AMERICAN CENTURY CAPITAL PRESERVATION FUND, INC.
AMERICAN CENTURY CAPITAL PRESERVATION FUND II, INC.
AMERICAN CENTURY GOVERNMENT INCOME TRUST
PROSPECTUS SUPPLEMENT
Capital Preservation o Capital Preservation II o Government Agency
Short-Term Treasury o Intermediate-Term Treasury o Long-Term Treasury
ARM Fund o GNMA Fund
SUPPLEMENT DATED MAY 16, 1997
Prospectus dated September 3, 1996 (revised January 1, 1997)
WEIGHTED AVERAGE MATURITY
On pages 2 and 13, the references to Capital Preservation's weighted average
maturity are hereby changed from 60 days to 90 days.
On page 14, the reference to Government Agency's weighted average maturity is
hereby changed from 60 days to 90 days.
SPECIAL MEETING OF SHAREHOLDERS
The Board of Trustees has requested that the following matters be submitted to
shareholders of the Funds for approval at a Special Meeting of Shareholders to
be held on July 30, 1997. The record date for the meeting is May 16, 1997, for
each fund other than Capital Preservation and Capital Preservation II, which
will have a record date of June 2, 1997. If you own shares of the Funds as of
the close of business on that date, you will be entitled to vote at the meeting.
Proxy materials containing more information about these proposals are expected
to be first sent to shareholders on June 2, 1997.
ALL FUNDS EXCEPT CAPITAL PRESERVATION AND CAPITAL PRESERVATION II WILL VOTE ON
THE FOLLOWING PROPOSALS
1. To ratify the selection of Coopers & Lybrand LLP as the independent
auditors of each Fund for its current fiscal year;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc.;
3. To approve the adoption of standardized investment limitations by amending
or eliminating certain of the Funds' current fundamental investment
limitations;
5. Only for the ARM Fund. Approval of amendments to its fundamental investment
objective; and
7. To transact such other business which may come before the meeting, although
we are not aware of any other items to be considered.
Proposals 4 and 6 do not apply to the funds offered by this Prospectus. If
approved by shareholders, the Management Agreement in Proposal 2 and the
amendments to the Funds' fundamental investment limitations would become
effective on August 1, 1997.
FURTHER INFORMATION ABOUT PROPOSAL 2
The proposed Management Agreement with American Century Investment Management,
Inc. ("ACIM") is substantially different from the Funds' current Advisory
Agreement with Benham Management Corporation ("BMC"). The most important change
is a difference in the way management fees are calculated under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating costs, it is proposed that the Funds pay one "unified" fee
which would cover not just the investment advisory fee, but nearly all expenses
of the Funds. The expenses covered under the unified fee would include fees for
administrative services, transfer agency services, custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Funds under the current arrangements with BMC. While
the fees paid under the proposed Management Agreement are not directly
comparable to those of the Funds' current agreements with their service
providers, the effect of the proposed Management Agreement would have been a net
decrease in total expenses paid by all of the American Century funds as a group
if the proposed Management Agreement had been in effect during 12 months ended
December 31, 1996. However, if the proposed Management Agreement had been in
effect during such period, the total expense ratios of some Funds may have been
higher. In no case is the proposed management fee of any Fund higher than the
maximum total expense ratio payable under the current Advisory Agreement.
If the proposed Management Agreement is approved, the investment management of
the Funds will not change in any way. Certain employees of ACIM currently
provide investment management services to the Funds through an arrangement with
BMC by which certain employees of BMC also provide investment management
services to funds managed by ACIM. If the proposed Management Agreement is
approved, ACIM intends to consolidate the investment management capabilities of
the two advisors in ACIM. The same investment teams that currently manage the
Funds will continue under the proposed Management Agreement with ACIM.
The table below depicts the effect of the proposed Management Agreement on the
Funds for the 12 month period ended December 31, 1996:
After Expense Reimbursements
- ------------------------------------------------------------------------------
Management Fee Other Expenses Total Expenses
Current Proposed Current Proposed Current Proposed
- ------------------------------------------------------------------------------
ARM 0.26% 0.60% 0.32% 0.00% 0.58% 0.60%
- ------------------------------------------------------------------------------
GNMA 0.28% 0.60% 0.28% 0.00% 0.56% 0.60%
- ------------------------------------------------------------------------------
Govt Agency 0.05% 0.48% 0.28% 0.00% 0.33% 0.48%
Money Market
- ------------------------------------------------------------------------------
Intermediate 0.65% 0.51% 0.23% 0.01% 0.88% 0.52%
Treasury
- ------------------------------------------------------------------------------
Long Treasury 0.29% 0.51% 0.33% 0.01% 0.62% 0.52%
- ------------------------------------------------------------------------------
Short Treasury 0.23% 0.51% 0.40% 0.02% 0.63% 0.53%
- ------------------------------------------------------------------------------
Absent the effect of voluntary fee waivers and contractual expense limitations,
the management fee, other expenses and total expenses of the following Funds
under the current Advisory Agreement would have been, respectively: ARM, 0.26%,
0.32% and 0.58%; Capital Preservation II, 0.45%, 0.31% and 0.76%; Government
Agency Money Market, 0.27%, 0.28% and 0.55%; Intermediate-Term Treasury, 0.28%,
0.24% and 0.52%; Long-Term Treasury, 0.29%, 0.33% and 0.62%; and Short-Term
Treasury, 0.28%, 0.40% and 0.68%.
FURTHER INFORMATION ABOUT PROPOSAL 3
Currently the Funds have fundamental investment restrictions which vary between
the Funds and those of other funds in the American Century family of mutual
funds. The Funds also have investment restrictions which reflect legal and other
requirements which are no longer applicable to the Funds. In the interests of
efficiency in Fund management and compliance, we have analyzed the fundamental
investment limitations and policies of the Funds in an effort to formulate a
standard set of policies for all American Century 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. It
should be noted that the adoption of the proposed changes is not expected to
substantially affect the way the Funds are managed.
FURTHER INFORMATION ABOUT PROPOSAL 5
Changes in the markets in which the ARM Fund invests have made changes advisable
for the Fund to effectively pursue its investment objective. The amendment would
allow the Fund to broaden its investment universe to include other types of
short-term U.S. government securities. This is, in part, a response to the
investment manager's opinion that the market for adjustable rate government
securities has not developed as fully as the overall market for government
securities. If the amendment is approved, the Fund's name will change to "Benham
Short-Term Government Fund" on August 1, 1997.
CAPITAL PRESERVATION AND CAPITAL PRESERVATION II WILL VOTE ON THE FOLLOWING
PROPOSAL.
The Board of Directors of American Century Capital Preservation Fund, Inc. and
American Century Capital Preservation Fund II, Inc. have unanimously agreed to
enter into an Agreement and Plan of Reorganization with the American Century
Government Income Trust. The Agreement provides for the consolidation of these
Funds into a new portfolio of American Century Government Income Trust which is
also called Capital Preservation. The new Fund has an identical investment
objective and substantially identical investment policies as the existing
Capital Preservation Fund. The proposed consolidation of Funds will not decrease
the dollar value of any shareholder's account. The Fund combinations are
contingent upon shareholder approval. If the reorganization is approved, it is
expected to occur on September 2, 1997. A decision regarding an investment in
these Funds should be made in light of the proposed consolidation.
P.O. Box 419200 [american century logo]
Kansas City, Missouri American
64141-6200 Century(sm)
1-800-345-2021 or 816-531-5575
SH-SPL-8737 9705
<PAGE>
AMERICAN CENTURY INVESTMENT TRUST
PROSPECTUS SUPPLEMENT
Prime Money Market
SUPPLEMENT DATED MAY 16, 1997
Prospectus dated September 3, 1996 (revised January 1, 1997)
SPECIAL MEETING OF SHAREHOLDERS
The Board of Trustees has requested that the following matters be submitted to
shareholders of Prime Money Market for approval at a Special Meeting of
Shareholders to be held on July 30, 1997, to consider the following proposals:
1. To ratify the selection of Coopers & Lybrand LLP as the independent
auditors for the Fund for its current fiscal year;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc.;
3. To approve the adoption of standardized investment limitations by amending
or eliminating certain of the Fund's current fundamental investment
limitations; and
7. To transact such other business which may come before the meeting, although
we are not aware of any other items to be considered.
Proposals 4, 5 and 6 do not apply to the fund offered by this Prospectus. The
record date for the meeting is May 16, 1997. If you own shares of the Fund as of
the close of business on that date, you will be entitled to vote at the meeting.
Proxy materials containing more information about these proposals are expected
to be first sent to shareholders on June 2, 1997. If approved by shareholders,
the Management Agreement in Proposal 2 and the amendments to the Fund's
fundamental investment limitations would become effective on August 1, 1997.
FURTHER INFORMATION ABOUT PROPOSAL 2
The proposed Management Agreement with American Century Investment Management,
Inc. ("ACIM") is substantially different from the Fund's current Advisory
Agreement with Benham Management Corporation ("BMC"). The most important change
is a difference in the way management fees are calculated under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating costs, it is proposed that the Fund pays one "unified" fee
which would cover not just the investment advisory fee, but nearly all expenses
of the Fund. The expenses covered under the unified fee would include fees for
administrative services, transfer agency services, custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Fund under the current arrangements with BMC. While the
fees paid under the proposed Management Agreement are not directly comparable to
those of the Fund's current agreements with its service providers, the effect of
the proposed Management Agreement would have been a net decrease in total
expenses paid by all of the American Century funds as a group if the proposed
Management Agreement had been in effect during 12 months ended December 31,
1996. However, if the proposed Management Agreement had been in effect during
such period, the total expense ratios of some funds may have been higher. In no
case is the proposed management fee of any fund higher than the maximum total
expense ratio payable under the current Advisory Agreement.
If the proposed Management Agreement is approved, the investment management of
the Fund will not change in any way. Certain employees of ACIM currently provide
investment management services to the Fund through an arrangement with BMC by
which certain employees of BMC also provide investment management services to
funds managed by ACIM. If the proposed Management Agreement is approved, ACIM
intends to consolidate the investment management capabilities of the two
advisors in ACIM. The same investment teams that currently manage the Fund will
continue under the proposed Management Agreement with ACIM.
The table below depicts the effect of the proposed Management Agreement on the
Fund for the 12 month period ended December 31, 1996:
After Expense Reimbursements
- -----------------------------------------------------------------------
Management Fee Other Expenses Total Expenses
Current Proposed Current Proposed Current Proposed
- -----------------------------------------------------------------------
0.18% 0.49% 0.32% 0.01% 0.50% 0.50%
- -----------------------------------------------------------------------
Absent the effect of voluntary fee waivers and contractual expense limitations,
the management fee, other expenses and total expenses of Prime Money Market
under the current arrangements would have been, respectively: 0.31%, 0.31% and
0.62%. Under the proposed Management Agreement they would have been 0.59%, 0.01%
and 0.60%.
FURTHER INFORMATION ABOUT PROPOSAL 3
Currently the Fund has fundamental investment restrictions which vary from the
funds within the American Century family of mutual funds. The Fund also has
investment restrictions which reflect legal and other requirements which are no
longer applicable to the Fund. In the interests of efficiency in Fund management
and compliance, we have analyzed the fundamental investment limitations and
policies in an effort to formulate a standard set of policies for all American
Century funds which reflect current industry practice and will allow the Fund to
respond to changes in regulatory and industry practice without the expense and
delay of a shareholder vote. It should be noted that the adoption of the
proposed changes is not expected to substantially affect the way the Fund is
managed.
P.O. Box 419200 [american century logo]
Kansas City, Missouri American
64141-6200 Century(sm)
1-800-345-2021 or 816-531-5575
SH-SPL-8769 9705
<PAGE>
AMERICAN CENTURY TARGET MATURITIES TRUST
PROSPECTUS SUPPLEMENT
Target 2000 o Target 2005 o Target 2010
Target 2015 o Target 2020 o Target 2025
SUPPLEMENT DATED MAY 16, 1997
Prospectus dated January 1, 1997
SPECIAL MEETING OF SHAREHOLDERS
The Board of Trustees has requested that the following matters be submitted to
shareholders of the Funds for approval at a Special Meeting of Shareholders to
be held on July 30, 1997, to consider the following proposals:
1. To ratify the selection of Coopers & Lybrand LLP as the independent
auditors for each Fund for its current fiscal year;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc.;
3. To approve the adoption of standardized investment limitations by amending
or eliminating certain of the Funds' current fundamental investment
limitations; and
7. To transact such other business which may come before the meeting, although
we are not aware of any other items to be considered.
Proposals 4, 5 and 6 do not apply to the funds offered by this Prospectus. The
record date for the meeting is May 16, 1997. If you own shares of the Funds as
of the close of business on that date, you will be entitled to vote at the
meeting. Proxy materials containing more information about these proposals are
expected to be first sent to shareholders on June 2, 1997. If approved by
shareholders, the Management Agreement in Proposal 2 and the amendments to the
Funds' fundamental investment limitations would become effective on August 1,
1997.
FURTHER INFORMATION ABOUT PROPOSAL 2
The proposed Management Agreement with American Century Investment Management,
Inc. ("ACIM") is substantially different from the Funds' current Advisory
Agreement with Benham Management Corporation ("BMC"). The most important change
is a difference in the way management fees are calculated under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating costs, it is proposed that the Funds pay one "unified" fee
which would cover not just the investment advisory fee, but nearly all expenses
of the Funds. The expenses covered under the unified fee would include fees for
administrative services, transfer agency services, custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Funds under the current arrangements with BMC. While
the fees paid under the proposed Management Agreement are not directly
comparable to those of the Funds' current agreements with their service
providers, the effect of the proposed Management Agreement would have been a net
decrease in total expenses paid by all of the American Century funds as a group
if the proposed Management Agreement had been in effect during 12 months ended
December 31, 1996. However, if the proposed Management Agreement had been in
effect during such period, the total expense ratios of some Funds may have been
higher. In no case is the proposed management fee of any Fund higher than the
maximum total expense ratio payable under the current Advisory Agreement.
If the proposed Management Agreement is approved, the investment management of
the Funds will not change in any way. Certain employees of ACIM currently
provide investment management services to the Funds through an arrangement with
BMC by which certain employees of BMC also provide investment management
services to funds managed by ACIM. If the proposed Management Agreement is
approved, ACIM intends to consolidate the investment management capabilities of
the two advisors in ACIM. The same investment teams that currently manage the
Funds will continue under the proposed Management Agreement with ACIM.
The table below depicts the effect of the proposed Management Agreement on the
Funds for the 12 month period ended December 31, 1996:
AFTER EXPENSE REIMBURSEMENTS
- ------------------------------------------------------------------------------
Management Fee Other Expenses Total Expenses
Current Proposed Current Proposed Current Proposed
- ------------------------------------------------------------------------------
Target 2000 0.25% 0.59% 0.31% 0.01% 0.56% 0.60%
Target 2005 0.26% 0.59% 0.33% 0.01% 0.59% 0.60%
Target 2010 0.25% 0.59% 0.40% 0.01% 0.65% 0.60%
Target 2015 0.24% 0.59% 0.40% 0.01% 0.64% 0.60%
Target 2020 0.30% 0.59% 0.30% 0.01% 0.60% 0.60%
Target 2025 0.24% 0.59% 0.42% 0.01% 0.66% 0.60%
- ------------------------------------------------------------------------------
Absent the effect of voluntary fee waivers and contractual expense limitations,
the management fee, other expenses and total expenses of the following Funds
under the current Advisory Agreement would have been, respectively: Target 2010,
0.29%, 0.40% and 0.69%; Target 2015, 0.27%, 0.40% and 0.67%; Target 2020, 0.28%,
0.30% and 0.58%; and Target 2025, 0.43%, 0.42% and 0.85%.
FURTHER INFORMATION ABOUT PROPOSAL 3
Currently the Funds have fundamental investment restrictions which vary between
the Funds and those of other funds in the American Century family of mutual
funds. The Funds also have investment restrictions which reflect legal and other
requirements which are no longer applicable to the Funds. In the interests of
efficiency in fund management and compliance, we have analyzed the fundamental
investment limitations and policies of the Funds in an effort to formulate a
standard set of policies for all American Century 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. It
should be noted that the adoption of the proposed changes is not expected to
substantially affect the way the Funds are managed.
P.O. Box 419200 [american century logo]
Kansas City, Missouri American
64141-6200 Century(sm)
1-800-345-2021 or 816-531-5575
SH-SPL-8771 9705
<PAGE>
AMERICAN CENTURY MUNICIPAL TRUST
PROSPECTUS SUPPLEMENT
Arizona Intermediate-Term Municipal o Florida Municipal Money Market
Florida Intermediate-Term Municipal o Tax-Free Money Market
Intermediate-Term Tax-Free o Long-Term Tax-Free
SUPPLEMENT DATED MAY 16, 1997
Prospectus dated September 3, 1996 (revised January 1, 1997)
WEIGHTED AVERAGE MATURITY
On page 14 under the heading "Portfolio Investment Quality and Maturity
Guidelines--Money Market Funds", item (2) is hereby replaced with the following:
(2) Maintains a dollar-weighted average maturity of 90 days or less; and
SPECIAL MEETING OF SHAREHOLDERS
The Board of Trustees has requested that the following matters be submitted to
shareholders of the Funds for approval at a Special Meeting of Shareholders to
be held on July 30, 1997, to consider the following proposals:
1. To ratify the selection of Coopers & Lybrand LLP as the independent
auditors for each Fund for its current fiscal year;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc.;
3. To approve the adoption of standardized investment limitations by amending
or eliminating certain of the Funds' current fundamental investment
limitations; and
7. To transact such other business which may come before the meeting, although
we are not aware of any other items to be considered.
Proposals 4, 5 and 6 do not apply to funds offered by this Prospectus. The
record date for the meeting is May 16, 1997. If you own shares of the Funds as
of the close of business on that date, you will be entitled to vote at the
meeting. Proxy materials containing more information about these proposals are
expected to be first sent to shareholders on June 2, 1997. If approved by
shareholders, the Management Agreement in Proposal 2 and the amendments to the
Funds' fundamental investment limitations would become effective on August 1,
1997.
FURTHER INFORMATION ABOUT PROPOSAL 2
The proposed Management Agreement with American Century Investment Management,
Inc. ("ACIM") is substantially different from the Fund's current Advisory
Agreement with Benham Management Corporation ("BMC"). The most important change
is a difference in the way management fees are calculated under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating costs, it is proposed that the Funds pay one "unified" fee
which would cover not just the investment advisory fee, but nearly all expenses
of the Funds. The expenses covered under the unified fee would include fees for
administrative services, transfer agency services, custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Funds under the current arrangements with BMC. While
the fees paid under the proposed Management Agreement are not directly
comparable to those of the Funds' current agreements with their service
providers, the effect of the proposed Management Agreement would have been a net
decrease in total expenses paid by all of the American Century funds as a group
if the proposed Management Agreement had been in effect during 12 months ended
December 31, 1996. However, if the proposed Management Agreement had been in
effect during such period, the total expense ratios of some Funds may have been
higher. In no case is the proposed management fee of any Fund higher than the
maximum total expense ratio payable under the current Advisory Agreement.
If the proposed Management Agreement is approved, the investment management of
the Funds will not change in any way. Certain employees of ACIM currently
provide investment management services to the Funds through an arrangement with
BMC by which certain employees of BMC also provide investment management
services to funds managed by ACIM. If the proposed Management Agreement is
approved, ACIM intends to consolidate the investment management capabilities of
the two advisors in ACIM. The same investment teams that currently manage the
Funds will continue under the proposed Management Agreement with ACIM.
The table below depicts the effect of the proposed Management Agreement on the
Funds for the 12 month period ended December 31, 1996:
AFTER EXPENSE REIMBURSEMENTS
- -----------------------------------------------------------------------------
Management Fee Other Expenses Total Expenses
Current Proposed Current Proposed Current Proposed
- -----------------------------------------------------------------------------
AZ 0.16% 0.51% 0.35% 0.01% 0.51% 0.52%
Intermediate
Municipal
- -----------------------------------------------------------------------------
FL 0.04% 0.51% 0.47% 0.02% 0.51% 0.53%
Intermediate
Municipal
- -----------------------------------------------------------------------------
FL Money 0.48% 0.50% 0.19% 0.00% 0.67% 0.50%
Market
- -----------------------------------------------------------------------------
Intermediate 0.37% 0.51% 0.31% 0.01% 0.68% 0.52%
Tax-Free
- -----------------------------------------------------------------------------
Long 0.36% 0.51% 0.32% 0.01% 0.68% 0.52%
Tax-Free
- -----------------------------------------------------------------------------
Tax-Free 0.36% 0.50% 0.29% 0.00% 0.66% 0.50%
Money Market
- -----------------------------------------------------------------------------
Absent the effect of voluntary fee waivers and contractual expense limitations,
the management fee, other expenses and total expenses of the following funds
under the current Advisory Agreement would have been, respectively: AZ
Intermediate Municipal, 0.44%, 0.36% and 0.80%; FL Intermediate Municipal,
0.43%, 0.47% and 0.90%; Intermediate Tax-Free, 0.43%, 0.31% and 0.73%; Long
Tax-Free, 0.43%, 0.32% and 0.75%; and Tax-Free Money Market, 0.43%, 0.29% and
0.72%.
FURTHER INFORMATION ABOUT PROPOSAL 3
Currently the Funds have fundamental investment restrictions which vary between
the Funds and those of other funds in the American Century family of mutual
funds. The Funds also have investment restrictions which reflect legal and other
requirements which are no longer applicable to the Funds. In the interests of
efficiency in fund management and compliance, we have analyzed the fundamental
investment limitations and policies of the Funds in an effort to formulate a
standard set of policies for all American Century 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. It
should be noted that the adoption of the proposed changes is not expected to
substantially affect the way the Funds are managed.
P.O. Box 419200 [american century logo]
Kansas City, Missouri American
64141-6200 Century(sm)
1-800-345-2021 or 816-531-5575
SH-SPL-8772 9705
<PAGE>
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
PROSPECTUS SUPPLEMENT
California Tax-Free Money Market o California Municipal Money Market
California Limited-Term Tax-Free o California Intermediate-Term Tax-Free
California Long-Term Tax-Free o California High-Yield Municipal
California Insured Tax-Free
SUPPLEMENT DATED MAY 16, 1997
Prospectus dated January 1, 1997
WEIGHTED AVERAGE MATURITY
On page 13 under the heading "Portfolio Investment Quality and Maturity
Guidelines--Money Market Funds," item (2) is hereby replaced with the following:
(2) Maintains a dollar-weighted average maturity of 90 days or less; and
SPECIAL MEETING OF SHAREHOLDERS
The Board of Trustees has requested that the following matters be submitted to
shareholders of the Funds for approval at a Special Meeting of Shareholders to
be held on July 30, 1997, to consider the following proposals:
1. To ratify the selection of Coopers & Lybrand LLP as the independent
auditors for each Fund for its current fiscal year;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc.;
3. To approve the adoption of standardized investment limitations by amending
or eliminating certain of the Funds' current fundamental investment
limitations; and
7. To transact such other business which may come before the meeting, although
we are not aware of any other items to be considered.
Proposals 4, 5 and 6 do not apply to the funds offered by this Prospectus. The
record date for the meeting is May 16, 1997. If you own shares of the Funds as
of the close of business on that date, you will be entitled to vote at the
meeting. Proxy materials containing more information about these proposals are
expected to be first sent to shareholders on June 2, 1997. If approved by
shareholders, the Management Agreement in Proposal 2 and the amendments to the
Funds' fundamental investment limitations would become effective on August 1,
1997.
FURTHER INFORMATION ABOUT PROPOSAL 2
The proposed Management Agreement with American Century Investment Management,
Inc. ("ACIM") is substantially different from the Funds' current Advisory
Agreement with Benham Management Corporation ("BMC"). The most important change
is a difference in the way management fees are calculated under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating costs, it is proposed that the Funds pay one "unified" fee
which would cover not just the investment advisory fee, but nearly all expenses
of the Funds. The expenses covered under the unified fee would include fees for
administrative services, transfer agency services, custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Funds under the current arrangements with BMC. While
the fees paid under the proposed Management Agreement are not directly
comparable to those of the Funds' current agreements with their service
providers, the effect of the proposed Management Agreement would have been a net
decrease in total expenses paid by all of the American Century funds as a group
if the proposed Management Agreement had been in effect during 12 months ended
December 31, 1996. However, if the proposed Management Agreement had been in
effect during such period, the total expense ratios of some funds may have been
higher. In no case is the proposed management fee of any fund higher than the
maximum total expense ratio payable under the current Advisory Agreement.
If the proposed Management Agreement is approved, the investment management of
the Funds will not change in any way. Certain employees of ACIM currently
provide investment management services to the Funds through an arrangement with
BMC by which certain employees of BMC also provide investment management
services to funds managed by ACIM. If the proposed Management Agreement is
approved, ACIM intends to consolidate the investment management capabilities of
the two advisors in ACIM. The same investment teams that currently manage the
Funds will continue under the proposed Management Agreement with ACIM.
The table below depicts the effect of the proposed Management Agreement on the
Funds for the 12 month period ended December 31, 1996:
AFTER EXPENSE REIMBURSEMENTS
- -------------------------------------------------------------------------------
Management Fee Other Expenses Total Expenses
Current Proposed Current Proposed Current Proposed
- -------------------------------------------------------------------------------
Cal 0.31% 0.54% 0.20% 0.01% 0.51% 0.55%
High Yield
Municipal
- -------------------------------------------------------------------------------
Cal
Insured 0.29% 0.51% 0.20% 0.01% 0.49% 0.52%
Tax-Free
- -------------------------------------------------------------------------------
Cal
Intermediate 0.29% 0.51% 0.19% 0.01% 0.48% 0.52%
Tax-Free
- -------------------------------------------------------------------------------
Cal Limited 0.30% 0.51% 0.20% 0.01% 0.50% 0.52%
Tax-Free
- -------------------------------------------------------------------------------
Cal Long 0.29% 0.51% 0.19% 0.01% 0.48% 0.52%
Tax-Free
- -------------------------------------------------------------------------------
Cal
Municipal 0.29% 0.50% 0.23% 0.00% 0.52% 0.50%
Money Market
- -------------------------------------------------------------------------------
Cal
Tax-Free 0.29% 0.50% 0.20% 0.00% 0.49% 0.50%
Money Market
- -------------------------------------------------------------------------------
FURTHER INFORMATION ABOUT PROPOSAL 3
Currently the Funds have fundamental investment restrictions which vary between
the Funds and those of other funds in the American Century family of mutual
funds. The Funds also have investment restrictions which reflect legal and other
requirements which are no longer applicable to the Funds. In the interests of
efficiency in fund management and compliance, we have analyzed the fundamental
investment limitations and policies of the Funds in an effort to formulate a
standard set of policies for all American Century 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. It
should be noted that the adoption of the proposed changes is not expected to
substantially affect the way the Funds are managed.
P.O. Box 419200 [american century logo]
Kansas City, Missouri American
64141-6200 Century(sm)
1-800-345-2021 or 816-531-5575
SH-SPL-8773 9705
<PAGE>
AMERICAN CENTURY GOVERNMENT INCOME TRUST
PROSPECTUS SUPPLEMENT
Inflation-Adjusted Treasury
SUPPLEMENT DATED MAY 16, 1997
Prospectus dated February 10, 1997
SPECIAL MEETING OF SHAREHOLDERS
The Board of Trustees has requested that the following matters be submitted to
shareholders of Inflation-Adjusted Treasury for approval at a Special Meeting of
Shareholders to be held on July 30, 1997, to consider the following proposals:
1. To ratify the selection of Coopers & Lybrand LLP as the independent
auditors for the Fund for its current fiscal year;
2. To vote on the approval of a Management Agreement with American Century
Investment Management, Inc.;
3. To approve the adoption of standardized investment limitations by amending
or eliminating certain of the Fund's current fundamental investment
limitations; and
7. To transact such other business which may come before the meeting, although
we are not aware of any other items to be considered.
Proposals 4, 5 and 6 do not apply to the fund offered by this Prospectus. The
record date for the meeting is May 16, 1997. If you own shares of the Fund as of
the close of business on that date, you will be entitled to vote at the meeting.
Proxy materials containing more information about these proposals are expected
to be first sent to shareholders on June 2, 1997. If approved by shareholders,
the Management Agreement in Proposal 2 and the amendments to the Fund's
fundamental investment limitations would become effective on August 1, 1997.
FURTHER INFORMATION ABOUT PROPOSAL 2
The proposed Management Agreement with American Century Investment Management,
Inc. ("ACIM") is substantially different from the Fund's current Advisory
Agreement with Benham Management Corporation ("BMC"). The most important change
is a difference in the way management fees are calculated under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating costs, it is proposed that the Fund pays one "unified" fee
which would cover not just the investment advisory fee, but nearly all expenses
of the Fund. The expenses covered under the unified fee would include fees for
administrative services, transfer agency services, custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Fund under the current arrangements with BMC. While the
fees paid under the proposed Management Agreement are not directly comparable to
those of the Fund's current agreements with its service providers, the effect of
the proposed Management Agreement would have been a net decrease in total
expenses paid by all of the American Century funds as a group if the proposed
Management Agreement had been in effect during 12 months ended December 31,
1996. However, if the proposed Management Agreement had been in effect during
such period, the total expense ratios of some funds may have been higher. In no
case is the proposed management fee of any fund higher than the maximum total
expense ratio payable under the current Advisory Agreement.
If the proposed Management Agreement is approved, the investment management of
the Fund will not change in any way. Certain employees of ACIM currently provide
investment management services to the Fund through an arrangement with BMC by
which certain employees of BMC also provide investment management services to
funds managed by ACIM. If the proposed Management Agreement is approved, ACIM
intends to consolidate the investment management capabilities of the two
advisors in ACIM. The same investment teams that currently manage the Fund will
continue under the proposed Management Agreement with ACIM.
The table below depicts the effect of the proposed Management Agreement on the
Fund for the 12 month period ended December 31, 1996:
AFTER EXPENSE REIMBURSEMENTS
- -----------------------------------------------------------------------
Management Fee Other Expenses Total Expenses
Current Proposed Current Proposed Current Proposed
- -----------------------------------------------------------------------
0.00% 0.44% 0.50% 0.06% 0.50% 0.50%
- -----------------------------------------------------------------------
Absent the effect of voluntary fee waivers and contractual expense limitations,
the management fee, other expenses and total expenses of Inflation-Adjusted
Treasury under the current Advisory Agreement would have been, respectively:
0.28%, 2.09% and 2.37%. Under the proposed Management Agreement they would have
been 0.51%, 0.07% and 0.58%.
FURTHER INFORMATION ABOUT PROPOSAL 3
Currently the Fund has fundamental investment restrictions which vary from the
funds within the American Century family of mutual funds. The Fund also has
investment restrictions which reflect legal and other requirements which are no
longer applicable to the Fund. In the interests of efficiency in Fund management
and compliance, we have analyzed the fundamental investment limitations and
policies in an effort to formulate a standard set of policies for all American
Century funds which reflect current industry practice and will allow the Fund to
respond to changes in regulatory and industry practice without the expense and
delay of a shareholder vote. It should be noted that the adoption of the
proposed changes is not expected to substantially affect the way the Fund is
managed.
P.O. Box 419200 [american century logo]
Kansas City, Missouri American
64141-6200 Century(sm)
1-800-345-2021 or 816-531-5575
SH-SPL-8735 9705
