SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----
File No. 2-94608:
Pre-Effective Amendment No.____
Post-Effective Amendment No._26_ X
-----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----
File No. 811-4165:
Amendment No._28_
BENHAM TARGET MATURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
4500 Main Street, Kansas City, MO 64141-6200
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 415-965-8300
Douglas A. Paul
General Counsel
1665 Charleston Road, Mountain View, CA 94043
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: Immediately, upon effectiveness
(first offered 3/25/85)
It is proposed that this filing become effective:
__X__ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on September 3, 1996, pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485
_____ 75 days after filing pursuant to paragraph (a) (2) of Rule 485
_____ on (date) pursuant to paragraph (a)(2) of Rule 485
- --------------------------------------------------------------------------------
Registrant has elected to register an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. On November 14, 1996, the Registrant filed a
Rule 24f-2 Notice on Form 24f-2 with respect to its fiscal year ended September
30, 1996.
BENHAM TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 26
1940 Act Amendment No. 28
FORM N-1A
CROSS-REFERENCE SHEET
PART A: PROSPECTUS
ITEM PROSPECTUS CAPTION
1 Cover Page
2 Transaction and Operating Expense Table
3 Financial Highlights, Performance Advertising
4 Further Information About American Century, Investment Policies
of the Funds, Investment Objectives of the Funds,
Risk Factors and Investment Techniques, Other Investment
Practices, Their Characteristics and Risks
5 Investment Management, Transfer and Administrative Services,
Financial Highlights
5A Not Applicable
6 Further Information About American Century, How to Redeem Shares,
Cover Page, Distributions, Taxes
7 How to Open an Account, Distribution of Fund Shares, Cover Page, Share
Price, Transfer and Administrative Services, How to Exchange From One
Account to Another
8 How to Redeem Shares, Transfer and Administrative Services
9 Not Applicable
PART B: STATEMENT OF ADDITIONAL INFORMATION
ITEM STATEMENT OF ADDITIONAL INFORMATION CAPTION
10 Cover Page
11 Table of Contents
12 About the Trust
13 Investment Policies and Techniques, Investment Restrictions, Portfolio
Transactions
14 Trustee and Officers
15 Additional Purchase and Redemption Information, Trustees and Officers
16 Investment Advisory Services, Transfer and Administrative and
Services, About the Trust, Expense Limitation Agreement
17 Portfolio Transactions
18 About the Trust
19 Additional Purchase and Redemption Information, Valuation of Portfolio
Securities
20 Taxes
21 Distribution of Fund Shares, Additional Purchase and
Redemption Information
22 Performance
23 Cover Page
PROSPECTUS
[american century logo]
American
Century(sm)
JANUARY 1, 1997
BENHAM
GROUP(R)
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
[cover page]
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.
AMERICAN CENTURY INVESTMENTS
BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY(R) GROUP
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
[inside cover]
PROSPECTUS
JANUARY 1, 1997
TARGET 2000 o TARGET 2005 o TARGET 2010
TARGET 2015 o TARGET 2020 o TARGET 2025
AMERICAN CENTURY TARGET MATURITIES TRUST
American Century Target Maturities Trust is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. Six of the funds from our Benham
Group that invest primarily in zero-coupon U.S. Treasury securities, are
described in this Prospectus. Their investment objectives are listed on page 2
of this Prospectus. The other funds are described in separate prospectuses.
American Century offers investors a full line of no-load funds, investments
that have no sales charges or commissions.
This Prospectus gives you information about the Funds that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated January 1, 1997 and filed with the Securities and Exchange
Commission ("SEC"). It is incorporated into this Prospectus by reference. To
obtain a copy without charge, call or write:
AMERICAN CENTURY INVESTMENTS
4500 Main Street o P.O. Box 419200
Kansas City, Missouri 64141-6200 o 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-753-1865
Internet: www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus 1
INVESTMENT OBJECTIVES OF THE FUNDS
AMERICAN CENTURY - BENHAM TARGET MATURITIES
TRUST: 2000
AMERICAN CENTURY - BENHAM TARGET MATURITIES
TRUST: 2005
AMERICAN CENTURY - BENHAM TARGET MATURITIES
TRUST: 2010
AMERICAN CENTURY - BENHAM TARGET MATURITIES
TRUST: 2015
AMERICAN CENTURY - BENHAM TARGET MATURITIES
TRUST: 2020
AMERICAN CENTURY - BENHAM TARGET MATURITIES
TRUST: 2025
Each Fund seeks to provide the highest attainable investment return
consistent with the creditworthiness of U.S. Treasury securities and the
professional management of reinvestment and market risks.
Each Fund invests primarily in zero-coupon U.S. Treasury securities and
will be liquidated shortly after the conclusion of its target maturity year. For
more information about this unique feature, please see "Distributions-Fund
Liquidation," page 22.
An investment in the Funds is neither insured nor guaranteed by the U.S.
Government.
There is no assurance that the Funds will achieve their respective
investment objectives.
NO PERSON IS AUTHORIZED BY THE FUNDS TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUNDS, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
2 Investment Objectives American Century Investments
TABLE OF CONTENTS
Transaction and Operating Expense Table.......................4
Financial Highlights..........................................5
INFORMATION REGARDING THE FUNDS
Investment Policies of the Funds..............................11
Investment Objectives of the Funds.........................11
Investment Policies........................................11
Zero Coupon Securities.....................................12
Other Investments..........................................12
Other Investment Practices, Their Characteristics
and Risks..................................................12
Coupon-Bearing U.S. Treasury Securities....................13
REFCORP Bonds..............................................13
Cash Management............................................13
Securities Lending.........................................13
Portfolio Turnover.........................................13
U.S. Government Securities....................................13
Performance Advertising.......................................13
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
American Century Investments..................................15
Investing in American Century.................................15
How to Open an Account........................................15
By Mail..................................................15
By Wire..................................................15
By Exchange..............................................16
In Person................................................16
Subsequent Investments.....................................16
By Mail..................................................16
By Telephone.............................................16
By Online Access.........................................16
By Wire..................................................16
In Person................................................16
Automatic Investment Plan..................................16
How to Exchange from One Account to Another ..................16
By Mail .................................................17
By Telephone.............................................17
By Online Access.........................................17
How to Redeem Shares..........................................17
By Mail .................................................17
By Telephone.............................................17
By Check-A-Month.........................................17
Other Automatic Redemptions..............................17
Redemption Proceeds........................................17
By Check.................................................17
By Wire and ACH..........................................17
Redemption of Shares
in Low-Balance Accounts....................................17
Signature Guarantee...........................................18
Special Shareholder Services..................................18
Automated Information Line...............................18
Online Account Access....................................18
Open Order Service.......................................18
Tax-Qualified Retirement Plans...........................19
Important Policies Regarding Your Investments.................19
Reports to Shareholders.......................................19
Employer-Sponsored Retirement Plans and
Institutional Accounts.....................................20
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price...................................................21
When Share Price Is Determined.............................21
How Share Price Is Determined..............................21
Where to Find Information About Share Price................21
Distributions.................................................22
Buying a Dividend..........................................22
Reverse Share Splits.......................................22
Fund Liquidation...........................................22
Taxes.........................................................22
Tax-Deferred Accounts......................................22
Taxable Accounts...........................................22
Management....................................................23
Investment Management......................................23
Code of Ethics.............................................24
Transfer and Administrative Services.......................24
Distribution of Fund Shares...................................25
Expenses......................................................25
Further Information About American Century....................25
Prospectus Table of Contents 3
<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE
Target Target Target Target Target Target
2000 2005 2010 2015 2020 2025
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases none none none none none none
Maximum Sales Load Imposed on Reinvested Dividends none none none none none none
Deferred Sales Load none none none none none none
Redemption Fee(1) none none none none none none
Exchange Fee none none none none none none
ANNUAL FUND OPERATING EXPENSES:(2)
(AS A PERCENTAGE OF NET ASSETS)
Management Fees (net expense limitation) .28% .30% .28% .29% .32% .04%
12b-1 Fees none none none none none none
Other Expenses .25% .28% .34% .33% .29% .58%
Total Fund Operating Expenses .53% .58% .62% .62% .61% .62%
EXAMPLE
You would pay the following expenses 1 year $ 5 $ 6 $ 6 $ 6 $ 6 $ 6
on a $1,000 investment, assuming a 5% 3 years 17 19 20 20 20 20
annual return and redemption at the end 5 years 30 32 35 35 34 35
of each time period: 10 years 66 73 77 77 76 77
</TABLE>
(1) Redemption proceeds sent by wire are subject to a $10 processing fee.
(2) Benham Management Corporation (the "Manager") has agreed to limit each
Fund's total operating expenses to specified percentages of each Fund's
average daily net assets. The agreement provides that the Manager may
recover amounts absorbed on behalf of the Fund during the preceding 11
months if, and to the extent that, for any given month, Fund expenses were
less than the expense limit in effect at that time. The current expense
limits for each of the Funds is .62%. These expense limitations are subject
to annual renewal in June. Amounts which are paid by unaffiliated third
parties do not apply to these expense limitations. If the expense
limitations were not in effect, each Fund's Management Fee, Other Expenses
and Total Fund Operating Expenses would be as follows, respectively: Target
2010, .29%, .34% and .63%; and Target 2025, .29%, .58% and .87%.
Each Fund pays the Manager advisory fees equal to an annualized percentage
of each Fund's average daily net assets. Other expenses include administrative
and transfer agent fees paid to American Century Services Corporation.
The purpose of the above table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the shares of the Funds offered by this
Prospectus. The example set forth above assumes reinvestment of all dividends
and distributions and uses a 5% annual rate of return as required by SEC
regulations.
NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
4 Transaction and Operating Expense Table American Century Investments
FINANCIAL HIGHLIGHTS
TARGET 2000
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
appears in the Fund's annual report, which is incorporated by reference into the
Statement of Additional Information. The semiannual and annual reports contain
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended September 30, except as noted.
<TABLE>
1996 1995 1994 1993 1992 1991 1990 1989(1) 1988 1987
PER-SHARE DATA(2)
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ...................$76.86 $66.93 $72.40 $62.16 $52.67 $43.11 $42.79 $37.16 $33.33 $35.44
Income From Investment Operations
Net Investment Income .............. 4.75 4.37 3.99 3.94 3.90 3.69 3.40 2.36 2.94 2.68
Net Realized and Unrealized Gains
(Losses) on Investment Transactions (1.66) 5.56 (9.46) 6.30 5.59 5.87 (3.08) 3.27 .89 (4.79)
Total Income (Loss) from
Investment Operations .............. 3.09 9.93 (5.47) 10.24 9.49 9.56 .32 5.63 3.83 (2.11)
Distributions
From Net Investment Income .........(3.94) (3.42) (3.25) (2.34) (2.22) (2.09) (2.35) -- (2.23) (4.72)
From Net Realized Gains
on Investment Transactions ......... -- -- (2.95) (1.83) (.16) -- (.10) -- -- --
In Excess of Net Realized Gains
on Investment Transactions ......... -- -- (1.20) -- -- -- -- -- -- --
Total Distributions ................(3.94) (3.42) (7.40) (4.17) (2.38) (2.09) (2.45) -- (2.23) (4.72)
Reverse Share Split ................... 3.94 3.42 7.40 4.17 2.38 2.09 2.45 -- 2.23 4.72
Net Asset Value, End of Period ........$79.95 $76.86 $66.93 $72.40 $62.16 $52.67 $43.11 $42.79 $37.16 $33.33
TOTAL RETURN(3) ....................... 4.01% 14.84% (7.54)% 16.46% 18.02% 22.18% .75% 15.15% 11.49% (5.95)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to Average
Daily Net Assets(4) ................ .53% .63% .59% .60% .66% .66% .70% .70%(5) .70% .70%
Ratio of Net Investment
Income to Average
Daily Net Assets(4) ................ 5.99% 6.13% 5.74% 5.94% 6.90% 7.67% 7.84% 7.81%(5) 8.33% 8.08%
Portfolio Turnover Rate ............29.24% 52.64% 89.35% 76.59% 92.59% 67.39% 78.76% 49.14% 162.54% 72.70%
Net Assets, End of Period
(in thousands) ...................$267,757 $294,736 $243,895 $291,418 $190,063 $89,655 $53,216 $34,820 $14,073 $6,285
</TABLE>
(1) In 1989, the fiscal year-end for American Century Target Maturities Trust
was changed from December 31 to September 30.
(2) Per-share data in this table are calculated using the average shares
outstanding during the year. Dividends and distributions shown in the table
will be different than the actual per-share distributions to shareholders.
(3) Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
(4) The ratio for the year ended September 30, 1996 includes expenses paid
through expense offset arrangements.
(5) Annualized.
Prospectus Financial Highlights 5
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
TARGET 2005
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
appears in the Fund's annual report, which is incorporated by reference into the
Statement of Additional Information. The semiannual and annual reports contain
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended September 30, except as noted.
1996 1995 1994 1993 1992 1991 1990 1989(1) 1988 1987
PER-SHARE DATA(2)
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ...................$56.61 $45.22 $51.84 $41.18 $35.13 $27.74 $28.61 $24.36 $21.28 $23.74
Income From Investment Operations
Net Investment Income .............. 3.50 3.33 3.11 2.90 2.69 2.47 2.27 1.54 1.90 1.77
Net Realized and Unrealized Gains
(Losses) on Investment Transactions (2.28) 8.06 (9.73) 7.76 3.36 4.92 (3.14) 2.71 1.18 (4.23)
Total Income (Loss) from
Investment Operations .............. 1.22 11.39 (6.62) 10.66 6.05 7.39 (.87) 4.25 3.08 (2.46)
Distributions
From Net Investment Income .........(2.06) (2.41) (2.70) (2.51) (1.75) (.86) (1.60) -- (1.53) (3.52)
From Net Realized Gains
on Investment Transactions ......... (.58) (.67) (8.47) (1.01) (.37) -- (.07) -- -- (.13)
Total Distributions ................(2.64) (3.08) (11.17) (3.52) (2.12) (.86) (1.67) -- (1.53) (3.65)
Reverse Share Split ................... 2.64 3.08 11.17 3.52 2.12 .86 1.67 -- 1.53 3.65
Net Asset Value, End of Period ........$57.83 $56.61 $45.22 $51.84 $41.18 $35.13 $27.74 $28.61 $24.36 $21.28
TOTAL RETURN(3) ....................... 2.15% 25.16% (12.75)% 25.89% 17.22% 26.64% (3.04)% 17.45% 14.48% (10.36)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to Average
Daily Net Assets(4) ................ .58% .71% .64% .62% .63% .70% .70% .70%(5) .70% .70%
Ratio of Net Investment
Income to Average
Daily Net Assets(4) ................ 6.05% 6.58% 6.37% 6.44% 7.27% 7.80% 7.93% 7.66%(5) 8.44% 8.31%
Portfolio Turnover Rate ............31.36% 34.23% 68.11% 49.89% 64.38% 85.38% 186.02% 71.98% 27.25% 68.11%
Net Assets, End of Period
(in thousands) ...................$238,864 $183,452 $96,207 $149,890 $168,697 $161,388 $46,303 $24,955 $8,948 $3,680
</TABLE>
(1) In 1989, the fiscal year-end for American Century Target Maturities Trust
was changed from December 31 to September 30.
(2) Per-share data in this table are calculated using the average shares
outstanding during the year. Dividends and distributions shown in the table
will be different than the actual per-share distributions to shareholders.
(3) Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
(4) The ratio for the year ended September 30, 1996 includes expenses paid
through expense offset arrangements.
(5) Annualized.
6 Financial Highlights American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
TARGET 2010
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
appears in the Fund's annual report, which is incorporated by reference into the
Statement of Additional Information. The semiannual and annual reports contain
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended September 30, except as noted.
1996 1995 1994 1993 1992 1991 1990 1989(1) 1988 1987
PER-SHARE DATA(2)
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ...................$42.14 $31.67 $38.13 $28.53 $25.08 $19.18 $20.59 $17.31 $14.96 $17.65
Income From Investment Operations
Net Investment Income .............. 2.58 2.41 2.24 2.05 1.88 1.72 1.61 1.08 1.29 1.23
Net Realized and Unrealized Gains
(Losses) on Investment Transactions (2.25) 8.06 (8.70) 7.55 1.57 4.18 (3.02) 2.20 1.06 (3.92)
Total Income (Loss) from
Investment Operations .............. .33 10.47 (6.46) 9.60 3.45 5.90 (1.41) 3.28 2.35 (2.69)
Distributions
From Net Investment Income .........(1.57) (1.48) (1.46) (1.58) (1.14) (1.05) (1.50) -- (.42) (.90)
From Net Realized Gains
on Investment Transactions ......... -- (.48) (4.31) (1.14) -- -- (.09) -- -- --
Total Distributions ................(1.57) (1.96) (5.77) (2.72) (1.14) (1.05) (1.59) -- (.42) (.90)
Reverse Share Split ................... 1.57 1.96 5.77 2.72 1.14 1.05 1.59 -- .42 .90
Net Asset Value, End of Period ........$42.47 $42.14 $31.67 $38.13 $28.53 $25.08 $19.18 $20.59 $17.31 $14.96
TOTAL RETURN(3) ....................... .78% 33.06% (16.92)% 33.61% 13.76% 30.76% (6.85)% 18.95% 15.71% (15.24)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to Average
Daily Net Assets(4) ................ .67% .71% .68% .66% .70% .70% .70% .70%(5) .70% .70%
Ratio of Net Investment
Income to Average
Daily Net Assets(4) ................ 5.98% 6.56% 6.35% 6.32% 7.20% 7.73% 7.82% 7.34%(5) 8.11% 8.13%
Portfolio Turnover Rate ............24.42% 26.00% 35.35% 131.50% 95.25% 130.91% 191.16% 88.43% 258.70% 83.59%
Net Assets, End of Period
(in thousands) ...................$111,117 $95,057 $46,312 $70,551 $55,565 $47,661 $37,222 $42,439 $9,617 $9,297
</TABLE>
(1) In 1989, the fiscal year-end for American Century Target Maturities Trust
was changed from December 31 to September 30.
(2) Per-share data in this table are calculated using the average shares
outstanding during the year. Dividends and distributions shown in the table
will be different than the actual per-share distributions to shareholders.
(3) Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
(4) The ratio for the year ended September 30, 1996 includes expenses paid
through expense offset arrangements.
(5) Annualized.
Prospectus Financial Highlights 7
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
TARGET 2015
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
appears in the Fund's annual report, which is incorporated by reference into the
Statement of Additional Information. The semiannual and annual reports contain
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended September 30, except as noted.
1996 1995 1994 1993 1992 1991 1990 1989(1) 1988 1987
PER-SHARE DATA(2)
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ...................$32.20 $22.79 $29.04 $20.39 $18.44 $13.75 $15.62 $12.63 $11.37 $14.24
Income From Investment Operations
Net Investment Income .............. 1.85 1.71 1.57 1.46 1.33 1.26 1.18 .79 .94 .90
Net Realized and Unrealized Gains
(Losses) on Investment Transactions (2.09) 7.70 (7.82) 7.19 .62 3.43 (3.05) 2.20 .32 (3.77)
Total Income (Loss) from
Investment Operations .............. (.24) 9.41 (6.25) 8.65 1.95 4.69 (1.87) 2.99 1.26 (2.87)
Distributions
From Net Investment Income .........(1.28) (.87) (1.19) (1.45) (1.23) (.97) (.50) -- (.55) (.22)
From Net Realized Gains
on Investment Transactions .........(1.61) -- (7.08) (.34) -- -- (.01) -- -- --
In Excess of Net Realized Gains
on Investment Transactions ......... -- -- (.37) -- -- -- -- -- -- --
Total Distributions ................(2.89) (.87) (8.64) (1.79) (1.23) (.97) (.51) -- (.55) (.22)
Reverse Share Split ................... 2.89 .87 8.64 1.79 1.23 .97 .51 -- .55 .22
Net Asset Value, End of Period ........$31.96 $32.20 $22.79 $29.04 $20.39 $18.44 $13.75 $15.62 $12.63 $11.37
TOTAL RETURN(3) .......................(.74)% 41.29% (21.52)% 42.42% 10.57% 34.11% (11.97)% 23.67% 11.08% (20.15)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to Average
Daily Net Assets(4) ................ .65% .71% .68% .63% .62% .61% .70% .70%(5) .70% .70%
Ratio of Net Investment Income
to Average Daily Net Assets(4) ..... 5.63% 6.40% 5.97% 6.28% 7.04% 7.79% 7.74% 7.02%(5) 7.97% 7.99%
Portfolio Turnover Rate ............17.24% 69.97% 64.90% 138.34% 103.25% 39.91% 81.27% 48.31% 188.24% 508.59%
Net Assets, End of Period
(in thousands) ...................$115,654 $114,647 $66,073 $89,023 $131,106 $222,118 $295,577 $233,792 $11,790 $2,006
</TABLE>
(1) In 1989, the fiscal year-end for American Century Target Maturities Trust
was changed from December 31 to September 30.
(2) Per-share data in this table are calculated using the average shares
outstanding during the year. Dividends and distributions shown in the table
will be different than the actual per-share distributions to shareholders.
(3) Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
(4) The ratio for the year ended September 30, 1996 includes expenses paid
through expense offset arrangements.
(5) Annualized.
8 Financial Highlights American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
TARGET 2020
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
appears in the Fund's annual report, which is incorporated by reference into the
Statement of Additional Information. The semiannual and annual reports contain
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended September 30, except as noted.
1996 1995 1994 1993 1992 1991 1990(1)
PER-SHARE DATA(2)
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ....................... $22.47 $15.28 $20.72 $13.63 $12.54 $9.63 $12.00
Income From Investment Operations
Net Investment Income .................. 1.41 1.19 1.13 1.00 .92 .85 .60
Net Realized and Unrealized Gains
(Losses) on Investment Transactions .... (1.88) 6.00 (6.57) 6.09 .17 2.06 (2.97)
Total Income (Loss) from
Investment Operations .................. (.47) 7.19 (5.44) 7.09 1.09 2.91 (2.37)
Distributions
From Net Investment Income ............. (.40) (.21) (0.28) (.53) (.63) (.21) --
From Net Realized Gains
on Investment Transactions ............. (.04) -- (1.31) (.72) (.08) -- --
In Excess of Net Realized Gains
on Investment Transactions ............. -- -- (1.18) -- -- -- --
Total Distributions .................... (.44) (.21) (2.77) (1.25) (.71) (.21) --
Reverse Share Split ....................... .44 .21 2.77 1.25 .71 .21 --
Net Asset Value, End of Period ............ $22.00 $22.47 $15.28 $20.72 $13.63 $12.54 $9.63
TOTAL RETURN(3) ...........................(2.09)% 47.05% (26.25)% 52.02% 8.69% 30.22% (19.75)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to Average
Daily Net Assets(4) .................... .61% .72% .70% .70% .66% .67% .70%(5)
Ratio of Net Investment Income
to Average Daily Net Assets(4) ......... 6.25% 6.24% 6.28% 6.10% 7.19% 7.50% 7.79%(5)
Portfolio Turnover Rate ................ 47.05% 78.08% 116.46% 178.52% 144.05% 151.44% 188.60%
Net Assets, End of Period
(in thousands) ........................$926,319 $574,702 $58,535 $56,125 $41,793 $88,332 $53,198
</TABLE>
(1) From December 29, 1989 (commencement of operations) through September 30,
1990.
(2) Per-share data in this table are calculated using the average shares
outstanding during the year. Dividends and distributions shown in the table
will be different than the actual per-share distributions to shareholders.
(3) Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
(4) The ratio for the year ended September 30, 1996 includes expenses paid
through expense offset arrangements.
(5) Annualized.
Prospectus Financial Highlights 9
FINANCIAL HIGHLIGHTS
TARGET 2025
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
appears in the Fund's annual report, which is incorporated by reference into the
Statement of Additional Information. The semiannual and annual reports contain
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended September 30, except as noted.
1996(1)
PER-SHARE DATA(2)
Net Asset Value, Beginning of Period ................................... $19.85
Income from Investment Operations
Net Investment Income ............................................... .72
Net Realized and Unrealized Losses on Investment Transactions ....... (2.66)
Total Loss From Investment Operations ............................... (1.94)
Distributions
Dividends From Net Investment Income ................................ --
Total Distributions .................................................... --
Reverse Share Split ................................................. --
Net Asset Value, End of Period ......................................... $17.91
TOTAL RETURN(3) ........................................................ (9.77)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to Average Daily Net Assets(4) ....................... .67%(5)
Ratio of Net Investment Income to Average Daily Net Assets(4) ..........6.57%(5)
Portfolio Turnover Rate ................................................ 60.80%
Net Assets, End of Period (in thousands) ............................... $35,661
(1) From February 15, 1996 (commencement of operations) through September 30,
1996.
(2) Per-share data in this table are calculated using the average shares
outstanding during the period. Dividends and distributions shown in the
table will be different than the actual per-share distributions to
shareholders.
(3) Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
(4) The ratio includes expenses paid through expense offset arrangements.
(5) Annualized.
10 Financial Highlights American Century Investments
INFORMATION REGARDING THE FUNDS
INVESTMENT POLICIES OF THE FUNDS
The Funds have adopted certain investment restrictions that are set forth
in the Statement of Additional Information. Those restrictions, as well as the
investment objectives of the Funds identified on page 2 of the Prospectus and
any other investment policies which are designated as "fundamental" in this
Prospectus or in the Statement of Additional Information, cannot be changed
without shareholder approval. The Funds have implemented additional investment
policies and practices to guide their activities in the pursuit of their
respective investment objectives. These policies and practices, which are
described throughout this Prospectus, are not designated as fundamental policies
and may be changed without shareholder approval.
For an explanation of the securities ratings referred to in the following
discussion, see "Other Information" in the Statement of Additional Information.
INVESTMENT OBJECTIVES OF THE FUNDS
American Century Target Maturities Trust currently consists of six Funds
with target maturity years of 2000, 2005, 2010, 2015, 2020, and 2025,
respectively. Each Fund will be liquidated shortly after the conclusion of its
target maturity year. Additional funds may be introduced from time to time.
There is no assurance that a Fund will achieve its investment objective.
Each Fund seeks to provide the highest attainable investment return
consistent with the creditworthiness of U.S. Treasury securities and the
professional management of reinvestment and market risks.
INVESTMENT POLICIES
Each Fund invests primarily in zero-coupon U.S. Treasury securities (a
"zero"). Unlike U.S. Treasury securities with coupons attached, which pay
interest periodically, zeros pay no interest. Instead, these securities are
issued at a substantial discount from their maturity value, and this discount is
amortized over the life of the security. Investment return comes from the
difference between the price at which a zero is issued (or purchased) and the
price at which it matures (or is sold).
To approximate the experience an investor would have if he or she purchased
zeros directly, the Manager manages each Fund to track as closely as possible
the price behavior of a zero with the same term to maturity to correct for
factors such as shareholder purchases and redemptions (and related transaction
costs) that differentiate investing in a portfolio of zeros from investing
directly in a zero. The Manager executes portfolio transactions necessary to
accommodate shareholder activity each business day. To limit reinvestment risk,
the Manager adjusts each Fund's weighted average maturity ("WAM") to fall within
the Fund's target maturity year so that, normally, at least 90% of the
securities held mature within one year of the Fund's target maturity year.
By adhering to these investment parameters, the Manager expects that
shareholders who hold their shares until a Fund's WAM*, and who reinvest all
dividends and capital gain distributions, will realize an investment return and
a maturity value that does not differ substantially from the anticipated growth
rate ("AGR") and anticipated value at maturity ("AVM") calculated on the day the
shares were purchased.
The Manager calculates each Fund's AGR and AVM each day the Trust is open
for business. AGR and AVM daily calculations assume, among other factors, that
the Fund's expense ratio and portfolio composition remain constant for the life
of the Fund.
Transaction costs, interest rate changes, and the Manager's efforts to
improve total return by taking advantage of market opportunities also cause the
Funds' AGRs and AVMs to vary from day to day. Despite these so-called
"destabilizing" factors, however, each Fund's AGR and AVM tend to fluctuate
within narrow ranges. The following table shows each Fund's AVM as of September
30 for each of the past
Prospectus Information Regarding the Fund 11
five years. (AGRs are illustrated in the Statement of Additional Information.)
Anticipated Value At Maturity
9/30/92 9/30/93 9/30/94 9/30/95 9/30/96
Target 2000 101.01 100.69 100.86 100.99 101.10
Target 2005 99.78 100.21 100.58 100.32 100.71
Target 2010 100.11 100.94 101.38 101.02 102.53
Target 2015 107.05 106.84 107.95 109.62 110.11
Target 2020 101.83 100.76 102.11 102.31 103.60
Target 2025 N/A N/A N/A N/A 109.24
The Funds' share prices and growth rates are not guaranteed by the Trust,
the Manager, or any of their affiliates. There is no guarantee that the Funds'
AVMs will fluctuate as little in the future as they have in the past.
*A Fund's weighted average maturity date can be calculated at any point in
time by adding its WAM to the current date. For example, if today were November
17, 1995, and the Fund's WAM were six years, the Fund's weighted average
maturity date would be November 17, 2001. Please note that a Fund's weighted
average maturity date typically precedes the date on which the Fund will be
liquidated. For details on Fund liquidation, see page 22.
ZERO COUPON SECURITIES
Zero-coupon U.S. Treasury securities (or zeros) are the unmatured interest
coupons and underlying principal portions of U.S. Treasury bonds. Originally,
these securities were created by broker-dealers who bought Treasury bonds and
deposited these securities with a custodian bank. The broker-dealers then sold
receipts representing ownership interests in the coupons or principal portions
of the bonds. Some examples of zero-coupon securities sold through custodial
receipt programs are CATS (Certificates of Accrual on Treasury Securities),
TIGRs (Treasury Investment Growth Receipts), and generic TRs (Treasury
Receipts).
The U.S. Treasury subsequently introduced a program called Separate Trading
of Registered Interest and Principal of Securities ("STRIPS"), through which it
exchanges eligible securities for their component parts and then allows the
component parts to trade in book-entry form. (Book-entry trading eliminates the
bank credit risks associated with broker-dealer-sponsored custodial receipt
programs.) STRIPS are direct obligations of the U.S. government and have the
same credit risks as other U.S. Treasury securities.
Principal and interest on bonds issued by the Resolution Funding
Corporation ("REFCORP") have also been separated and issued as zero-coupon
securities. The U.S. government and its agencies may issue securities in
zero-coupon form. These securities are referred to as "original issue
zero-coupon securities."
OTHER INVESTMENTS
As a Fund's target maturity year approaches, the Manager may buy
coupon-bearing securities whose duration and price characteristics are similar
to those of aging zero-coupon securities. Towards the end of a Fund's target
maturity year and until the Fund is liquidated, the proceeds of maturing
zero-coupon securities are invested in U.S. Treasury bills.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
The Funds are designed for investors with long-term financial goals that
correspond to one or more of the target maturities offered. Investors who use
zeros or the Funds for short-term speculative purposes should understand that,
although most of the reinvestment risk associated with coupon-bearing bonds has
been eliminated, the prices of zeros can fluctuate dramatically between issuance
and maturity. When interest rates rise, the price of a zero falls more sharply
than the price of a coupon-bearing security of the same maturity.
Correspondingly, when interest rates fall, the price of a zero rises more
sharply than the price of a coupon-bearing security.
Each Fund's share price will fluctuate daily in response to Fund activity
and changes in the market value of its investments. Due to the price volatility
of zeros, redemptions made prior to a Fund's target maturity year may result in
unanticipated capital gains or losses for the Funds. These capital gains and
losses will be distributed to shareholders regardless of whether they have
redeemed shares. Although shareholders have the option to redeem shares on any
business day, those seeking to minimize their exposure to share price volatility
should plan to hold their shares until the end of their Fund's target maturity
year.
12 Information Regarding the Funds American Century Investments
Investing in a portfolio of zeros is different from investing directly in a
zero. Although the Manager adheres to investment policies designed to assure
close correspondence between the price behavior of a Fund and that of a zero
with the same maturity characteristics, precise forecasts of maturity value and
yield to maturity are not possible.
For additional information regarding the investment practices of any of the
Funds, see the Statement of Additional Information.
COUPON-BEARING U.S. TREASURY SECURITIES
U.S. Treasury bills, notes, and bonds are direct obligations of the U.S.
Treasury. Historically, they have involved no risk of loss of principal if held
to maturity. Between issuance and maturity, however, the prices of these
securities change in response to changes in market interest rates.
Coupon-bearing securities generate current interest payments, and part of a
Fund's return may come from reinvesting interest earned on these securities.
REFCORP BONDS
REFCORP issues bonds whose interest payments are guaranteed by the U.S.
Treasury and whose principal amounts are secured by zero-coupon U.S. Treasury
securities held in a separate custodial account at the Federal Reserve Bank of
New York. The principal amount and maturity date of REFCORP bonds are the same
as the par amount and maturity date of the corresponding zeros; upon maturity,
REFCORP bonds are repaid from the proceeds of the zeros.
CASH MANAGEMENT
Each Fund may invest up to 5% of its total assets in money market funds,
including those advised by the Manager, provided that the investment is
consistent with the Fund's investment policies and restrictions.
SECURITIES LENDING
The Funds may lend portfolio securities to broker-dealers to earn
additional income. This practice could result in a loss or a delay in recovering
the Fund's securities. Securities loans are subject to guidelines prescribed by
the board of trustees, which are set forth in the Statement of Additional
Information. Loans are limited to one-third of the Fund's total assets and must
be fully collateralized.
PORTFOLIO TURNOVER
The portfolio turnover rates of the Funds are shown in the Financial
Highlights tables on pages 5-10 of this Prospectus.
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to the particular fund's
objectives. The manager believes that the rate of portfolio turnover is
irrelevant when it determines a change is in order to achieve those objectives
and, accordingly, the annual portfolio turnover rate cannot be accurately
anticipated.
The portfolio turnover of each Fund may be higher than other mutual funds
with similar investment objectives. The Funds' annual portfolio turnover rates
are not expected to exceed 150% and may vary from year to year. An annual
portfolio turnover rate of 100% or more is considered high. A high turnover rate
involves correspondingly higher transaction costs that are borne directly by a
Fund. Portfolio turnover may also affect the character of capital gains, if any,
realized and distributed by a Fund since short-term capital gains are taxable as
ordinary income.
U.S. GOVERNMENT SECURITIES
Generally, the state tax-exempt interest income earned by the Funds is
passed through to the Funds' shareholders as state tax-free dividends.
Each Fund may therefore quote state tax-equivalent yields, which show the
state taxable yields an investor would have to earn before taxes to equal the
Fund's state tax-free yields. As a prospective investor in the Funds, you should
determine whether your state tax-equivalent yield is likely to be higher with a
taxable or with a tax-exempt Fund. To determine this, you may use the formulas
depicted below.
The tax-equivalent yield is based on each Fund's current state tax-free
yield and your state income tax rate. The formula is:
Fund's State Tax-Free Yield Your State
100% - State Tax Rate = Tax-Equivalent
Yield
PERFORMANCE ADVERTISING
From time to time, the Funds may advertise performance data. Fund
performance may be shown by pre-
Prospectus Information Regarding the Funds 13
senting one or more performance measurements, including cumulative total return
or average annual total return, yield, effective yield and tax-equivalent
yield(for tax-exempt funds).
Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the Fund's cumulative total return over the same period if the
Fund's performance had remained constant throughout.
A quotation of yield reflects a Fund's income over a stated period
expressed as a percentage of the Fund's share price. The effective yield is
calculated in a similar manner but, when annualized, the income earned by the
investment is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect on the assumed
reinvestment.
Yield is calculated by adding over a 30-day (or one-month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of Fund shares
outstanding during the period, and expressing the result as a percentage of the
Fund's share price on the last day of the 30-day (or one month) period. The
percentage is then annualized. Capital gains and losses are not included in the
calculation.
Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules. The SEC yield should be regarded as an estimate of
the Fund's rate of investment income, and it may not equal the Fund's actual
income distribution rate, the income paid to a shareholder's account, or the
income reported in the Fund's financial statements.
A tax-equivalent yield demonstrates the taxable yield necessary to produce
after-tax yield equivalent to that of a mutual fund which invests in exempt
obligations. See "U.S. Government Securities," page 13, for a description of the
formulas used in comparing yields to tax-equivalent yields.
The Funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services or Donoghue's Money Fund Report) and publications
that monitor the performance of mutual funds. Performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
In addition, Fund performance may be compared to well-known indices of market
performance. Fund performance may also be compared, on a relative basis, to the
other funds in our fund family. This relative comparison, which may be based
upon historical or expected Fund performance, volatility or other Fund
characteristics, may be presented numerically, graphically or in text. Fund
performance may also be combined or blended with other funds in our fund family,
and that combined or blended performance may be compared to the same indices to
which individual funds may be compared.
All performance information advertised by the Funds is historical in nature
and is not intended to represent or guarantee future results. The value of Fund
shares when redeemed may be more or less than their original cost.
14 Information Regarding the Funds American Century Investments
HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS
AMERICAN CENTURY INVESTMENTS
The Funds offered by this Prospectus are a part of the American Century
Investments family of mutual funds. Our family provides a full range of
investment opportunities, from the aggressive equity growth funds in our
Twentieth Century Group, to the fixed income funds in our Benham Group, to the
moderate risk and specialty funds in our American Century Group. Please call
1-800-345-2021 for a brochure or prospectuses for the other funds in the
American Century Investments family.
INVESTING IN AMERICAN CENTURY
The following section explains how to invest in American Century funds,
including purchases, redemptions, exchanges and special services. You will find
more detail about doing business with us by referring to the Investor Services
Guide that you will receive when you open an account.
If you own or are considering purchasing Fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 20.
HOW TO OPEN AN ACCOUNT
To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.
The minimum investment is $2,500 ($1,000 for IRA accounts). These minimums
will be waived if you establish an automatic investment plan to your account
that is the equivalent of at least $50 per month. See "Automatic Investment
Plan," page 16.
The minimum investment requirements may be different for some types of
retirement accounts. Call one of our Investor Services Representatives for
information on our retirement plans, which are available for individual
investors or for those investing through their employers.
Please note: If you register your account as belonging to multiple owners
(e.g., as joint tenants), you must provide us with specific authorization on
your application in order for us to accept written or telephone instructions
from a single owner. Otherwise, all owners will have to agree to any
transactions that involve the account (whether the transaction request is in
writing or over the telephone).
You may invest in the following ways:
BY MAIL
Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.
BY WIRE
You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:
o RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)
o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111
o Beneficiary account number (BNF ACCT):
2804918
o REFERENCE FOR BENEFICIARY (RFB):
American Century account number into which you are investing. If more
than one, leave blank and see Bank to Bank Information below.
o ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.
o BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):
o Taxpayer identification or Social Security number
o If more than one account, account numbers and amount to be
invested in each account.
Prospectus How To Invest with American Century Investment 15
o Current tax year, previous tax year or rollover designation if an
IRA. Specify whether IRA, SEP-IRA or SARSEP-IRA.
BY EXCHANGE
Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.
IN PERSON
If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:
4500 Main Street
Kansas City, Missouri 64111
1665 Charleston Road
Mountain View, California 94043
2000 S. Colorado Blvd.
Denver, Colorado 80222.
SUBSEQUENT INVESTMENTS
Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see "Automatic Investment Plan," this page) or by any
of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the remittance portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.
BY MAIL
When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)
BY TELEPHONE
Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.
BY ONLINE ACCESS
Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.
BY WIRE
You may make subsequent investments by wire. Follow the wire transfer
instructions on page 15 and indicate your account number.
IN PERSON
You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.
AUTOMATIC INVESTMENT PLAN
You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must be
at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application to
receive more information. If you would like to add a direct deposit to an
existing account, please call one of our Investor Services Representatives.
HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER
As long as you meet any minimum investment requirements, you may exchange
your Fund shares to our other funds up to six times per year per account. An
exchange request will be processed the same day it is received if it is received
before the Funds' net asset values are calculated, which is one hour prior to
the close of the New York Stock Exchange for the Funds described in this
Prospectus, and at the close of the Exchange for all of our other funds.
See "When Share Price is Determined," page 21.
For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an Automatic
Exchange Plan between any two funds in the amount of at least $50 per month. See
our Investor Services Guide for further information about exchanges.
16 How To Invest With American Century Investments American Century Investments
BY MAIL
You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.
BY TELEPHONE
You can make exchanges over the telephone (either with an Investor Services
Representative or using our Automated Information Line--see page 18) if you have
authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to get the appropriate form.
BY ONLINE ACCESS
You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.
HOW TO REDEEM SHARES
We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received.
Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.
BY MAIL
Your written instructions to redeem shares may be made either by a
redemption form, which we will send to you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 18.
BY TELEPHONE
If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.
BY CHECK-A-MONTH
If you have at least a $10,000 balance in your account, you may redeem
shares by Check-A-Month. A Check-A-Month plan automatically redeems enough
shares each month to provide you with a check in an amount you choose (minimum
$50). To set up a Check-A-Month plan, please call and request our Check-A-Month
brochure.
OTHER AUTOMATIC REDEMPTIONS
If you have at least a $10,000 balance in your account, you may elect to
make redemptions automatically by authorizing us to send funds directly to you
or to your account at a bank or other financial institution. To set up automatic
redemptions, call one of our Investor Services Representatives.
REDEMPTION PROCEEDS
Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up to
15 days or longer to send redemption proceeds (to allow your purchase funds to
clear). No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption proceeds are sent.
Redemption proceeds may be sent to you in one of the following ways:
BY CHECK
Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.
BY WIRE AND ACH
You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.
Your bank will usually receive wired funds within 48 hours of transmission.
Funds transferred by ACH may be received up to seven days after transmission.
Wired funds are subject to a $10 fee to cover bank wire charges, which is
deducted from redemption proceeds. Once the funds are transmitted, the time of
receipt and the funds' availability are not under our control.
REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS
Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you to either bring the value
of the shares held in the account up to the minimum or to establish an
Prospectus How To Invest with American Century Investments 17
automatic investment that is the equivalent of at least $50 per month. If action
is not taken within 90 days of the letter's date, the shares held in the account
will be redeemed and proceeds from the redemption will be sent by check to your
address of record. We reserve the right to increase the investment minimums.
SIGNATURE GUARANTEE
To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee will be required
when:
o redeeming more than $25,000; or
o establishing or increasing a Check-A-Month or automatic transfer on an
existing account.
You may obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.
For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.
We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.
SPECIAL SHAREHOLDER SERVICES
We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.
Our special shareholder services include:
AUTOMATED INFORMATION LINE
We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.
ONLINE ACCOUNT ACCESS
You may contact us 24 hours a day, seven days a week at
www.americancentury.com to access your fund's daily share prices, receive
updates on major market indexes and view historical performance of your funds.
If you select "Full Services" on your application, you can use your personal
access code and Social Security number to view your account balances and account
activity, make subsequent investments from your bank account or exchange shares
from one fund to another.
OPEN ORDER SERVICE
Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.
If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.
Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.
18 How To Invest With American Century Investments American Century Investments
TAX-QUALIFIED RETIREMENT PLANS
Each Fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:
o Individual Retirement Accounts ("IRAs");
o 403(b) plans for employees of public school systems and non-profit
organizations; or
o Profit sharing plans and pension plans for corporations and other
employers.
If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.
You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.
IMPORTANT POLICIES REGARDING
YOUR INVESTMENTS
Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.
(1) We reserve the right for any reason to suspend the offering of shares
for a period of time, or to reject any specific purchase order
(including purchases by exchange). Additionally, purchases may be
refused if, in the opinion of the manager, they are of a size that
would disrupt the management of the Fund.
(2) We reserve the right to make changes to any stated investment
requirements, including those that relate to purchases, transfers and
redemptions. In addition, we may also alter, add to or terminate any
investor services and privileges. Any changes may affect all
shareholders or only certain series or classes of shareholders.
(3) Shares being acquired must be qualified for sale in your state of
residence.
(4) Transactions requesting a specific price and date, other than open
orders, will be refused. Once you have mailed or otherwise transmitted
your transaction instructions to us, they may not be modified or
canceled.
(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require
evidence satisfactory to us of the authority of the individual making
the request.
(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include
requesting personal identification from callers, recording telephone
calls, and providing written confirmations of telephone transactions.
These procedures are designed to protect shareholders from
unauthorized or fraudulent instructions. If we do not employ
reasonable procedures to confirm the genuineness of instructions, then
we may be liable for losses due to unauthorized or fraudulent
instructions. The company, its transfer agent and investment advisor
will not be responsible for any loss due to instructions they
reasonably believe are genuine.
(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary
Elizabeth Jones, she should sign that way and not as Mary E. Jones.
(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you
experience difficulty in reaching us during such periods, you may send
your transaction instructions by mail, express mail or courier
service, or you may visit one of our Investors Centers. You may also
use our Automated Information Line if you have requested and received
an access code and are not attempting to redeem shares.
(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to
cover the penalty the IRS will impose on us for failure to report your
correct taxpayer identification number on information reports.
(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 per hour may be applied.
REPORTS TO SHAREHOLDERS
At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all
Prospectus How To Invest with American Century Investments 19
year-to-date activity in your account. You may request a statement of your
account activity at any time.
With the exception of most automatic transactions, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transactions. See the Investor Services Guide for more detail.
Carefully review all the information relating to transactions on your
statements and confirmations to ensure that your instructions were acted on
properly. Please notify us immediately in writing if there is an error. If you
fail to provide notification of an error with reasonable promptness, i.e.,
within 30 days of non-automatic transactions or within 30 days of the date of
your consolidated quarterly statement, in the case of automatic transactions, we
will deem you to have ratified the transaction.
No later than January 31st of each year, we will send you reports that
you may use in completing your U.S. income tax return. See the Investor
Services Guide for more information.
Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.
EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS
Information contained in our Investor Services Guide pertains to
shareholders who invest directly with American Century rather than through an
employer-sponsored retirement plan or through a financial intermediary.
If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the
funds, exchange them for shares of other American Century funds, and redeem them
will depend on the terms of your plan.
If you own or are considering purchasing fund shares through a bank,
broker-dealer, insurance company or other financial intermediary, your ability
to purchase, exchange and redeem shares will depend on your agreement with, and
the policies of, such financial intermediary.
You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your plan administrator or financial intermediary.
20 How To Invest With American Century Investments American Century Investments
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. Net asset value for the Funds offered by this Prospectus is
determined one hour before the close of regular trading on each day that the New
York Stock Exchange is open, usually 2 p.m. Central time. Net asset value for
all other American Century funds is determined at the close of regular trading
on the Exchange.
Investments and requests to redeem or exchange shares will receive the
share price next determined after receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents one hour before the close of business
on the Exchange are effective on and will receive the price determined one hour
before the close of the Exchange. Investment, redemption and exchange requests
received thereafter are effective on, and receive the price determined as of,
the close of the Exchange on the next day the Exchange is open.
Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited one hour before the close of business on the
Exchange.
Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.
Investment and transaction instructions received by us on any business day
by mail prior to the close of business on the Exchange will receive that day's
price. Investments and instructions received after that time will receive the
price determined on the next business day.
If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the fund's transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the fund's procedures or any contractual arrangement with the
fund or the fund's distributor in order for you to receive that day's price.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized
as follows:
The portfolio securities of each Fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Trustees.
Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Trustees.
WHERE TO FIND INFORMATION ABOUT SHARE PRICE
The net asset values of the Funds are published in leading newspapers
daily. The net asset values, as well as yield information on all of the Funds
and other funds in the American Century family of funds, may be obtained by
calling us or by accessing our Web site at www.americancentury.com.
Prospectus Additional Information You Should Know 21
DISTRIBUTIONS
Each Fund declares an ordinary income dividend (and a capital gain
distribution, if necessary) in December.
Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the Funds may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code, in all events in a manner consistent with the provisions of the
1940 Act.
Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 591/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date. Please consult our Investor Services Guide for
further information regarding your distribution options.
BUYING A DIVIDEND
The timing of your investment could have undesirable tax consequences. If
you open a new account or buy more shares for your current account just before
the day a dividend or distribution is reflected in your Fund's share price, you
will receive a portion of your investment back as a taxable dividend or
distribution.
REVERSE SHARE SPLITS
At the same time that the Funds' annual dividends (and capital gain
distributions, if any) are declared, the Board of Trustees also declares a
reverse share split for each Fund that exactly offsets the per-share amount of
the Fund's dividends (and capital gain distributions).
Following a reverse share split, shareholders who have chosen to reinvest
dividends and capital gain distributions own exactly the same number of shares
they owned prior to the distribution and reverse share split. Shareholders who
have elected to take distributions in cash own fewer shares. Reverse share
splits cause the Funds' share prices to behave similarly to the prices of
directly held zero-coupon securities with comparable maturity characteristics.
Although the Trustees intend to declare a reverse share split each time a
dividend or capital gain distribution is declared, they reserve the right not to
do so.
FUND LIQUIDATION
During a Fund's target maturity year, shareholders will be asked if they
wish to receive payment of the liquidation proceeds in cash or to exchange their
shares for those of another American Century fund or another Fund. If the Trust
has not received instructions by December 31 of the Fund's target maturity year,
shares will be exchanged for shares of American Century-Benham Capital
Preservation Fund ("CPF") or, if CPF is not available, for shares of another
money market fund in the American Century family of funds.
TAXES
Each Fund has elected to be taxed under Subchapter M of the Internal
Revenue Code, which means that to the extent its income is distributed to
shareholders, it pays no income taxes.
TAX-DEFERRED ACCOUNTS
If Fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the Fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
TAXABLE ACCOUNTS
Zero-coupon securities purchased by the Funds accrue interest (commonly
referred to as "imputed income") for federal income tax purposes even though
zeros do not pay current interest. The Funds must distribute this imputed income
to shareholders as ordinary income dividends, which are subject to federal taxes
but exempt from state taxes.
22 Additional Information You Should Know American Century Investments
Distributions of net investment income and net short-term capital gains are
taxable to you as ordinary income, except as described below. The dividends from
net income of the fixed income funds do not qualify for the 70%
dividends-received deduction for corporations since they are derived from
interest income. Dividends representing income derived from tax-exempt bonds
generally retain the bonds' tax-exempt character in a shareholder's hands.
Distributions from net long-term capital gains are taxable as long-term capital
gains regardless of the length of time you have held the shares on which such
distributions are paid. However, you should note that any loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to such shares.
Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a capital gain distribution, you must pay income
taxes on the distribution, even though the value of your investment (plus cash
received, if any) will not have increased. In addition, the share price at the
time you purchase shares may include unrealized gains in the securities held in
the investment portfolio of the fund. If these portfolio securities are
subsequently sold and the gains are realized, they will, to the extent not
offset by capital losses, be paid to you as a distribution of capital gains and
will be taxable to you as short-term or long-term capital gains.
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions may also be subject to state and local taxes, even if all or
a substantial part of such distribution are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue
Code and its Regulations, we are required by federal law to withhold and remit
to the IRS 31% of reportable payments (which may include dividends, capital
gains distributions and redemptions). Those regulations require you to certify
that the Social Security number or tax identification number you provide is
correct and that you are not subject to 31% withholding for previous
under-reporting to the IRS. You will be asked to make the appropriate
certification on your application. Payments reported by us that omit your Social
Security number or tax identification number will subject us to a penalty of
$50, which will be charged against your account if you fail to provide the
certification by the time the report is filed, and is not refundable.
Redemption of shares of a Fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize a gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of Fund shares, the reinvestment in additional Fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Internal Revenue Code, resulting in a postponement of the recognition of
such loss for federal income tax purposes.
MANAGEMENT
INVESTMENT MANAGEMENT
The Funds are series of the American Century Target Maturities Trust (the
"Trust"). Under the laws of the Commonwealth of Massachusetts, the Board of
Trustees is responsible for managing the business and affairs of the Trust.
Acting pursuant to an investment advisory agreement entered into with the Trust,
Benham Management Corporation (the "Manager") serves as the investment advisor
of the Funds. Its principal place of business is 1665 Charleston Road, Mountain
View, California 94043. The Manager has been providing investment advisory
services to investment companies and other clients since 1971.
Prospectus Additional Information You Should Know 23
The Manager supervises and manages the investment portfolio of each Fund
and directs the purchase and sale of its investment securities. It utilizes
teams of portfolio managers, assistant portfolio managers and analysts acting
together to manage the assets of the Funds. The teams meet regularly to review
portfolio holdings and to discuss purchase and sale activity. The teams adjust
holdings in the Funds' portfolios and the Funds' asset mix as they deem
appropriate in pursuit of the Funds' investment objectives. Individual portfolio
manager members of the team may also adjust portfolio holdings of the Funds or
of sectors of the Funds as necessary between team meetings.
In June 1995, American Century Companies, Inc. ("ACC") acquired Benham
Management International, Inc., the then-parent company of the Manager. In the
acquisition, the Manager became a wholly owned subsidiary of ACC.
The portfolio manager members of the teams managing the Funds described in
this Prospectus and their work experience for the last five years are as
follows:
CASEY COLTON, Portfolio Manager, joined the Manager in 1990 as a
Municipal Analyst and has been a member of the team that manages the Target
funds since January 1996. Mr. Colton is a Chartered Financial Analyst.
DAVID SCHROEDER, Vice President, joined the Manager in 1990 and has been
primarily responsible for the day-to-day operations of each of the Funds since
July, 1990.
The activities of the Manager are subject only to directions of the Trust's
Board of Trustees. For the services provided to the Funds, the Manager receives
a monthly investment advisory fee equal to its pro rata share of the dollar
amount derived from applying the Trust's average daily net assets to an
investment advisory fee schedule.
The investment advisory fee rate cannot exceed 0.35% of average daily net
assets, and it drops to a marginal rate of 0.19% of average daily net assets as
Trust assets increase.
CODE OF ETHICS
The Funds and the Manager have adopted a Code of Ethics that restricts
personal investing practices by employees of the Manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the Funds' portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of the Fund
shareholders come before the interests of the people who manage those Funds.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri, 64111, (the "transfer agent") acts as transfer agent and
dividend-paying agent for the Funds. It provides facilities, equipment and
personnel to the Funds and is paid for such services by the Funds. For
administrative services, each Fund pays the transfer agent a monthly fee equal
to its pro rata share of the dollar amount derived from applying the average
daily net assets of all of the Funds managed by the Manager. The administrative
fee rate ranges from 0.11% to 0.08% of average daily net assets, dropping as
assets managed by the Manager increase. For transfer agent services, each Fund
pays the transfer agent a monthly fee for each shareholder account maintained
and for each shareholder transaction executed during that month.
The Funds charge no sales commissions, or "loads," of any kind. However,
investors who do not choose to purchase or sell Fund shares directly from the
transfer agent may purchase or sell Fund shares through registered
broker-dealers and other qualified service providers, who may charge investors
fees for their services. These broker-dealers and service providers generally
provide shareholder, administrative and/or accounting services which would
otherwise be provided by the transfer agent. To accommodate these investors, the
Manager and its affiliates have entered into agreements with some broker-dealers
and service providers to provide these services. Fees for such services are
borne normally by the Funds at the rates normally paid to the transfer agent,
which would otherwise provide the services.
24 Additional Information You Should Know American Century Investments
From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the Manager
or its affiliates.
The Manager and the transfer agent are both wholly owned by ACC. James E.
Stowers Jr., Chairman of the Board of Directors of ACC, controls ACC by virtue
of his ownership of a majority of its common stock.
DISTRIBUTION OF FUND SHARES
The Funds' shares are distributed by American Century Investment Services,
Inc. (the "Distributor"), a registered broker-dealer and an affiliate of the
Manager. The Manager pays all expenses for promoting and distributing the Fund
shares offered by this Prospectus. The Funds do not pay any commissions or other
fees to the Distributor or to any other broker-dealers or financial
intermediaries in connection with the distribution of Fund shares.
EXPENSES
Each Fund pays certain operating expenses directly, including, but not
limited to: custodian, audit, and legal fees; fees of the independent directors
or trustees; costs of printing and mailing prospectuses, statements of
additional information, proxy statements, notices, and reports to shareholders;
insurance expenses; and costs of registering the Fund's shares for sale under
federal and state securities laws. See the Statement of Additional Information
for a more detailed discussion of independent trustee compensation.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
American Century Target Maturities Trust was organized as a Massachusetts
business trust on November 8, 1984. The Trust is a diversified, open-end
management investment company. Its business and affairs are managed by its
officers under the direction of its Board of Trustees.
The principal office of the Trust is American Century Tower, 4500 Main
Street, P. O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may
be made by mail to that address, or by telephone to 1-800-345-2021
(international calls: 816-531-5575).
The Funds are individual series of the Trust which issues shares with no
par value. The assets belonging to each series of shares are held separately by
the custodian and in effect each series is a separate fund.
Each share, irrespective of series, is entitled to one vote for each dollar
of net asset value applicable to such share on all questions, except those
matters which must be voted on separately by the series of shares affected.
Matters affecting only one Fund are voted upon only by that Fund.
Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of Trustees can elect all of the
Trustees if they choose to do so, and in such event the holders of the remaining
votes will not be able to elect any person or persons to the Board of Trustees.
Unless required by the 1940 Act, it will not be necessary for the Trust to
hold annual meetings of shareholders. As a result, shareholders may not vote
each year on the election of Trustees or the appointment of auditors. However,
pursuant to the Trust's by-laws, the holders of shares representing at least 10%
of the votes entitled to be cast may request that the Trust hold a special
meeting of shareholders. We will assist in the communication with other
shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.
THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL SECURITIES OF A FUND ONLY IN
THOSE STATES WHERE THE FUND'S SHARES HAVE BEEN REGISTERED OR OTHERWISE QUALIFIED
FOR SALE. A FUND WILL NOT ACCEPT APPLICATIONS FROM PERSONS RESIDING IN STATES
WHERE THE FUND'S SHARES ARE NOT REGISTERED.
Prospectus Additional Information You Should Know 25
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
9701 [recycled logo]
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American
Century (sm)
STATEMENT OF ADDITIONAL INFORMATION
[american century logo]
American Century (sm)
JANUARY 1, 1997
BENHAM
GROUP(R)
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
[front cover]
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
AMERICAN CENTURY TARGET MATURITIES TRUST
This statement is not a prospectus but should be read in conjunction with the
current Prospectus of American Century Target Maturities Trust, dated January 1,
1997. The Funds' annual report for the fiscal year ended September 30, 1996 is
incorporated by reference. Please retain this document for future reference. To
obtain the Prospectus, call American Century Investments toll-free at
1-800-345-2021 (international calls: 816-531-5575) or write P.O.
Box 419200, Kansas City, Missouri 64141-6200.
TABLE OF CONTENTS
Investment Policies and Techniques....................2
Investment Restrictions...............................2
Portfolio Transactions................................3
Valuation of Portfolio Securities.....................4
Predictability of Return..............................4
Performance...........................................6
Taxes.................................................8
About the Trust.......................................8
Trustees and Officers.................................9
Investment Advisory Services.........................10
Transfer and Administrative Services.................12
Distribution of Fund Shares..........................13
Direct Fund Expenses.................................13
Expense Limitation Agreement.........................13
Additional Purchase and Redemption Information.......13
Other Information....................................15
Statement of Additional Information 1
INVESTMENT POLICIES AND TECHNIQUES
The following paragraphs provide a more detailed description of the securities
and investment practices identified in the Prospectus. Unless otherwise noted,
the policies described in this Statement of Additional Information are not
fundamental and may be changed by the Board of Trustees.
LOANS OF PORTFOLIO SECURITIES
Each Fund may lend its portfolio securities to earn additional income. If a
borrower defaults on a securities loan, the lending Fund could experience delays
in recovering the securities it loaned; if the value of the loaned securities
increased in the meantime, the Fund could suffer a loss. To minimize the risk of
default on securities loans, Benham Management Corporation (the "Manager")
adheres to the following guidelines established by the Board of Trustees:
TYPE AND AMOUNT OF COLLATERAL. At the time a loan is made, the Fund must
receive, from or on behalf of a borrower, collateral consisting of any
combination of cash and full faith and credit U.S. government securities equal
to not less than 102% of the market value of the securities loaned. Cash
collateral received by a Fund in connection with loans of portfolio securities
may be commingled by the Fund's custodian with other cash and marketable
securities, provided that the loan agreement expressly allows such commingling.
ADDITIONS TO COLLATERAL. Collateral must be marked to market daily, and the
borrower must agree to add to collateral to the extent necessary to maintain the
102% level specified in guideline (1) above. The borrower must deposit
additional collateral not later than the business day following the business day
on which a collateral deficiency occurs or collateral appears to be inadequate.
TERMINATION OF LOAN. The Fund must have the ability to terminate a loan of
portfolio securities at any time. The borrower must be obligated to redeliver
the borrowed securities within the normal settlement period following receipt of
the termination notice. The normal settlement period for U.S. government
securities is two trading days.
REASONABLE RETURN ON LOAN. The borrower must agree that the Fund (a) will
receive all dividends, interest, or other distributions on loaned securities and
(b) will be paid a reasonable return on such loans either in the form of a loan
fee or premium or from the retention by the Fund of part or all of the earnings
and profits realized from the investment of cash collateral in full faith and
credit U.S. government securities.
LIMITATIONS ON PERCENTAGE OF FUND ASSETS ON LOAN. A Fund's loans may not
exceed 33-1/3% of its total assets.
CREDIT ANALYSIS. As part of the regular monitoring procedures it follows to
evaluate banks and broker-dealers in connection with, for example, repurchase
agreements and municipal securities credit issues, the Manager, the Funds'
investment advisor, analyzes and monitors the creditworthiness of all borrowers
with whom securities lending agreements are contemplated or entered into.
INVESTMENT RESTRICTIONS
The Funds' investment restrictions set forth below are fundamental and may not
be changed without approval of a majority of the outstanding votes of
shareholders of the Fund as determined in accordance with the Investment Company
Act of 1940 (the "1940 Act").
Each Fund May Not:
(1) Purchase the securities of any issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities) if,
as a result, (a) more than 5% of the value of its total assets would be
invested in the securities of that issuer, or (b) the Fund would hold more
than 10% of the outstanding voting securities of that issuer.
(2) Purchase the securities of any issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities) if,
as a result, 25% or more of the value of its total assets would be invested
in securities of issuers having their principal business activities in the
same industry.
(3) Purchase the securities of any issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities) if,
as a result, more than 5% of the value of its total assets would be
invested in the securities (taken at cost) of issuers which, at the time of
purchase,
2 American Century Investments
had been in operation less than three years, including predecessors and
unconditional guarantors.
(4) Purchase any equity securities in any companies, including warrants or
bonds with warrants attached, or any preferred stocks, convertible bonds,
or convertible debentures.
(5) Engage in transactions involving puts, calls, straddles, or spreads.
(6) Invest in securities that are not readily marketable or the disposition of
which is restricted under federal securities laws (collectively, "illiquid
securities") if, as a result, more than 10% of the Fund's net assets would
be invested in illiquid securities.
(7) Acquire or retain the securities of any other investment company if, as a
result, more than 3% of such investment company's outstanding shares would
be held by the Trust, more than 5% of the value of the Trust's assets would
be invested in shares of such investment company, or more than 10% of the
value of the Trust's assets would be invested in shares of investment
companies in the aggregate, except in connection with a merger,
consolidation, acquisition, or reorganization.
(8) Purchase or retain securities of any issuer if, to the knowledge of the
Trust's management, those officers and Trustees of the Trust and of its
investment advisor, who each own beneficially more than 0.5% of the
outstanding securities of such issuer, together own beneficially more than
5% of such securities.
(9) Acquire securities for the purpose of exercising control over management of
the issuer.
(10) Issue or sell any class of senior security as defined in the Investment
Company Act of 1940.
(11) Purchase, sell, or invest in real estate, commodities, commodity contracts,
foreign exchange, or interests in oil, gas, or other mineral exploration or
development programs.
(12) May not engage in any short-selling operations.
(13) Purchase securities on margin, except for such short-term credits as are
necessary for the clearance of purchases of portfolio securities.
(14) Act as an underwriter of securities issued by others, except to the extent
that the purchase of portfolio securities may be deemed to be an
underwriting.
(15) Borrow money in excess of 33-1/3% of the market value of its total assets,
and then only from a bank and as a temporary measure to satisfy redemption
requests or for extraordinary or emergency purposes, and provided that
immediately after any such borrowing there is an asset coverage of at least
300 per centum for all such borrowings. To secure any such borrowing, a
Fund may not mortgage, pledge, or hypothecate in excess of 33-1/3% of the
value of its total assets. A Fund will not purchase any security while
borrowings representing more than 5% of its total assets are outstanding. A
Fund will not borrow in order to increase income (leverage), but only to
facilitate redemption requests that might require untimely disposition of
portfolio securities.
(16) Make loans to others, except for the lending of portfolio securities
pursuant to guidelines established by the Board of Trustees or for the
purchase of debt securities in accordance with its investment objectives
and policies.
Unless otherwise indicated, percentage limitations included in the restrictions
apply at the time the transactions are entered into. Accordingly, any later
increase or decrease beyond the specified limitation resulting from a change in
the Fund's net assets will not be considered in determining whether it has
complied with these investment restrictions.
PORTFOLIO TRANSACTIONS
Each Fund's assets are invested by the Manager in a manner consistent with the
Fund's investment objective, policies and restrictions, and with any
instructions the Board of Trustees may issue from time to time. Within this
framework, the Manager is responsible for making all determinations as to the
purchase and sale of portfolio securities and for taking all steps necessary to
implement securities transactions on behalf of the Funds. In placing orders for
the purchase and sale of portfolio securities, the Manager will use its best
possible price and execution and will otherwise place orders with broker-dealers
subject to and in accordance with any instructions the Board of Trustees may
issue from time to time. The
Statement of Additional Information 3
Manager will select broker-dealers to execute portfolio transactions on behalf
of the Funds solely on the basis of best price and execution.
U.S. government securities generally are traded in the over-the-counter (OTC)
market through broker-dealers. A broker-dealer is a securities firm or bank that
makes a market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between these prices is known as a spread.
The Manager expects to execute most transactions on a net basis through
broker-dealers unless it is determined that a better price or execution can be
obtained on a commission basis through a broker. Portfolio securities may also
be purchased directly from the issuer. The Funds paid no brokerage commissions
during the fiscal years ended September 30, 1996, 1995 and 1994.
Each Fund may hold portfolio securities until they mature, or it may sell or
otherwise dispose of these securities, replacing them with other securities
consistent with its investment objective and policies. The Funds' turnover rates
for the fiscal years ended September 30, 1996 and 1995, are indicated in the
following table.
PORTFOLIO TURNOVER RATES
- ------------------------------------------------------------------------
Fiscal Fiscal
Fund 1996 1995
- ------------------------------------------------------------------------
Target 2000 29.24% 52.64%
Target 2005 31.36% 34.23%
Target 2010 24.42% 26.00%
Target 2015 17.24% 69.97%
Target 2020 47.05% 78.08%
Target 2025 60.80% N/A
- ------------------------------------------------------------------------
VALUATION OF PORTFOLIO SECURITIES
Each Fund's net asset value per share ("NAV") is calculated as of one hour
before the close of business of the New York Stock Exchange (the "Exchange"),
usually 3:00 p.m. Central time each day the Exchange is open for business. The
Exchange has designated the following holiday closings for 1997: New Year's Day
(observed), Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day (observed). Although the Funds expect
the same holiday schedule to be observed in the future, the Exchange may modify
its holiday schedule at any time.
The Manager typically completes its trading on behalf of each Fund in various
markets before the Exchange closes for the day. Each Fund's share price is
calculated by adding the value of all portfolio securities and other assets,
deducting liabilities, and dividing the result by the number of shares
outstanding. Expenses and interest on portfolio securities are accrued daily.
Most securities held by the Funds are priced at market value using prices
obtained from an independent pricing service. Because of the large number of
zero-coupon Treasury obligations available, many do not trade each day. In
valuing these securities, the pricing service generally takes into account
institutional trading, trading in similar groups of securities, and any
developments related to specific securities.
The methods used by the pricing service and the valuations so established are
reviewed by the Manager under the general supervision of the Board of Trustees.
There are a number of pricing services available. The Manager, on the basis of
ongoing evaluation of these services, may use other pricing services or
discontinue the use of any pricing service in whole or in part.
Securities maturing within 60 days of the valuation date may be valued at
amortized cost, which is cost plus or minus any amortized discount or premium,
unless the Trustees determine that this would not result in fair valuation of a
given security. Other assets and securities for which quotations are not readily
available are valued in good faith at their fair market value using methods
approved by the Board of Trustees.
PREDICTABILITY OF RETURN
ANTICIPATED VALUE AT MATURITY. The maturity values of zero-coupon bonds are
specified at the time the bonds are issued, and this feature, combined with the
ability to calculate yield to maturity, has made these instruments popular
investment vehicles for investors seeking reliable investments to meet long-term
financial goals.
To provide a comparable investment opportunity while allowing investors the
flexibility to purchase or redeem shares each day the Trust is open for busi-
4 American Century Investments
ness, each Fund consists primarily of zero-coupon bonds but is actively managed
to accommodate shareholder activity and to take advantage of perceived market
opportunities. Because of this active management approach, the Manager does not
guarantee that a certain price per share will be attained by the time a Fund is
liquidated. Instead, the Manager attempts to track the price behavior of a
directly held zero-coupon bond by:
(1) Maintaining a weighted average maturity within the Fund's target maturity
year;
(2) Investing at least 90% of assets in securities that mature within one year
of the Fund's target maturity year;
(3) Investing a substantial portion of assets in Treasury STRIPS (the most
liquid Treasury zero);
(4) Under normal conditions, maintaining a cash balance of less than 1%;
(5) Executing portfolio transactions necessary to accommodate net shareholder
purchases or redemptions on a daily basis; and
(6) Whenever feasible, contacting several U.S. government securities dealers
for each intended transaction in an effort to obtain the best price on each
transaction.
These measures enable the advisor to calculate an anticipated value at maturity
(AVM) for each Fund that approximates the price per share the Fund will achieve
by its weighted average maturity date. The AVM calculation is as follows:
AVM = P(1+AGR/2)2T
where P = the Fund's current price per share; T = the Fund's weighted average
term to maturity in years; and AGR = the anticipated growth rate.
This calculation assumes that the shareholder will reinvest all dividend and
capital gain distributions (if any). It also assumes an expense ratio and a
portfolio composition that remain constant for the life of the Fund. Because
Fund expenses and composition do not remain constant, however, the Manager
calculates AVM for each Fund each day the Trust is open for business.
In addition to the measures described above, which the Manager believes are
adequate to assure close correspondence between the price behavior of each Fund
and the price behavior of directly held zero-coupon bonds with comparable
maturities, the Trust has made an undertaking to the staff of the Securities and
Exchange Commission (SEC) that each Fund will invest at least 90% of its net
assets in zero-coupon bonds until it is within four years of its target maturity
year and at least 80% of its net assets in zero-coupon securities while the Fund
is within two to four years of its target maturity year. This undertaking may be
revoked if the market supply of zero-coupon securities diminishes unexpectedly,
although it will not be revoked without prior consultation with the SEC staff.
In addition, the Manager has undertaken that any coupon-bearing bond purchased
on behalf of a Fund will have a duration that falls within the Fund's target
maturity year.
ANTICIPATED GROWTH RATE. The Manager also calculates an anticipated growth rate
(AGR) for each Fund each day the Trust is open for business. AGR is a
calculation of the annualized rate of growth an investor may expect from his or
her purchase date to the Fund's target maturity date. As is the case with
calculations of AVM, the AGR calculation assumes that the investor will reinvest
all dividends and capital gain distributions (if any) and that the Fund's
expense ratio and portfolio composition will remain constant. Each Fund's AGR
changes from day to day primarily because of changes in interest rates and, to a
lesser extent, to changes in portfolio composition and other factors that affect
the value of the Fund's investments.
The Manager expects that shareholders who hold their shares until a Fund's
weighted average maturity date and who reinvest all dividends and capital gain
distributions (if any), will realize an investment return and maturity value
that do not differ substantially from the AGR and AVM calculated on the day his
or her shares were purchased.
The table on the next page illustrates investor experience with Target 1990, a
series of the Trust that was first offered on March 25, 1985, and that was
liquidated on January 25, 1991. This table is not indicative of the future
performance of the existing Funds.
Statement of Additional Information 5
Share Weighted
Price (P) Average AVM
Date (in $) AGR Maturity (T) (in $)
- ------------------------------------------------------------------------
April 1985 56.03 10.58 5.64 100.25
June 60.62 9.68 5.42 101.17
September 62.72 9.44 5.08 100.23
December 67.75 8.26 4.95 101.15
March 1986 73.60 6.86 4.69 100.98
June 74.80 6.83 4.38 100.38
September 76.82 6.59 4.16 100.63
December 79.01 6.27 3.86 100.26
March 1987 79.88 6.34 3.59 99.93
June 79.01 7.21 3.27 99.63
September 77.28 8.57 3.14 100.62
December 81.02 7.52 2.7 99.33
March 1988 83.61 6.98 2.51 99.33
June 83.97 6.55 2.62 99.42
September 84.96 6.97 2.09 98.04
December 85.70 8.39 1.68 98.38
March 1989 86.76 9.18 1.50 99.25
June 90.47 7.57 1.23 99.16
September 91.91 7.81 0.98 99.08
December 94.00 7.38 0.74 99.17
March 1990 95.62 7.68 0.52 99.44
June 97.48 7.44 0.32 99.82
September 99.32 6.73 0.15 100.31
December 101.13 4.33 0.07 101.43
- ------------------------------------------------------------------------
Calculations in the table above may not reconcile precisely due to rounding of
share price, AGR, and weighted average maturity to two decimal points.
Note that the Target 1990's share price on December 31, 1990, was not the same
as its AVM on that date because the Fund had not yet been liquidated and still
held short-term Treasury securities with a 25-day maturity. The Fund was
liquidated on January 25, 1991, at a final share price of $101.46.
As a further demonstration of how the Funds have behaved over time, the
following tables show each Fund's AGR and AVM as of September 30 for each of the
past five years.
9/30/92 9/30/93 9/30/94 9/30/95 9/30/96
AGR AGR AGR AGR AGR
- ------------------------------------------------------------------------
Target 2000 6.01% 4.66% 6.76% 5.37% 5.75%
Target 2005 6.89 5.53 7.33 5.75 6.17
Target 2010 7.21 5.92 7.54 6.04 6.44
Target 2015 7.43 6.04 7.56 6.21 6.58
Target 2020 7.37 6.02 7.52 6.20 6.59
Target 2025 N/A N/A N/A N/A 6.43
- ------------------------------------------------------------------------
9/30/92 9/30/93 9/30/94 9/30/95 9/30/96
AVM AVM AVM AVM AVM
- ------------------------------------------------------------------------
Target 2000 $101.01 $100.21 $100.86 $100.99 $101.10
Target 2005 99.78 100.21 100.58 100.32 100.71
Target 2010 100.11 100.94 101.38 101.02 102.53
Target 2015 107.05 106.84 107.95 109.62 110.11
Target 2020 101.87 100.76 102.11 102.31 103.60
Target 2025 N/A N/A N/A N/A 109.24
- ------------------------------------------------------------------------
The Funds' share prices and growth rates are not guaranteed by the Trust or any
of its affiliates. There is no guarantee that the Funds' AVMs will fluctuate as
little in the future as they have in the past.
PERFORMANCE
The Funds' yields and total returns may be quoted in advertising and sales
literature. These figures, as well as the Fund's share price will vary. Past
performance should not be considered as indicative of future results.
Yield quotations are based on the investment income per share earned during a
particular 30-day period, less expenses accrued during the period (net
investment income), and are computed by dividing a Fund's net investment income
by its share price on the last day of the period, according to the following
formula:
YIELD = 2 [(a - b + 1)6 - 1]
------
cd
where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends, and d =
the maximum offering price per share on the last day of the period.
Each Fund's yield for the 30-day period ended September 30, 1996, calculated
using the SEC yield formula described above, is indicated below.
Fund 30-Day Yield
- ------------------------------------------------------------------------
Target 2000 6.15%
Target 2005 6.51%
Target 2010 6.71%
Target 2015 6.80%
Target 2020 6.94%
Target 2025 6.48%
- ------------------------------------------------------------------------
6 American Century Investments
Total returns quoted in advertising and sales literature reflect all aspects of
a Fund's return, including the effect of reinvesting dividends and capital gain
distributions and any change in the Fund's NAV during the period.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a Fund over a stated period
and then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant throughout the period. For example, a cumulative return of 100% over
ten years would produce an average annual return of 7.18%, which is the steady
annual rate that would result in 100% growth on a compounded basis in ten years.
While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that a Fund's performance is
not constant over time but changes from year-to-year and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.
The Funds' average annual total returns for the one-year, five-year, ten-year,
and life-of-fund periods ended September 30, 1996, are indicated in the
following table.
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------
One- Five- Ten- Life-of-
Fund Year Year Year Fund
- ------------------------------------------------------------------------
Target 2000(1) 4.02% 8.71% 9.35% 13.03%
Target 2005(1) 2.16% 10.48% 10.34% 14.73%
Target 2010(1) 0.78% 11.11% 10.37% 15.80%
Target 2015(2) (0.75)% 11.63% 9.38% 9.70%
Target 2020(3) (2.09)% 11.90% N/A 9.39%
Target 2025(4) N/A N/A N/A (15.18)%
- ------------------------------------------------------------------------
(1) Commenced operations on March 25, 1985.
(2) Commenced operations on September 1, 1986.
(3) Commenced operations on December 29, 1989.
(4) Commenced operations on February 16, 1996.
In addition to average annual total returns, each Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as percentages or as dollar amounts and may be calculated for a single
investment, a series of investments, or a series of redemptions over any time
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) to illustrate the
relationship of these factors and their contributions to total return.
The Funds' performances may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indexes of market
performance. This may include comparisons with funds that, unlike the American
Century funds, are sold with a sales charge or deferred sales charge. Sources of
economic data that may be considered in making such comparisons may include, but
are not limited to, U.S. Treasury bill, note, and bond yields, money market fund
yields, U.S. government debt and percentage held by foreigners, the U.S. money
supply, net free reserves, and yields on current-coupon GNMAs (source: Board of
Governors of the Federal Reserve System); the federal funds and discount rates
(source: Federal Reserve Bank of New York); yield curves for U.S. Treasury
securities and AA/AAA-rated corporate securities (source: Bloomberg Financial
Markets); yield curves for AAA-rated tax-free municipal securities (source:
Telerate); yield curves for foreign government securities (sources: Bloomberg
Financial Markets and Data Resources, Inc.); total returns on foreign bonds
(source: J.P. Morgan Securities Inc.); various U.S. and foreign government
reports; the junk bond market (source: Data Resources, Inc.); the CRB Futures
Index (source: Commodity Index Report); the price of gold (sources: London
a.m./p.m. fixing and New York Comex Spot Price); rankings of any mutual fund or
mutual fund category tracked by Lipper Analytical Services, Inc. or Morningstar,
Inc.; mutual fund rankings published in major, nationally distributed
periodicals; data provided by the Investment Company Institute; Ibbotson
Associates, Stocks, Bonds, Bills, and Inflation; major indexes of stock market
performance; and indexes and historical data supplied by major securities
brokerage or investment advisory firms. The Funds may also utilize reprints from
newspapers and magazines furnished by third parties to illustrate the Funds'
historical performances.
Statement of Additional Information 7
TAXES
Each Fund intends to qualify annually as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
so qualifying, each Fund will be exempt from federal and California income taxes
to the extent that it distributes substantially all of its net investment income
and net realized capital gains to shareholders.
As holders of zero-coupon Treasury securities ("zeros"), the Funds receive no
cash payments of interest prior to the dates these securities mature. However,
portfolio holdings that include zeros accrue interest (commonly referred to as
"imputed income") for federal income tax purposes.
Under the Code, dividends derived from interest, imputed income, and any
short-term capital gains are federally taxable to shareholders as ordinary
income, regardless of whether such dividends are taken in cash or reinvested in
additional shares. Distributions designated as being made from a Fund's net
realized long-term capital gains are taxable to shareholders as long-term
capital gains, regardless of the length of time shares are held. Corporate
investors are not eligible for the dividends-received deduction with respect to
distributions from the Funds.
Upon redeeming, selling, or exchanging shares of a Fund, shareholders will
realize a taxable gain or loss depending upon their basis in the shares
liquidated. The gain or loss generally will be long-term or short-term depending
on the length of time the shares were held. However, a loss recognized by a
shareholder in the disposition of shares on which capital gain dividends were
paid (or deemed paid) before the shareholder had held his or her shares for more
than six months would be treated as a long-term capital loss for tax purposes.
Dividends paid by each Fund are exempt from state personal income taxes in all
states because the Funds derive their income from debt securities of the U.S.
government whose interest payments are state tax-exempt. Distributions of
capital gains are generally not exempt from state and local taxes.
The information above is only a summary of some of the tax considerations
generally affecting the Funds and their shareholders; no attempt has been made
to discuss individual tax consequences. A prospective investor should consult
his or her tax advisor or state or local tax authorities to determine whether
the Funds are suitable investments based on his or her tax situation.
ABOUT THE TRUST
American Century Target Maturities Trust (the "Trust") was organized as a
Massachusetts business trust on November 8, 1984. The Declaration of Trust
permits the Trustees to issue an unlimited number of full and fractional shares
of beneficial interest without par value, which may be issued in series (each a
Fund). Currently, there are six series of the Trust, as follows: Target 2000 ,
Target 2005, Target 2010, Target 2015 , Target 2020 and Target 2025. The table
below lists each Fund's current and former name. The Board of Trustees may
create additional series from time to time. In addition, the Board of trustees
may liquidate a series at the conclusion of its target maturity year.
Shares of each Fund have equal voting rights, although each Fund votes
separately on matters affecting it exclusively. Voting rights are not
cumulative; investors holding more than 50% of the Trust's outstanding shares
may elect a Board of Trustees. The
FUND NAME AS OF JANUARY, 1997
- ------------------------------------------------------------------------
American Century--Benham Target Maturities Trust: 2000
American Century--Benham Target Maturities Trust: 2005
American Century--Benham Target Maturities Trust: 2010
American Century--Benham Target Maturities Trust: 2015
American Century--Benham Target Maturities Trust: 2020
American Century--Benham Target Maturities Trust: 2025
- ------------------------------------------------------------------------
FORMER FUND NAME
- ------------------------------------------------------------------------
Benham Target Maturities Trust 2000 Portfolio
Benham Target Maturities Trust 2005 Portfolio
Benham Target Maturities Trust 2010 Portfolio
Benham Target Maturities Trust 2015 Portfolio
Benham Target Maturities Trust 2020 Portfolio
Benham Target Maturities Trust 2025 Portfolio
- ------------------------------------------------------------------------
8 American Century Investments
Trust has instituted dollar-based voting, meaning that the number of votes you
are entitled to is based upon the dollar amount of your investment. The election
of Trustees is determined by the votes received from all Trust shareholders
without regard to whether a majority of shares of any one series voted in favor
of a particular nominee or all nominees as a group. Each shareholder has rights
to dividends and distributions declared by a Fund and to the net assets of such
Fund upon its liquidation or dissolution proportionate to his or her share
ownership interest in the Fund.
Shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable for its obligations. However, the
Declaration of Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust. The Declaration of Trust also provides for
indemnification and reimbursement of expenses of any shareholder held personally
liable for obligations of the Trust. The Declaration of Trust provides that the
Trust will, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. The Declaration of Trust further provides that the Trust may maintain
appropriate insurance (for example, fidelity, bonding, and errors and omissions
insurance) for the protection of the Trust, its shareholders, Trustees,
officers, employees, and agents to cover possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance exists and the Trust itself is unable to meet its obligations.
CUSTODIAN BANK: Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY
11245 and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64106, serve
as custodians of the Trust's assets. Services provided by the custodians include
(a) settling portfolio purchases and sales, (b) reporting failed trades, (c)
identifying and collecting portfolio income, and (d) providing safekeeping of
securities. The custodians take no part in determining the Funds' investment
policies or in determining which securities are sold or purchased by the Funds.
INDEPENDENT AUDITORS: KPMG Peat Marwick LLP, 1000 Walnut, Suite 1600, Kansas
City, Missouri 64106, serves as the Trust's independent auditors. KPMG audits
the annual report and provides tax and other services.
TRUSTEES AND OFFICERS
The Trust's activities are overseen by a Board of Trustees, including seven
independent Trustees. The individuals listed below whose names are marked by an
asterisk (*) are "interested persons" of the Trust (as defined in the Investment
Company Act of 1940) by virtue of, among other considerations, their affiliation
with either the Trust; the Trust's investment advisor, Benham Management
Corporation (the "Manager"); the Trust's agent for transfer and administrative
services, American Century Services Corporation (ACS); the Trust's distribution
agent, American Century Investment Services, Inc. (ACIS); their parent
corporation, American Century Companies, Inc. (ACC) or ACC's subsidiaries; or
other funds advised by the Manager. The Trustees listed below serve as Trustees
or Directors of other funds advised by the Manager. Unless otherwise noted, a
date in parentheses indicates the date the Trustee or officer began his or her
service in a particular capacity. The Trustees' and officers' address with the
exception of Mr. Stowers III and Ms. Roepke is 1665 Charleston Road, Mountain
View, California 94043. The address of Mr. Stowers III and Ms. Roepke is 4500
Main Street, Kansas City, Missouri 64111.
TRUSTEES
*JAMES M. BENHAM, Chairman of the Board of Trustees (1985); President and
Chief Executive Officer (1996). Mr. Benham is also President and Chairman of
the Board of the Manager (1971); and a member of the Board of Governors of the
Investment Company Institute (1988). Mr. Benham has been in the securities
business since 1963, and he frequently comments through the media on economic
conditions, investment strategies, and the securities markets.
ALBERT A. EISENSTAT, independent Trustee (1995). Mr. Eisenstat is an
independent Director of each of Commercial Metals Co. (1982), Sungard Data
Systems (1991) and Business Objects S/A (1994). Previously, he served as Vice
President of Corporate Development and Corporate Secretary of Apple Computer
and served on its Board of Directors (1985 to 1993).
RONALD J. GILSON, independent Trustee (1995); Charles J. Meyers Professor of
Law and Business at
Statement of Additional Information 9
Stanford Law School (1979) and the Mark and Eva Stern Professor of Law and
Business at Columbia University School of Law (1992); Counsel to Marron, Reid
& Sheehy (a San Francisco law firm, 1984).
MYRON S. SCHOLES, independent Trustee (1985). Mr. Scholes is a principal of
Long-Term Capital Management (1993). He is also Frank E. Buck Professor of
Finance at the Stanford Graduate School of Business (1983) and a Director of
Dimensional Fund Advisors (1982) and the Smith Breeden Family of Funds (1992).
From August 1991 to June 1993, Mr. Scholes was a Managing Director of Salomon
Brothers Inc. (securities brokerage).
KENNETH E. SCOTT, independent Trustee (1985). Mr. Scott is Ralph M. Parsons
Professor of Law and Business at Stanford Law School (1972) and a Director of
RCM Capital Funds, Inc. (June 1994).
EZRA SOLOMON, independent Trustee (1985). Mr. Solomon is Dean Witter Professor
of Finance Emeritus at the Stanford Graduate School of Business, where he served
as Dean Witter Professor of Finance from 1965 to 1990, and a Director of
Encyclopedia Britannica.
ISAAC STEIN, independent Trustee (1992). Mr. Stein is former Chairman of the
Board (1990 to 1992) and Chief Executive Officer (1991 to 1992) of Esprit de
Corp. (clothing manufacturer). He is a member of the Board of Raychem
Corporation (electrical equipment, 1993), President of Waverley Associates, Inc.
(private investment firm, 1983), and a Director of ALZA Corporation
(pharmaceuticals, 1987). He is also a Trustee of Stanford University (1994) and
Chairman of Stanford Health Services (hospital, 1994).
*JAMES E. STOWERS III, Trustee (1995). Mr. Stowers III is President, Chief
Executive Officer and Director of ACC, ACS and ACIS.
JEANNE D. WOHLERS, independent Trustee (1985). Ms. Wohlers is a private
investor and an independent Director and partner of Windy Hill Productions,
LP. Previously, she served as Vice President and Chief Financial Officer of
Sybase, Inc. (software company, 1988 to 1992).
OFFICERS
*James M. Benham, President and Chief Executive Officer (1996).
*William M. Lyons, Executive Vice President (1996); Executive Vice President,
Chief Operating Officer, General Counsel and Secretary of the Manager, ACS,
and ACIS.
*Douglas A. Paul, Secretary (1988), Vice President (1990), and General Counsel
(1990); Secretary and Vice President of the funds advised by the Manager.
*C. Jean Wade, Controller (1996).
*Maryanne Roepke, CPA, Chief Financial Officer and Treasurer (1995); Vice
President and Assistant Treasurer of ACS.
As of November 30, 1996, the Trust's officers and Trustees, as a group, owned
less than 1% of each Fund's total shares outstanding.
The table on the next page summarizes the compensation that the Trustees of the
Funds received for the Fund's fiscal year ended September 30, 1996, as well as
the compensation received for serving as a Director or Trustee of all other
funds advised by the Manager.
INVESTMENT ADVISORY SERVICES
Each Fund has an investment advisory agreement with the Manager dated June 1,
1995, that was approved by shareholders on May 31, 1995.
The Manager is a California corporation and a wholly owned subsidiary of ACC, a
Delaware corporation. The Manager became a wholly owned subsidiary of ACC on
June 1, 1995. The Manager has served as investment advisor to the Funds since
each Fund's inception. ACC is a holding company that owns all of the stock of
the operating companies that provide the investment management, transfer agency,
shareholder service, and other services for the American Century funds. James E.
Stowers, Jr., controls ACC by virtue of his ownership of a majority of its
common stock. The Manager has been a registered investment advisor since 1971
and is investment advisor to the funds advised by the Manager.
Each Fund's agreement with the Manager continues for an initial period of two
years and thereafter from year to year provided that, after the initial two-year
period, it is approved at least annually by vote of either a majority of the
Fund's outstanding shares, or by vote of a majority of the Fund's Trustees,
including a majority of those Trustees who are neither parties to the agreement
nor interested persons of any such
10 American Century Investments
<TABLE>
TRUSTEE COMPENSATION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------------------------------------------------------
Aggregate Pension or Retirement Estimated Total Compensation
Name of Compensation Benefits Accrued As Part Annual Benefits From Fund and Fund
Trustee* From The Fund of Fund Expenses Upon Retirement Complex** Paid to Trustees
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Albert A. Eisenstat $ 12 (Target 1995) Not Applicable Not Applicable $47,750
249 (Target 2000)
200 (Target 2005)
100 (Target 2010)
110 (Target 2015)
643 (Target 2020)
9 (Target 2025)
- -----------------------------------------------------------------------------------------------------------------------
Ronald J. Gilson $1,025 (Target 1995) Not Applicable Not Applicable $56,249
1,313 (Target 2000)
1,240 (Target 2005)
1,121 (Target 2010)
1,135 (Target 2015)
1,755 (Target 2020)
9 (Target 2025)
- -----------------------------------------------------------------------------------------------------------------------
Myron S. Scholes $1,029 (Target 1995) Not Applicable Not Applicable $56,000
1,310 (Target 2000)
1,234 (Target 2005)
1,119 (Target 2010)
1,135 (Target 2015)
1,733 (Target 2020)
7 (Target 2025)
- -----------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $1,049 (Target 1995) Not Applicable Not Applicable $64,523
1,515 (Target 2000)
1,393 (Target 2005)
1,202 (Target 2010)
1,230 (Target 2015)
2,241 (Target 2020)
9 (Target 2025)
- -----------------------------------------------------------------------------------------------------------------------
Ezra Solomon $1,035 (Target 1995) Not Applicable Not Applicable $61,083
1,398 (Target 2000)
1,302 (Target 2005)
1,153 (Target 2010)
1,172 (Target 2015)
1,943 (Target 2020)
10 (Target 2025)
- -----------------------------------------------------------------------------------------------------------------------
Isaac Stein $1,036 (Target 1995) Not Applicable Not Applicable $59,000
1,381 (Target 2000)
1,287 (Target 2005)
1,146 (Target 2010)
1,165 (Target 2015)
1,899 (Target 2020)
9 (Target 2025)
- -----------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $1,033 (Target 1995) Not Applicable Not Applicable $59,500
1,391 (Target 2000)
1,301 (Target 2005)
1,154 (Target 2010)
1,173 (Target 2015)
1,954 (Target 2020)
9 (Target 2025)
- -----------------------------------------------------------------------------------------------------------------------
* Interested Trustees receive no compensation for their services as such.
** American Century family of funds includes nearly 70 no-load mutual funds.
</TABLE>
Statement of Additional Information 11
party, cast in person at a meeting called for the purpose of voting on such
approval.
Each investment advisory agreement is terminable on sixty days' written notice,
either by the Fund or by the Manager, to the other party and terminates
automatically in the event of its assignment.
Each investment advisory agreement stipulates that the Manager will provide the
Fund with investment advice and portfolio management services in accordance with
the Fund's investment objective, policies, and restrictions. Each agreement also
provides that the Manager will determine what securities will be purchased and
sold by the Fund and assist the Trust's officers in carrying out decisions made
by the Board of Trustees.
Under the investment advisory agreements, each Fund pays the Manager a monthly
investment advisory fee equal to its pro rata share of the dollar amount derived
from applying the Trust's average daily net assets to the annual investment
advisory fee schedule below.
Investment Advisory Fee Schedule for the Funds
- --------------------------------------------------------------------------------
.35% of the first $750 million
.25% of the next $750 million
.24% of the next $1 billion
.23% of the next $1 billion
.22% of the next $1 billion
.21% of the next $1 billion
.20% of the next $1 billion
.19% of net assets over $6.5 billion
- --------------------------------------------------------------------------------
Investment advisory fees paid by each Fund for the fiscal years ended September
30, 1996, 1995and 1994, are indicated in the following table. Fee amounts are
net of amounts reimbursed or recouped as described under the section titled
"Expense Limitation Agreement."
INVESTMENT ADVISORY FEES*
- ------------------------------------------------------------------------
Fiscal Fiscal Fiscal
Fund 1996 1995 1994
- ------------------------------------------------------------------------
Target 2000 $ 815,109 $984,031 $943,356
Target 2005 672,052 420,328 400,711
Target 2010 368,802 175,368 186,373
Target 2015 410,846 336,887 224,852
Target 2020 2,525,244 422,436 152,691
Target 2025 13,420 -- --
- ------------------------------------------------------------------------
*Net of reimbursements
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, 4500 Main Street, Kansas City, Missouri,
64111, (ACS) acts as transfer, administrative services and dividend paying agent
for the Funds. ACS provides facilities, equipment and personnel to the Funds and
is paid for such services by the Funds. For administrative services, each Fund
pays ACS a monthly fee equal to its pro rata share of the dollar amount derived
from applying the average daily net assets of all of the Funds managed by the
Manager to the following administrative fee rate schedule:
Group Assets Administrative Fee Rate
- ------------------------------------------------------------------------
up to $4.5 billion .11%
up to $6 billion .10%
up to $9 billion .09%
over $9 billion .08%
- ------------------------------------------------------------------------
For transfer agent services, each Fund pays ACS monthly fees of $1.1875 for each
shareholder account maintained and $1.35 for each shareholder transaction
executed during that month.
Administrative service and transfer agent fees paid by each Fund for the fiscal
years ended September 30, 1996, 1995 and 1994, are indicated in the following
tables. Fee amounts are net of reimbursements as described under "Expense
Limitation Agreement."
12 American Century Investments
ADMINISTRATIVE FEES
- ------------------------------------------------------------------------
Fiscal Fiscal Fiscal
Fund 1996 1995 1994
- ------------------------------------------------------------------------
Target 2000 $274,837 $274,835 $265,769
Target 2005 217,047 121,534 113,361
Target 2010 106,951 64,928 54,429
Target 2015 117,664 108,475 66,096
Target 2020 744,692 185,592 50,714
Target 2025 14,090 -- --
- ------------------------------------------------------------------------
TRANSFER AGENT FEES
- ------------------------------------------------------------------------
Fiscal Fiscal Fiscal
Fund 1996 1995 1994
- ------------------------------------------------------------------------
Target 2000 $267,353 $285,145 $170,682
Target 2005 266,687 $183,211 $104,835
Target 2010 178,493 $130,450 $67,306
Target 2015 178,562 $202,013 $78,543
Target 2020 858,442 $350,332 $69,631
Target 2025 32,597 -- --
- ------------------------------------------------------------------------
DISTRIBUTION OF FUND SHARES
The Funds' shares are distributed by American Century Investment Services, Inc.
(ACIS), a registered broker-dealer and an affiliate of the Manager. The Manager
pays all expenses for promoting and distributing the Fund shares offered by this
Prospectus. The Funds do not pay any commissions or other fees to ACIS or to any
other broker-dealers or financial intermediaries in connection with the
distribution of Fund shares.
DIRECT FUND EXPENSES
Each Fund pays certain operating expenses that are not assumed by the Manager or
ACS. These include fees and expenses of the independent Trustees; custodian,
audit, tax preparation, and pricing fees; fees of outside counsel and counsel
employed directly by the Trust; costs of printing and mailing prospectuses,
statements of additional information, proxy statements, notices, confirmations,
and reports to shareholders; fees for registering the Fund's shares under
federal and state securities laws; brokerage fees and commissions (if any);
trade association dues; costs of fidelity and liability insurance policies
covering the Fund; costs for incoming WATS lines maintained to receive and
handle shareholder inquiries; and organizational costs.
EXPENSE LIMITATION AGREEMENT
The Manager may recover amounts absorbed on behalf of the Funds during the
preceding 11 months if, and to the extent that, for any given month, the Funds
expense limit in effect at that time. The Manager has agreed to limit the Funds'
expenses to .62% of the Funds' average daily net assets until May 31, 1997.
The Funds' contractual expense limit is subject to annual renewal.
Net amounts absorbed or recouped for the fiscal years ended September 30, 1996,
1995 and 1994, are indicated in the table below.
NET REIMBURSEMENTS (RECOUPMENTS)
- ------------------------------------------------------------------------
Fiscal Fiscal Fiscal
Fund 1996 1995 1994
- ------------------------------------------------------------------------
Target 2000 $0 $0 $0
Target 2005 (16,979) 15,078 1,904
Target 2010 (46,717) 57,258 6,924
Target 2015 (50,080) 51,419 9,885
Target 2020 (251,449) 243,519 27,220
Target 2025 29,985 -- --
- ------------------------------------------------------------------------
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Funds' shares are continuously offered at net asset value. American Century
may reject or limit the amount of an investment to prevent any one shareholder
or affiliated group from controlling the Trust or one of its series; to avoid
jeopardizing a series' tax status; or whenever, in management's opinion, such
rejection is in the Trust's or series' best interest. As of November 30, 1996,
the shareholders owning 5% or more of a Fund's total outstanding shares are
listed on the following page.
Statement of Additional Information 13
Fund Target 2000
- ------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101-4122
- ------------------------------------------------------------------------
# of Shares Held 491,770.201
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 15.5%
- ------------------------------------------------------------------------
Fund Target 2005
- ------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101
- ------------------------------------------------------------------------
# of Shares Held 667,158.762
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 16.9%
- ------------------------------------------------------------------------
Fund Target 2010
- ------------------------------------------------------------------------
Shareholder Name and National Financial Services Corp.
Address P.O. Box 3908
Church Street Station
New York, NY 10008-3908
- ------------------------------------------------------------------------
# of Shares Held 143,277.243
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 5.9%
- ------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101-4122
- ------------------------------------------------------------------------
# of Shares Held 543,068.264
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 22.5%
- ------------------------------------------------------------------------
Fund Target 2015
- ------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101
- ------------------------------------------------------------------------
# of Shares Held 765,111.255
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 22.4%
- ------------------------------------------------------------------------
Fund Target 2020
- ------------------------------------------------------------------------
Shareholder Name and National Financial Services Corp.
Address P.O. Box 3908
Church Street Station
New York, NY 10008-3908
- ------------------------------------------------------------------------
# of Shares Held 4,674,830.140
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 12.4%
- ------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101-4122
- ------------------------------------------------------------------------
# of Shares Held 12,910,920.599
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 8.1%
- ------------------------------------------------------------------------
Fund Target 2025
- ------------------------------------------------------------------------
Shareholder Name and National Financial Services Corp.
Address P.O. Box 3908
Church Street Station
New York, NY 10008-3908
- ------------------------------------------------------------------------
# of Shares Held 152,280.796
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 8.1%
- ------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101-4122
- ------------------------------------------------------------------------
# of Shares Held 576,527.425
- ------------------------------------------------------------------------
% of Total Shares
Outstanding 30.4%
- ------------------------------------------------------------------------
ACS charges neither fees nor commissions on the purchase and sale of fund
shares. However, ACS may charge fees for special services requested by a
shareholder or necessitated by acts or omissions of a shareholder. For example,
ACS may charge a fee for processing dishonored investment checks or stop-payment
requests. See the Investor Services Guide for more information.
Share purchases and redemptions are governed by California law.
14 American Century Investments
FUND LIQUIDATIONS. On or before January 31st of the year following a Fund's
target maturity year, its investments will be sold or allowed to mature; its
liabilities will be discharged, or a provision will be made for their discharge;
and its accounts will be closed. A shareholder may choose to redeem his or her
shares in one of the following ways: (i) by receiving redemption proceeds or
(ii) by exchanging shares for shares of another American Century fund. If the
Fund receives no instructions from a shareholder, his or her shares will be
exchanged for shares of Capital Preservation Fund (or a similar fund if Capital
Preservation Fund is not available). The estimated expenses of terminating and
liquidating a Fund will be accrued ratably over its target maturity year. These
expenses, which are charged to income (as are all expenses), are not expected to
exceed significantly the ordinary annual expenses incurred by a Fund and,
therefore, should have little or no effect on the maturity value of the Fund.
OTHER INFORMATION
The Funds' investment advisor has been continuously registered with the SEC
under the Investment Advisers Act of 1940 since December 14, 1971. The Trust has
filed a registration statement under the Securities Act of 1933 and the
Investment Company Act of 1940 with respect to the shares offered. Such
registrations do not imply approval or supervision of the Trust or the advisor
by the SEC.
For further information, refer to registration statements and exhibits on file
with the SEC in Washington, DC. These documents are available upon payment of a
reproduction fee. Statements in the Prospectus and in this Statement of
Additional Information concerning the contents of contracts or other documents,
copies of which are filed as exhibits to the registration statement, are
qualified by reference to such contracts or documents.
Statement of Additional Information 15
NOTES
16 American Century Investments
NOTES
Notes 17
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
[american century logo]
American
Century (sm)
9701 [recycled logo]
SH-BKT-6749 Recycled
BENHAM TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 26
1940 Act Amendment No. 28
- --------------------------------------------------------------------------------
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS. Audited financial statements for each series of
the Trust for the fiscal year ended September 30, 1996, are
incorporated herein by reference to the Registrant's Annual Report
dated September 30, 1996 filed on November 26, 1996 (Accession
# 757928-96-000009).
(b) EXHIBITS.
(1) Agreement and Declaration of Trust dated May 31, 1995, is
incorporated herein by reference to Exhibit 1(b) of
Post-Effective Amendment No. 24 filed on November 29, 1995
(Accession # 757928-95-000005).
(2) Amended and Restated Bylaws, dated May 17, 1995, are
incorporated herein by reference to Exhibit 2(b) of
Post-Effective Amendment No. 24 filed on November 29, 1995
(Accession # 757928-95-000005).
(3) Not applicable.
(4) Not applicable.
(5) Investment Advisory Agreement between Benham Target
Maturities Trust: 2000 Portfolio, Benham Target Maturities
Trust: 2005 Portfolio, Benham Target Maturities Trust: 2010
Portfolio, Benham Target Maturities Trust: 2015 Portfolio,
Benham Target Maturities Trust: 2020 Portfolio, Benham
Target Maturities Trust: 2025 Portfolio and any additional
series and Benham Management Corporation, dated June 1,
1995, is incorporated herein by reference to Exhibit 5(a) of
Post-Effective Amendment No. 24 filed on November 29, 1995
(Accession # 757928-95-000005).
(6) Distribution Agreement between Benham Target Maturities
Trust and Twentieth Century Securities, Inc. dated as of
September 3, 1996, is incorporated herein by reference to
Exhibit 6 of Post-Effective Amendment No. 29 to the
Registration Statement of the Benham Government Income Trust
filed on August 30, 1996 (Accession # 773674-96-000007).
(7) Not applicable.
(8) 1993 Omnibus Custodian Agreement between the Benham Group
of Funds (including Benham Target Maturities Trust) and State
Street Bank and Trust Company, dated August 10, 1993, is
incorporated herein by reference to Exhibit 8 to
Post-Effective Amendment No. 22.
(9) Administrative Services and Transfer Agency Agreement
between Benham Target Maturities Trust and Twentieth Century
Services, Inc. dated as of September 3, 1996,. is incorporated
herein by reference to Exhibit 9 of Post-Effective Amendment
No. 29 to the Registration Statement of the Benham Government
Income Trust filed on August 30, 1996 (Accession #
773674-96-000007).
(10) Opinion and consent of counsel as to the legality of the
securities being registered, dated November 14, 1996 is
incorporated herein by reference to the Rule 24f-2 Notice
filed on November 14, 1996 (Accession # 757928-96-000008).
(11) Consent of KPMG Peat Marwick, LLP, independent auditors,
is included herein.
(12) Not applicable.
(13) Not applicable.
(14) (a)Benham Individual Retirement Account Plan,
including all instructions and other relevant
documents, dated February 1992, is incorporated by
reference to Exhibit 14(a) to Post-Effective
Amendment No. 20.
(b) Benham Pension/Profit Sharing plan, including all
instructions and other relevant documents, dated
February 1992, is incorporated by reference to
Exhibit 14(b) to Post-Effective Amendment No. 20.
(15) Not applicable.
(16) Schedule for computation of each performance quotation
provided in response to Item 22 is included herein.
(17) Power of Attorney dated March 4, 1996 is included herein.
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
As of November 1, 1996, each Portfolio of Benham Target Maturities Trust had the
following number of shareholders of record:
2000 Portfolio........................12,626
2005 Portfolio........................12,387
2010 Portfolio.........................6,997
2015 Portfolio.........................7,142
2020 Portfolio........................24,260
2025 Portfolio.........................1,524
Item 27. Indemnification.
As stated in Article VII, Section 3 of the Declaration of Trust, incorporated
herein by reference to Exhibit 1 to the Registration Statement, "The Trustees
shall be entitled and empowered to the fullest extent permitted by law to
purchase insurance for and to provide by resolution or in the Bylaws for
indemnification out of Trust assets for liability and for all expenses
reasonably incurred or paid or expected to be paid by a Trustee or officer in
connection with any claim, action, suit, or proceeding in which he or she
becomes involved by virtue of his or her capacity or former capacity with the
Trust. The provisions, including any exceptions and limitations concerning
indemnification, may be set forth in detail in the Bylaws or in a resolution
adopted by the Board of Trustees."
Registrant hereby incorporates by reference, as though set forth fully herein,
Article VI of the Registrant's Bylaws, amended on May 17, 1995, appearing as
Exhibit 2(b) of Post-Effective Amendment No. 24 filed on November 29, 1995
(Accession # 757928-95-000005).
Item 28. Business and Other Connections of Investment Advisor.
The Registrant's investment advisor, Benham Management Corporation, provides
investment advisory services for various collective investment vehicles and
institutional clients and serves as investment advisor to a number of open-end
investment companies.
Item 29. Principal Underwriters.
The Registrant's distribution agent, Twentieth Century Securities, Inc., is
distribution agent to Capital Preservation Fund, Inc., Capital Preservation Fund
II, Inc., Benham California Tax-Free and Municipal Funds, Benham Government
Income Trust, Benham Municipal Trust, Benham Target Maturities Trust, Benham
Equity Funds, Benham International Funds, Benham Investment Trust, Benham
Manager Funds, TCI Portfolios, Inc., Twentieth Century Capital Portfolios, Inc.,
Twentieth Century Investors, Inc., Twentieth Century Premium Reserves, Inc.,
Twentieth Century Strategic Allocations, Inc. and Twentieth Century World
Investors, Inc. The information required with respect to each director, officer
or partner of Twentieth Century Securities is incorporated herein by reference
to Twentieth Century Securities' Form B-D filed on November 21, 1985 (SEC File
No. 8-35220; Firm CRD No. 17437).
Item 30. Location of Accounts and Records.
Benham Management Corporation, the Registrant's investment advisor, maintains
its principal office at 1665 Charleston Road, Mountain View, CA 94043. The
Registrant and its agent for transfer and administrative services, Twentieth
Century Services, maintain their principal office at 4500 Main St., Kansas City,
MO 64111. Twentieth Century Services maintains physical possession of each
account, book, or other document, and shareholder records as required by
ss.31(a) of the 1940 Act and rules thereunder. The computer and data base for
shareholder records are located at Central Computer Facility, 401 North Broad
Street, Sixth Floor, Philadelphia, PA 19108.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Registrant undertakes to furnish each person to whom a Prospectus is delivered
with a copy of the Registrant's latest report to shareholders, upon request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 26/Amendment No. 28 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Mountain View, and State of
California, on the 24th day of December, 1996. I hereby certify that this
Amendment meets the requirements for immediate effectiveness pursuant to Rule
485(b).
BENHAM TARGET MATURITIES TRUST
By: /s/ Douglas A. Paul
Douglas A. Paul
Vice President, Secretary, and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 26/Amendment No. 28 has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
Date
<S> <C> <C>
* Chairman of the Board of Trustees, December 24, 1996
- --------------------------------- President, and
James M. Benham Chief Executive Officer
* Trustee December 24, 1996
- ---------------------------------
Albert A. Eisenstat
* Trustee December 24, 1996
- ---------------------------------
Ronald J. Gilson
* Trustee December 24, 1996
- ---------------------------------
Myron S. Scholes
* Trustee December 24, 1996
- ---------------------------------
Kenneth E. Scott
* Trustee December 24, 1996
- ---------------------------------
Ezra Solomon
* Trustee December 24, 1996
- ---------------------------------
Isaac Stein
* Trustee December 24, 1996
- ---------------------------------
James E. Stowers III
* Trustee December 24, 1996
- ---------------------------------
Jeanne D. Wohlers
* Chief Financial Officer, Treasurer December 24, 1996
- ---------------------------------
Maryanne Roepke
</TABLE>
/s/ Douglas A. Paul
*by Douglas A. Paul, Attorney in Fact (pursuant to a Power of Attorney dated
March 4, 1996).
EXHIBIT DESCRIPTION
EX-99.B1 Agreement and Declaration of Trust dated May 31, 1995, is
incorporated herein by reference to Exhibit 1(b) of Post-Effective
Amendment No. 24 filed on November 29, 1995 (Accession #
757928-95-000005).
EX-99.B2 Amended and Restated Bylaws, dated May 17, 1995, are incorporated
herein by reference to Exhibit 2(b) of Post-Effective Amendment No.
24 filed on November 29, 1995 (Accession # 757928-95-000005).
EX-99.B5 Investment Advisory Agreement between Benham Target Maturities
Trust: 2000 Portfolio, Benham Target Maturities Trust:
2005 Portfolio, Benham Target Maturities Trust: 2010 Portfolio,
Benham Target Maturities Trust: 2015 Portfolio, Benham Target
Maturities Trust: 2020 Portfolio, Benham Target Maturities Trust:
2025 Portfolio, and any additional series and Benham Management
Corporation, dated June 1, 1995, is incorporated herein by reference
to Exhibit 5(a) of Post-Effective Amendment No. 24 filed on November
29, 1995 (Accession # 757928-95-000005).
EX-99.B6 Distribution Agreement between Benham Target Maturities Trust and
Twentieth Century Securities, Inc. dated as of September 3, 1996, is
incorporated herein by reference to Exhibit 6 of Post-Effective
Amendment No. 29 to the Registration Statement of the Benham
Government Income Trust filed on August 30, 1996 (Accession #
773674-96-000007).
EX-99.B8 1993 Omnibus Custodian Agreement between the Benham Group of Funds
(including Benham Target Maturities Trust) and State Street Bank and
Trust Company, dated August 10, 1993, is incorporated herein by
reference to Exhibit 8 to Post-Effective Amendment No. 22.
EX-99.B9 Administrative Services and Transfer Agency Agreement between Benham
Target Maturities Trust and Twentieth Century Services, Inc. dated
as of September 3, 1996,. is incorporated herein by reference to
Exhibit 9 of Post-Effective Amendment No. 29 to the Registration
Statement of the Benham Government Income Trust filed on August 30,
1996 (Accession # 773674-96-000007).
EX-99.B10 Opinion and consent of counsel as to the legality of the securities
being registered, dated November 14, 1996 is incorporated herein by
reference to the Rule 24f-2 Notice filed on November 14, 1996
(Accession # 757928-96-000008).
EX-99.B11 Consent of KPMG Peat Marwick, LLP, independent auditors, is included
herein.
EX-99.B14 a) Benham Individual Retirement Account Plan, including all
instructions and other relevant documents, dated February
1992, is incorporated by reference to Exhibit 14(a) to
Post-Effective Amendment No. 20.
b) Benham Pension/Profit Sharing plan, including all instructions
and other relevant documents, dated February 1992, is
incorporated by reference to Exhibit 14(b) to Post-Effective
Amendment No. 20.
EX-99.B16 Schedule for computation of each performance quotation provided in
response to Item 22 is included herein.
EX-99.B17 Power of Attorney dated March 4, 1996 is included herein.
EX-27.5.1 FDS - 2000 Portfolio
EX-27.5.2 FDS - 2005 Portfolio
EX-27.5.3 FDS - 2010 Portfolio
EX-27.5.4 FDS - 2015 Portfolio
EX-27.5.5 FDS - 2020 Portfolio
EX-27.5.6 FDS - 2025 Portfolio
Consent of Independent Auditors
The Board of Trustees and Shareholders
American Century Target Maturities Trust:
We consent to the inclusion in American Century Target Maturities Trust's
Post-Effective Amendment No. 26 to the Registration Statement No. 2-94608 on
Form N-1A under the Securities Act of 1933 and Amendment No. 28 to the
Registration Statement No. 811-4165 filed on Form N-1A under the Investment
Company Act of 1940 of our reports dated November 1, 1996 on the financial
statements and financial highlights of the American Century-Benham Target
Maturities Trust: 2000, American Century-Benham Target Maturities Trust: 2005,
American Century-Benham Target Maturities Trust: 2010, American Century-Benham
Target Maturities Trust: 2015, American Century-Benham Target Maturities Trust:
2020, and American Century-Benham Target Maturities Trust: 2025 for the periods
indicated therein, which reports have been incorporated by reference into the
Statement of Additional Information of American Century Target Maturities Trust.
We also consent to the reference to our firm under the heading "Financial
Highlights" in the Prospectus and under the heading "About the Trust" in the
Statement of Additional Information which is incorporated by reference into the
Prospectus.
/s/KPMG Peat Marwick LLP
Kansas City, Missouri
December 27, 1996
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2000
YIELD CALCULATION
September 30, 1996
[ ( A-B ) 6 ]
Formula: Yield = 2[ (------- + 1) - 1 ]
[ ( C*D ) ]
A = Investment income earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = The per share price on the last day of the period.
Calculation:
A = $1,466,750.46
B = $109,355.31
C = 3,356,125.288
D = $79.95
Yield = 6.15%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2005
YIELD CALCULATION
September 30, 1996
[ ( A-B ) 6 ]
Formula: Yield = 2[ (------- + 1) - 1 ]
[ ( C*D ) ]
A = Investment income earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = The per share price on the last day of the period.
Calculation:
A = $1,372,811.49
B = $99,293.93
C = 4,116,763.218
D = $57.83
Yield = 6.51%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2010
YIELD CALCULATION
September 30, 1996
[ ( A-B ) 6 ]
Formula: Yield = 2[ (------- + 1) - 1 ]
[ ( C*D ) ]
A = Investment income earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = The per share price on the last day of the period.
Calculation:
A = $661,295.69
B = $49,193.72
C = 2,611,498.972
D = $42.47
Yield = 6.71%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2015
YIELD CALCULATION
September 30, 1996
[ ( A-B ) 6 ]
Formula: Yield = 2[ (------- + 1) - 1 ]
[ ( C*D ) ]
A = Investment income earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = The per share price on the last day of the period.
Calculation:
A = $699,727.54
B = $51,608.87
C = 3,628,873.563
D = $31.96
Yield = 6.80%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2020
YIELD CALCULATION
September 30, 1996
[ ( A-B ) 6 ]
Formula: Yield = 2[ (------- + 1) - 1 ]
[ ( C*D ) ]
A = Investment income earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = The per share price on the last day of the period.
Calculation:
A = $5,624,417.55
B = $385,827.84
C = 41,754,828.165
D = $22.00
Yield = 6.94%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2025
YIELD CALCULATION
September 30, 1996
[ ( A-B ) 6 ]
Formula: Yield = 2[ (------- + 1) - 1 ]
[ ( C*D ) ]
A = Investment income earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = The per share price on the last day of the period.
Calculation:
A = $204,832.85
B = $17,292.57
C = 1,965,224.243
D = $17.91
Yield = 6.48%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2000
AVERAGE ANNUAL TOTAL RETURN
September 30, 1996
( ERV ) 1/N
Formula: T = (-----) - 1
( P )
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
Calculation: --------- --------- -------- -------
One Year $1,000.00 $1,040.20 1.000000 4.02%
Five Years $1,000.00 $1,517.90 5.000000 8.71%
Ten Years $1,000.00 $2,443.50 10.000000 9.35%
Date Of Inception* $1,000.00 $4,097.90 11.518138 13.03%
*Date Of Inception: March 25, 1985
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2005
AVERAGE ANNUAL TOTAL RETURN
September 30, 1996
( ERV ) 1/N
Formula: T = (-----) - 1
( P )
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
Calculation: --------- --------- -------- -------
One Year $1,000.00 $1,021.60 1.000000 2.16%
Five Years $1,000.00 $1,646.20 5.000000 10.48%
Ten Years $1,000.00 $2,674.80 10.000000 10.34%
Date Of Inception* $1,000.00 $4,867.80 11.518138 14.73%
*Date Of Inception: March 25, 1985
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2010
AVERAGE ANNUAL TOTAL RETURN
September 30, 1996
( ERV ) 1/N
Formula: T = (-----) - 1
( P )
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
Calculation: --------- --------- -------- -------
One Year $1,000.00 $1,007.80 1.000000 0.78%
Five Years $1,000.00 $1,693.40 5.000000 11.11%
Ten Years $1,000.00 $2,681.20 10.000000 10.37%
Date Of Inception* $1,000.00 $5,417.10 11.518138 15.80%
*Date Of Inception: March 25, 1985
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2015
AVERAGE ANNUAL TOTAL RETURN
September 30, 1996
( ERV ) 1/N
Formula: T = (-----) - 1
( P )
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
Calculation: --------- --------- -------- -------
One Year $1,000.00 $ 992.50 1.000000 -0.75%
Five Years $1,000.00 $1,733.20 5.000000 11.63%
Ten Years $1,000.00 $2,450.90 10.000000 9.38%
Date Of Inception* $1,000.00 $2,540.50 10.080767 9.70%
*Date Of Inception: September 1, 1986
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2020
AVERAGE ANNUAL TOTAL RETURN
September 30, 1996
( ERV ) 1/N
Formula: T = (-----) - 1
( P )
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
Calculation: --------- --------- -------- -------
One Year $1,000.00 $ 979.10 1.000000 -2.09%
Five Years $1,000.00 $1,754.40 5.000000 11.90%
Ten Years
Date Of Inception* $1,000.00 $1,833.30 6.754278 9.39%
*Date Of Inception: December 29, 1989
<PAGE>
AMERICAN CENTURY-BENHAM TARGET MATURITIES TRUST: 2025
AVERAGE ANNUAL TOTAL RETURN
September 30, 1996
( ERV ) 1/N
Formula: T = (-----) - 1
( P )
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
Calculation: --------- --------- -------- -------
One Year
Five Years
Ten Years
Date Of Inception* $1,000.00 $902.30 0.624230 -15.18%
*Date Of Inception: February 15, 1996
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, BENHAM TARGET
MATURITIES TRUST, hereinafter called the "Trust" and certain trustees and
officers of the Trust, do hereby constitute and appoint James M. Benham, James
E. Stowers, III, William M. Lyons, Douglas A. Paul, and Patrick A. Looby, and
each of them individually, their true and lawful attorneys and agents to take
any and all action and execute any and all instruments which said attorneys and
agents may deem necessary or advisable to enable the Trust to comply with the
Securities Act of 1933 and/or the Investment Company Act of 1940, as amended,
and any rules regulations, orders, or other requirements of the United States
Securities and Exchange Commission thereunder, in connection with the
registration under the Securities Act of 1933 and/or the Investment Company Act
of 1940, as amended, including specifically, but without limitation of the
foregoing, power and authority to sign the name of the Trust in its behalf and
to affix its seal, and to sign the names of each of such trustees and officers
in their capacities as indicated, to any amendment or supplement to the
Registration Statement filed with the Securities and Exchange Commission under
the Securities Act of 1933 and/or the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed as a part of
or in connection with such Registration Statement; and each of the undersigned
hereby ratifies and confirms all that said attorneys and agents shall do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused this Power to be executed by its
duly authorized officers on this the 4th day of March, 1996
BENHAM TARGET MATURITIES TRUST
(A Massachusetts Business Trust)
By: /s/James M. Benham, President
James M. Benham, President
SIGNATURE AND TITLE
/s/James M. Benham /s/Ezra Solomon
James M. Benham Ezra Solomon
Chairman Trustee
/s/Albert A. Eisenstat /s/Isaac Stein
Albert A. Eisenstat Isaac Stein
Trustee Trustee
/s/Ronald J. Gilson /s/Jeanne D. Wohlers
Ronald J. Gilson Jeanne D. Wohlers
Trustee Trustee
/s/Myron S. Scholes /s/James E. Stowers, III
Myron S. Scholes James E. Stowers, III
Trustee Trustee
/s/Kenneth E. Scott /s/Maryanne Roepke
Kenneth E. Scott Maryanne Roepke
Trustee Treasurer
Attest:
By: /s/Douglas A. Paul
Douglas A. Paul, Secretary
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