securities. To comply with the regulations of
certain state securities administrators, such loans may not exceed
one-third of the fund's net assets valued at market.
8. Shall not borrow any money, except in an amount not in excess of 5% of the
total assets of the fund and then only for emergency and extraordinary
purposes. Note: This investment restriction does not prohibit escrow and
collateral arrangements in connection with investment in futures contracts
and related options by a fund.
9. Shall not purchase or sell real estate, except that a fund may purchase
securities of issuers that deal in real estate and may purchase securities
that are secured by interests in real estate.
Proxy Statement Appendix VI 53
APPENDIX VII
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AMERICAN CENTURY PREMIUM RESERVES, INC.
Fundamental policies may be changed only with shareholder approval provide that
no series of shares:
1. Intended to be designated as a money market fund shall invest more than 10%
of its assets in illiquid investments, while no non-money market series of
shares shall invest more than 15% of its assets in illiquid investments.
2. Shall lend its portfolio securities except to unaffiliated persons and
subject to the rules and regulations adopted under the Investment Company
Act of 1940. No such rules and regulations have been issued, but it is the
fund's policy that such loans must be secured continuously by cash
collateral maintained on a current basis in an amount at least equal to the
market value of the securities loaned or by irrevocable letters of credit.
During the existence of the loan, a fund must continue to receive the
equivalent of the interest and dividends paid by the issuer on the
securities loaned and interest on the investment of the collateral; the
fund must have the right to call the loan and obtain the securities loaned
at any time on five days' notice, including the right to call the loan to
enable the fund to vote the securities. To comply with the regulations of
certain state securities administrators, such loan may not exceed one-third
of the fund's net assets taken at market.
3. Shall, with regard to 75% of its portfolio, purchase the security of any
one issuer if such purchase would cause more than 5% of a fund's assets at
market to be invested in the securities of such issuer, except U.S.
government securities, or if the purchase would cause more than 10% of the
outstanding voting securities of any one issuer to be held in a fund's
portfolio. Note: As a mater of operating policy and not a fundamental
policy, Premium Government Reserve and Premium Capital Reserve have elected
to comply with Rule 2a-7 under the Investment Company Act, which required
diversification of 100% of their respective portfolios, not 75% as stated
in this restriction.
4. Shall invest for control or for management, or concentrate its investment
in a particular company or a particular industry. No
54 Appendix VII American Century Investments
more than 25% of the assets of a fund, exclusive of cash and U.S.
government securities, will be invested in securities of any one industry.
5. Shall buy securities on margin or sell short (unless it owns or by virtue
of its ownership of other securities has the right to obtain securities
equivalent in kind and amount to the securities sold); however, a fund may
make margin deposits in connection with the use of any financial instrument
or any transaction in securities permitted by its fundamental policies.
6. Shall invest in the securities of other investment companies except by
purchases in the open market involving only customary brokers' commission
and no sales charges.
7. Shall issue any senior security.
8. Shall underwrite any securities.
9. Shall purchase or sell commodities or commodity contracts except that
premium Bond may, for non-speculative purposes, buy or sell interest rate
futures contracts on debt securities (debt futures and bond index futures)
and related options.
10. Shall borrow any money, except in an amount not in excess of 5% of the
total assets of the series, and then only for emergency and extraordinary
purposes. Note: This investment restrictions does not prohibit escrow and
collateral arrangements in connections with investment in interest rate
futures contracts and related options by Premium Bond.
Proxy Statement Appendix VII 55
NOTES
56 Notes American Century Investments
NOTES
Notes 57
NOTES
58 Notes American Century Investments
NOTES
Notes 59
NOTES
60 Notes American Century Investments
NOTES
Notes 61
[american century logo]
American
Century(sm)
9705 [recycled logo]
SH-BKT-8601-B Recycled
