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._27_ X
-----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----
File No. 811-4165:
Amendment No._29_
AMERICAN CENTURY 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
Secretary, Vice President and 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:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on September 2, 1997, 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.
<PAGE>
AMERICAN CENTURY TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 27
1940 Act Amendment No. 29
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,
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 Management, Transfer and Administrative and Services, About the Trust
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
<PAGE>
PROSPECTUS
[american century logo]
American
Century(reg.sm)
SEPTEMBER 2, 1997
BENHAM
GROUP(reg.tm)
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
INVESTOR CLASS
[front cover]
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--FAMILY OF FUNDS
- -------------------------------------------------------------------------------
Benham American Century Twentieth Century(reg. tm)
Group Group Group
- -------------------------------------------------------------------------------
MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
- -------------------------------------------------------------------------------
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
PROSPECTUS
SEPTEMBER 2, 1997
Target 2000 * Target 2005 * Target 2010
Target 2015 * Target 2020 * Target 2025
INVESTOR CLASS
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.
Through its Investor Class of shares, 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 * P.O. Box 419200
Kansas City, Missouri 64141-6200 * 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 * In Missouri:
816-444-3485 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," on 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
Investment Objectives of the Funds ....................................... 2
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
Cash Management ....................................................... 13
Securities Lending .................................................... 13
Portfolio Turnover .................................................... 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 ....................................... 18
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 ................................................. 20
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
Further Information About American Century ............................... 25
PROSPECTUS TABLE OF CONTENTS 3
TRANSACTION AND OPERATING EXPENSE TABLE
Target 2000, Target 2005
Target 2010, Target 2015
Target 2020, Target 2025
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases .................... none
Maximum Sales Load Imposed on Reinvested Dividends ......... none
Deferred Sales Load ........................................ none
Redemption Fee(1) .......................................... none
Exchange Fee ............................................... none
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fees(2) ......................................... 0.59%
12b-1 Fees ................................................. none
Other Expenses ............................................. 0.01%
Total Fund Operating Expenses .............................. 0.60%
EXAMPLE:
You would pay the following expenses 1 year $ 6
on a $1,000 investment, assuming a 5% 3 years 19
annual return and redemption at the end 5 years 34
of each time period: 10 years 75
(1) Redemption proceeds sent by wire are subject to a $10 processing fee.
(2) A portion of the management fee may be paid by American Century Investment
Management, Inc. (the "Manager") to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be
performed by an affiliate of the Manager. See "Management -- Transfer and
Administrative Services," page 24.
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 class of 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.
The shares offered by this Prospectus are Investor Class shares and have no
up-front or deferred sales charges, commissions, or 12b-1 fees. The Funds offer
one other class of shares, primarily to institutional investors, that has a
different fee structure than the Investor Class. The difference in the fee
structures among the classes is the result of their separate arrangements for
shareholder and distribution services and not the result of any difference in
amounts charged by the Manager for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class. A
difference in fees will result in different performance for those classes. For
additional information about the various classes, see "Further Information About
American Century," page 25.
4 TRANSACTION AND OPERATING EXPENSE TABLE AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
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 annual report contains 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 ......$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 Gain
(Loss) on Investment
Transactions ........... (1.66) 5.56 (9.46) 6.30 5.59 5.87 (3.08) 3.27 0.89 (4.79)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations .. 3.09 9.93 (5.47) 10.24 9.49 9.56 0.32 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
Capital Gains .......... -- -- (2.95) (1.83) (0.16) -- (0.10) -- -- --
In Excess of Net
Realized Gains ......... -- -- (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% 0.75% 15.15% 11.49% (5.95)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets ..... 0.53% 0.63% 0.59% 0.60% 0.66% 0.66% 0.70% 0.70%(4) 0.70% 0.70%
Ratio of Net Investment
Income to Average
Net Assets ............. 5.99% 6.13% 5.74% 5.94% 6.90% 7.67% 7.84% 7.81%(4) 8.33% 8.08%
Portfolio Turnover
Rate ................... 29% 53% 89% 77% 93% 67% 79% 49% 163% 73%
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
(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 was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
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 annual report contains 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 Gain
(Loss) on Investment
Transactions .......... (2.28) 8.06 (9.73) 7.76 3.36 4.92 (3.14) 2.71 1.18 (4.23)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations . 1.22 11.39 (6.62) 10.66 6.05 7.39 (0.87) 4.25 3.08 (2.46)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions
From Net
Investment Income ..... (2.06) (2.41) (2.70) (2.51) (1.75) (0.86) (1.60) -- (1.53) (3.52)
From Net Realized
Capital Gains ......... (0.58) (0.67) (8.47) (1.01) (0.37) -- (0.07) -- -- (0.13)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ... (2.64) (3.08) (11.17) (3.52) (2.12) (0.86) (1.67) -- (1.53) (3.65)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ..... 2.64 3.08 11.17 3.52 2.12 0.86 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 Operating
Expenses to
Average Net Assets .... 0.58% 0.71% 0.64% 0.62% 0.63% 0.70% 0.70% 0.70%(4) 0.70% 0.70%
Ratio of Net Investment
Income to Average
Net Assets ............ 6.05% 6.58% 6.37% 6.44% 7.27% 7.80% 7.93% 7.66%(4) 8.44% 8.31%
Portfolio Turnover
Rate .................. 31% 34% 68% 50% 64% 85% 186% 72% 27% 68%
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
(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 was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
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 annual report contains 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 Gain
(Loss) on Investment
Transactions .......... (2.25) 8.06 (8.70) 7.55 1.57 4.18 (3.02) 2.20 1.06 (3.92)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations . 0.33 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) -- (0.42) (0.90)
From Net Realized
Capital Gains ......... -- (0.48) (4.31) (1.14) -- -- (0.09) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ... (1.57) (1.96) (5.77) (2.72) (1.14) (1.05) (1.59) -- (0.42) (0.90)
Reverse Share Split ..... 1.57 1.96 5.77 2.72 1.14 1.05 1.59 -- 0.42 0.90
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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) ......... 0.78% 33.06% (16.92)% 33.61% 13.76% 30.76% (6.85)% 18.95% 15.71% (15.24)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets .... 0.67% 0.71% 0.68% 0.66% 0.70% 0.70% 0.70% 0.70%(4) 0.70% 0.70%
Ratio of Net Investment
Income to Average
Net Assets ............ 5.98% 6.56% 6.35% 6.32% 7.20% 7.73% 7.82% 7.34%(4) 8.11% 8.13%
Portfolio
Turnover Rate ......... 24% 26% 35% 132% 95% 131% 191% 88% 259% 84%
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
(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 was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
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 annual report contains 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 AssetValue,
<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 0.79 0.94 0.90
Net Realized and
Unrealized Gain
(Loss) on Investment
Transactions ........... (2.09) 7.70 (7.82) 7.19 0.62 3.43 (3.05) 2.20 0.32 (3.77)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations .. (0.24) 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) (0.87) (1.19) (1.45) (1.23) (0.97) (0.50) -- (0.55) (0.22)
From Net Realized
Capital Gains .......... (1.61) -- (7.08) (0.34) -- -- (0.01) -- -- --
In Excess of Net
Realized Gains ......... -- -- (0.37) -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions .... (2.89) (0.87) (8.64) (1.79) (1.23) (0.97) (0.51) -- (0.55) (0.22)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ...... 2.89 0.87 8.64 1.79 1.23 0.97 0.51 -- 0.55 0.22
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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) .......... (0.74)% 41.29% (21.52)% 42.42% 10.57% 34.11% (11.97)% 23.67% 11.08% (20.15)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets ..... 0.65% 0.71% 0.68% 0.63% 0.62% 0.61% 0.70% 0.70%(4) 0.70% 0.70%
Ratio of Net
Investment Income
to Average Net Assets .. 5.63% 6.40% 5.97% 6.28% 7.04% 7.79% 7.74% 7.02%(4) 7.97% 7.99%
Portfolio Turnover
Rate ................... 17% 70% 65% 138% 103% 40% 81% 48% 188% 509%
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
(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 was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
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 annual report contains 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 AssetValue,
<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 0.92 0.85 0.60
Net Realized and Unrealized Gain
(Loss) on Investment Transactions .................. (1.88) 6.00 (6.57) 6.09 0.17 2.06 (2.97)
------ ------ ------ ------ ------ ------ ------
TotalFrom
Investment Operations .............................. (0.47) 7.19 (5.44) 7.09 1.09 2.91 (2.37)
------ ------ ------ ------ ------ ------ ------
Distributions
From Net Investment Income ......................... (0.40) (0.21) (0.28) (0.53) (0.63) (0.21) --
From Net Realized Capital Gains .................... (0.04) -- (1.31) (0.72) (0.08) -- --
In Excess of Net Realized Gains .................... -- -- (1.18) -- -- -- --
------ ------ ------ ------ ------ ------ ------
Total Distributions ................................ (0.44) (0.21) (2.77) (1.25) (0.71) (0.21) --
------ ------ ------ ------ ------ ------ ------
Reverse Share Split .................................. 0.44 0.21 2.77 1.25 0.71 0.21 --
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 Operating Expenses to
Average Net Assets ................................. 0.61% 0.72% 0.70% 0.70% 0.66% 0.67% 0.70%(4)
Ratio of Net Investment Income
to Average Net Assets .............................. 6.25% 6.24% 6.28% 6.10% 7.19% 7.50% 7.79%(4)
Portfolio Turnover Rate ............................ 47% 78% 116% 179% 144% 151% 189%
Net Assets, End of Period
(in thousands) ..................................... $926,319 $574,702 $58,535 $56,125 $41,793 $88,332 $53,198
(1) From December 29, 1989, (commencement of operations) through September 30,
1990.
(2) Per-share data in this table was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
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 annual report contains additional performance
information and will be made available upon request and without charge. The
information presented is for a share outstanding throughout the period
indicated.
1996(1)
PER-SHARE DATA(2)
Net Asset Value, Beginning of Period ............................... $19.85
Income From Investment Operations
Net Investment Income ............................................ 0.72
Net Realized and Unrealized Loss on Investment Transactions ...... (2.66)
-------
Total From Investment Operations ................................. (1.94)
-------
Distributions
From Net Investment Income ....................................... --
Reverse Share Split .............................................. --
-------
Net Asset Value, End of Period ..................................... $17.91
=======
Total Return(3) .................................................... (9.77)
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets .................. 0.67%(4)
Ratio of Net Investment Income to Average Net Assets ............... 6.57%(4)
Portfolio Turnover Rate ............................................ 61%
Net Assets, End of Period (in thousands) ........................... $35,661
(1) February 15, 1996 (inception) through September 30, 1996.
(2) Per-share data in this table was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) 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.
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 and
their equivalents (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 five years. (AGRs are illustrated in the Statement of
Additional Information.)
*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
PROSPECTUS INFORMATION REGARDING THE FUNDS 11
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.
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.
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.
The Resolution Funding Corporation ("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. 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
busi-
12 INFORMATION REGARDING THE FUNDS AMERICAN CENTURY INVESTMENTS
ness 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.
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.
CASH MANAGEMENT
Each Fund may invest in any money market fund, including those advised by
the Manager, provided that the investment is consistent with the Fund's
investment policies and restrictions.
Up to 5% of each Fund's total assets may be invested in this manner.
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.
A Fund's loans may not exceed 33-1/3% of its total assets.
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.
PERFORMANCE ADVERTISING
From time to time, the Funds may advertise performance data. Fund
performance may be shown by presenting 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). Performance data
may be quoted separately for the Investor Class and for the other class offered
by the 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.
PROSPECTUS INFORMATION REGARDING THE FUNDS 13
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. Because yield accounting methods differ from the
methods used for other accounting purposes, a fund's yield may not equal the
income paid on its shares 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. 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
---------------------------------------- = Tax-Equivalent
100% - State Tax Rate Yield
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) 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:
(a) RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)
(a) BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111
(a) BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918
(a) 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.
(a) ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.
(a) BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):
* Taxpayer identification or Social Security
number
* If more than one account, account numbers and amount to be invested in
each account.
PROSPECTUS HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS 15
* Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA, SARSEP-IRA, SIMPLE Employer or SIMPLE
Employee.
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 Investor Centers, located at:
4500 Main Street, Kansas City, Missouri 64111
1665 Charleston Road, Mountain View, California 94043
4917 Town Center Drive, Leawood, Kansas 66211
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 investment slip 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 investment
slip portion of a previous statement or confirmation. 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 Investor
Centers. The locations of our four Investor 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 as of the same date 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
16 HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS AMERICAN CENTURY INVESTMENTS
the amount of at least $50 per month. See our Investor Services Guide for
further information about exchanges.
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.
PROSPECTUS HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS 17
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 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:
* redeeming more than $25,000; or
* 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.
18 HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS AMERICAN CENTURY INVESTMENTS
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.
TAX-QUALIFIED RETIREMENT PLANS
Each Fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:
* Individual Retirement Accounts ("IRAs");
* 403(b) plans for employees of public school
systems and non-profit organizations; or
* 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 Investor 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
PROSPECTUS HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS 19
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 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 will also 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 Investor Class 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
Investment Company Act of 1940.
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 59-1/2 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 Target 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 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 management agreement entered into with the
Funds, American Century Investment Management, Inc. serves as the investment
manager of the Funds. Its principal place of business is American Century Tower,
4500 Main Street, Kansas City, Missouri 64111. The Manager has been providing
investment advisory
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 23
services to investment companies and institutional clients since it was founded
in 1958.
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 teams may also adjust portfolio holdings of the Funds or of
sectors of the Funds as necessary between team meetings.
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 Funds'
Board of Trustees. The Manager pays all the expenses of the Funds except
brokerage, taxes, portfolio insurance, interest, fees and expenses of the
non-interested person directors (including counsel fees) and extraordinary
expenses.
For the services provided to the Funds, the Manager receives a monthly fee
based on a percentage of the average net assets of the Fund. The annual rate at
which this fee is assessed is determined monthly in a two-step process: First, a
fee rate schedule is applied to the assets of all of the bond funds managed by
the Manager (the "Investment Category Fee"). Second, a separate fee rate
schedule is applied to the assets of all of the mutual funds managed by the
Manager (the "Complex Fee"). The Investment Category Fee and the Complex Fee are
then added to determine the unified management fee payable by the Fund to the
Manager. Currently, the Investment Category Fee for each of the Funds is an
annual rate of 0.29% of the average net assets of each Fund. The Complex Fee is
currently an annual rate of 0.30% of the average net assets of each Fund.
Further information about the calculation of the annual management fee is
contained in the Statement of Additional Information.
On the first business day of each month, the Funds pay a management fee to
the Manager for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for a Fund by the
aggregate average daily closing value of a Fund's net assets during the previous
month by a fraction, the numerator of which is the number of days in the
previous month and the denominator of which is 365 (366 in leap years).
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 Manager.
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
24 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
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.
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 American Century
Companies, Inc. (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
Investor Class of Fund shares offered by this Prospectus. The Investor Class of
shares does 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.
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. The Funds do not issue
share certificates.
American Century offers two classes of each of the Funds offered by this
Prospectus: an Investor Class and an Advisor Class. The shares offered by this
Prospectus are Investor Class shares and have no up-front charges, commissions
or 12b-1 fees.
The other classes of shares are primarily offered to institutional investors
or through institutional distributions channels, such as employer-sponsored
retirement plans or through banks, broker-dealers, insurance companies or other
financial intermediaries. The other classes have different fees, expenses,
and/or minimum investment requirements than the Investor Class. The difference
in the fee structures among the classes is the result of their separate
arrangements for shareholder and distribution services and not the result of any
difference in amounts charged by the Manager for core investment advisory
services. Accordingly, the core investment advisory expenses do not vary by
class. Different fees and expenses will affect performance. For additional
information concerning the other classes of shares not offered by this
Prospectus, call one of our Investor Services Representatives at 1-800-345-2021
Except as described below, all classes of shares of a Fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class, and (d) each class
may have different exchange privileges.
Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable to such share on all questions, except
for those matters which must be voted on separately by the series or class of
shares affected. Matters affecting only one series or class are voted upon only
by that series or class.
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
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 25
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.
26 INFORMATION REGARDING THE FUNDS AMERICAN CENTURY INVESTMENTS
NOTES
NOTES 27
NOTES
28 INFORMATION REGARDING THE FUNDS NOTES
NOTES
NOTES 29
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
INVESTOR SERVICES:
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 816-444-3485
FAX: 816-340-7962
INTERNET: www.americancentury.com
[american century logo]
American
Century(reg.sm)
9708 [recycled logo]
SH-BKT-9212 Recycled
<PAGE>
PROSPECTUS
[american century logo]
American
Century(reg.sm)
SEPTEMBER 2, 1997
BENHAM
GROUP(reg.tm)
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
ADVISOR CLASS
[front cover]
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--FAMILY OF FUNDS
Benham American Century Twentieth Century(reg. tm)
Group Group Group
MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
PROSPECTUS
SEPTEMBER 2, 1997
Target 2000 * Target 2005 * Target 2010
Target 2015 * Target 2020 * Target 2025
ADVISOR CLASS
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 and low-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.
Each Fund's shares offered in this Prospectus (the Advisor Class shares) are
sold at their net asset value with no sales charges or commissions. The Advisor
Class shares are subject to a Rule 12b-1 shareholder services fee and
distribution fee as described in this Prospectus.
The Advisor Class shares are intended for purchase by participants in
employer-sponsored retirement or savings plans and for persons purchasing shares
through broker-dealers, banks, insurance companies and other financial
intermediaries that provide various administrative and distribution services.
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 September 2, 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 * P.O. Box 419385
Kansas City, Missouri 64141-6385 * 1-800-345-3533
International calls: 816-531-5575
Telecommunications Device for the Deaf: 1-800-345-1833 * In Missouri:
816-444-3038 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," on page 17.
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
Investment Objectives of the Funds ....................................... 2
Transaction and Operating Expense Table .................................. 4
Performance Information of Other Class ................................... 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
Cash Management ....................................................... 13
Securities Lending .................................................... 13
Portfolio Turnover .................................................... 13
Performance Advertising .................................................. 13
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
How to Purchase and Sell American
Century Funds ......................................................... 15
How to Exchange from One American
Century Fund to Another ............................................... 15
How to Redeem Shares ..................................................... 15
Telephone Services ....................................................... 15
Investors Line ........................................................ 15
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price .............................................................. 16
When Share Price Is Determined ........................................ 16
How Share Price Is Determined ......................................... 16
Where to Find Information About Share Price ........................... 16
Distributions ............................................................ 17
Buying a Dividend ..................................................... 17
Reverse Share Splits .................................................. 17
Fund Liquidation ...................................................... 17
Taxes .................................................................... 17
Tax-Deferred Accounts ................................................. 17
Taxable Accounts ...................................................... 17
Management ............................................................... 18
Investment Management ................................................. 18
Code of Ethics ........................................................ 19
Transfer and Administrative Services .................................. 19
Distribution of Fund Shares .............................................. 20
Service and Distribution Fees ......................................... 20
Further Information About American Century ............................... 20
PROSPECTUS TABLE OF CONTENTS 3
TRANSACTION AND OPERATING EXPENSE TABLE
Target 2000, Target 2005
Target 2010, Target 2015
Target 2020, Target 2025
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ........................ none
Maximum Sales Load Imposed on Reinvested Dividends ............. none
Deferred Sales Load ............................................ none
Redemption Fee ................................................. none
Exchange Fee ................................................... none
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fees(1) .............................................0.34%
12b-1 Fees(2) ..................................................0.50%
Other Expenses .................................................0.01%
Total Fund Operating Expenses ..................................0.85%
EXAMPLE:
You would pay the following expenses 1 year $ 9
on a $1,000 investment, assuming a 5% 3 years 27
annual return and redemption at the end 5 years 47
of each time period: 10 years 105
(1)A portion of the management fee may be paid by American Century Investment
Management, Inc. (the "Manager") to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be performed
by an affiliate of the Manager. See "Management -- Transfer and
Administrative Services," page 19.
(2)The 12b-1 fee is designed to permit investors to purchase Advisor Class
shares through broker-dealers, banks, insurance companies and other financial
intermediaries. A portion of the fee is used to compensate them for ongoing
recordkeeping and administrative services that would otherwise be performed
by an affiliate of the Manager, and a portion is used to compensate them for
distribution and other shareholder services. See "Service and Distribution
Fees," page 20.
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 class of shares of the American Century
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.
The shares offered by this Prospectus are Advisor Class shares. The Funds
offer one other class of shares which is primarily made available to retail
investors. The other class has a different fee structure than the Advisor Class.
The difference in the fee structures among the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the Manager for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. A difference in fees will result in different performance for the
other classes. For additional information about the various classes, see
"Further Information About American Century," page 20.
4 TRANSACTION AND OPERATING EXPENSE TABLE AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
PERFORMANCE INFORMATION OF OTHER CLASS
TARGET 2000
The Advisor Class of the Funds was established September 2, 1997; therefore no
shares had been issued prior to the Fund's prior fiscal year end. The financial
information in this table regarding selected per share data for the Fund
reflects the performance of the Fund's Investor Class of shares, which has a
total expense ratio that is 0.25% lower than the Advisor Class. Had the Advisor
Class been in existence for the Fund for the time periods presented, the Fund's
performance information would be lower as a result of the higher expenses.
The performance information 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 annual report contains 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 ......$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 Gain
(Loss) on Investment
Transactions ........... (1.66) 5.56 (9.46) 6.30 5.59 5.87 (3.08) 3.27 0.89 (4.79)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations .. 3.09 9.93 (5.47) 10.24 9.49 9.56 0.32 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
Capital Gains .......... -- -- (2.95) (1.83) (0.16) -- (0.10) -- -- --
In Excess of Net
Realized Gains ......... -- -- (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% 0.75% 15.15% 11.49% (5.95)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets ..... 0.53% 0.63% 0.59% 0.60% 0.66% 0.66% 0.70% 0.70%(4) 0.70% 0.70%
Ratio of Net Investment
Income to Average
Net Assets ............. 5.99% 6.13% 5.74% 5.94% 6.90% 7.67% 7.84% 7.81%(4) 8.33% 8.08%
Portfolio Turnover
Rate ................... 29% 53% 89% 77% 93% 67% 79% 49% 163% 73%
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
(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 was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
PROSPECTUS PERFORMANCE INFORMATION OF OTHER CLASS 5
<TABLE>
<CAPTION>
PERFORMANCE INFORMATION OF OTHER CLASS
TARGET 2005
The Advisor Class of the Funds was established September 2, 1997; therefore no
shares had been issued prior to the Fund's prior fiscal year end. The financial
information in this table regarding selected per share data for the Fund
reflects the performance of the Fund's Investor Class of shares, which has a
total expense ratio that is 0.25% lower than the Advisor Class. Had the Advisor
Class been in existence for the Fund for the time periods presented, the Fund's
performance information would be lower as a result of the higher expenses.
The performance information 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 annual report contains 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 Gain
(Loss) on Investment
Transactions .......... (2.28) 8.06 (9.73) 7.76 3.36 4.92 (3.14) 2.71 1.18 (4.23)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations . 1.22 11.39 (6.62) 10.66 6.05 7.39 (0.87) 4.25 3.08 (2.46)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions
From Net
Investment Income ..... (2.06) (2.41) (2.70) (2.51) (1.75) (0.86) (1.60) -- (1.53) (3.52)
From Net Realized
Capital Gains ......... (0.58) (0.67) (8.47) (1.01) (0.37) -- (0.07) -- -- (0.13)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ... (2.64) (3.08) (11.17) (3.52) (2.12) (0.86) (1.67) -- (1.53) (3.65)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ..... 2.64 3.08 11.17 3.52 2.12 0.86 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 Operating
Expenses to
Average Net Assets .... 0.58% 0.71% 0.64% 0.62% 0.63% 0.70% 0.70% 0.70%(4) 0.70% 0.70%
Ratio of Net Investment
Income to Average
Net Assets ............ 6.05% 6.58% 6.37% 6.44% 7.27% 7.80% 7.93% 7.66%(4) 8.44% 8.31%
Portfolio Turnover
Rate .................. 31% 34% 68% 50% 64% 85% 186% 72% 27% 68%
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
(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 was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
6 PERFORMANCE INFORMATION OF OTHER CLASS AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
PERFORMANCE INFORMATION OF OTHER CLASS
TARGET 2010
The Advisor Class of the Funds was established September 2, 1997; therefore no
shares had been issued prior to the Fund's prior fiscal year end. The financial
information in this table regarding selected per share data for the Fund
reflects the performance of the Fund's Investor Class of shares, which has a
total expense ratio that is 0.25% lower than the Advisor Class. Had the Advisor
Class been in existence for the Fund for the time periods presented, the Fund's
performance information would be lower as a result of the higher expenses.
The performance information 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 annual report contains 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 Gain
(Loss) on Investment
Transactions ...........(2.25) 8.06 (8.70) 7.55 1.57 4.18 (3.02) 2.20 1.06 (3.92)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations .. 0.33 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) -- (0.42) (0.90)
From Net Realized
Capital Gains .......... -- (0.48) (4.31) (1.14) -- -- (0.09) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ....(1.57) (1.96) (5.77) (2.72) (1.14) (1.05) (1.59) -- (0.42) (0.90)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ...... 1.57 1.96 5.77 2.72 1.14 1.05 1.59 -- 0.42 0.90
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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) ......... 0.78% 33.06% (16.92)% 33.61% 13.76% 30.76% (6.85)% 18.95% 15.71% (15.24)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets .... 0.67% 0.71% 0.68% 0.66% 0.70% 0.70% 0.70% 0.70%(4) 0.70% 0.70%
Ratio of Net Investment
Income to Average
Net Assets ............ 5.98% 6.56% 6.35% 6.32% 7.20% 7.73% 7.82% 7.34%(4) 8.11% 8.13%
Portfolio
Turnover Rate ......... 24% 26% 35% 132% 95% 131% 191% 88% 259% 84%
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
(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 was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
PROSPECTUS PERFORMANCE INFORMATION OF OTHER CLASS 7
<TABLE>
<CAPTION>
PERFORMANCE INFORMATION OF OTHER CLASS
TARGET 2015
The Advisor Class of the Funds was established September 2, 1997; therefore no
shares had been issued prior to the Fund's prior fiscal year end. The financial
information in this table regarding selected per share data for the Fund
reflects the performance of the Fund's Investor Class of shares, which has a
total expense ratio that is 0.25% lower than the Advisor Class. Had the Advisor
Class been in existence for the Fund for the time periods presented, the Fund's
performance information would be lower as a result of the higher expenses.
The performance information 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 annual report contains 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 0.79 0.94 0.90
Net Realized and
Unrealized Gain
(Loss) on Investment
Transactions ........... (2.09) 7.70 (7.82) 7.19 0.62 3.43 (3.05) 2.20 0.32 (3.77)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations .. (0.24) 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) (0.87) (1.19) (1.45) (1.23) (0.97) (0.50) -- (0.55) (0.22)
From Net Realized
Capital Gains .......... (1.61) -- (7.08) (0.34) -- -- (0.01) -- -- --
In Excess of Net
Realized Gains ......... -- -- (0.37) -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions .... (2.89) (0.87) (8.64) (1.79) (1.23) (0.97) (0.51) -- (0.55) (0.22)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ...... 2.89 0.87 8.64 1.79 1.23 0.97 0.51 -- 0.55 0.22
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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) .......... (0.74)% 41.29% (21.52)% 42.42% 10.57% 34.11% (11.97)% 23.67% 11.08% (20.15)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to
Average Net Assets ..... 0.65% 0.71% 0.68% 0.63% 0.62% 0.61% 0.70% 0.70%(4) 0.70% 0.70%
Ratio of Net
Investment Income
to Average Net Assets .. 5.63% 6.40% 5.97% 6.28% 7.04% 7.79% 7.74% 7.02%(4) 7.97% 7.99%
Portfolio Turnover
Rate ................... 17% 70% 65% 138% 103% 40% 81% 48% 188% 509%
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
(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 was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
8 PERFORMANCE INFORMATION OF OTHER CLASS AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
PERFORMANCE INFORMATION OF OTHER CLASS
TARGET 2020
The Advisor Class of the Funds was established September 2, 1997; therefore no
shares had been issued prior to the Fund's prior fiscal year end. The financial
information in this table regarding selected per share data for the Fund
reflects the performance of the Fund's Investor Class of shares, which has a
total expense ratio that is 0.25% lower than the Advisor Class. Had the Advisor
Class been in existence for the Fund for the time periods presented, the Fund's
performance information would be lower as a result of the higher expenses.
The performance information 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 annual report contains 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 0.92 0.85 0.60
Net Realized and Unrealized
Gain (Loss) on Investment Transactions ............ (1.88) 6.00 (6.57) 6.09 0.17 2.06 (2.97)
------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ............................. (0.47) 7.19 (5.44) 7.09 1.09 2.91 (2.37)
------ ------ ------ ------ ------ ------ ------
Distributions
From Net Investment Income ........................ (0.40) (0.21) (0.28) (0.53) (0.63) (0.21) --
From Net Realized Capital Gains ................... (0.04) -- (1.31) (0.72) (0.08) -- --
In Excess of Net Realized Gains ................... -- -- (1.18) -- -- -- --
------ ------ ------ ------ ------ ------ ------
Total Distributions ............................... (0.44) (0.21) (2.77) (1.25) (0.71) (0.21) --
------ ------ ------ ------ ------ ------ ------
Reverse Share Split ................................. 0.44 0.21 2.77 1.25 0.71 0.21 --
------ ------ ------ ------ ------ ------ ------
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 Operating Expenses to
Average Net Assets ................................ 0.61% 0.72% 0.70% 0.70% 0.66% 0.67% 0.70%(4)
Ratio of Net Investment Income
to Average Net Assets ............................. 6.25% 6.24% 6.28% 6.10% 7.19% 7.50% 7.79%(4)
Portfolio Turnover Rate ........................... 47% 78% 116% 179% 144% 151% 189%
Net Assets, End of Period
(in thousands) .................................... $926,319 $574,702 $58,535 $56,125 $41,793 $88,332 $53,198
(1) From December 29, 1989, (commencement of operations) through September 30,
1990.
(2) Per-share data in this table was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
PROSPECTUS PERFORMANCE INFORMATION OF OTHER CLASS 9
PERFORMANCE INFORMATION OF OTHER CLASS
TARGET 2025
The Advisor Class of the Funds was established September 2, 1997; therefore no
shares had been issued prior to the Fund's prior fiscal year end. The financial
information in this table regarding selected per share data for the Fund
reflects the performance of the Fund's Investor Class of shares, which has a
total expense ratio that is 0.25% lower than the Advisor Class. Had the Advisor
Class been in existence for the Fund for the time periods presented, the Fund's
performance information would be lower as a result of the higher expenses.
The performance information 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 annual report contains 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 ............................................ 0.72
Net Realized and Unrealized Loss on Investment Transactions ...... (2.66)
-------
Total From Investment Operations ................................. (1.94)
-------
Distributions
From Net Investment Income ....................................... --
Reverse Share Split .............................................. --
-------
Net Asset Value, End of Period ..................................... $17.91
=======
Total Return(3) .................................................... (9.77)
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets .................. 0.67%(4)
Ratio of Net Investment Income to Average Net Assets ............... 6.57%(4)
Portfolio Turnover Rate ............................................ 61%
Net Assets, End of Period (in thousands) ........................... $35,661
(1) February 15, 1996 (inception) through September 30, 1996.
(2) Per-share data in this table was 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 assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
10 PERFORMANCE INFORMATION OF OTHER CLASS 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.
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 and
their equivalents (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.
*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 17.
PROSPECTUS INFORMATION REGARDING THE FUNDS 11
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 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.
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.
The Resolution Funding Corporation ("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. 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
busi-
12 INFORMATION REGARDING THE FUNDS AMERICAN CENTURY INVESTMENTS
ness 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.
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.
CASH MANAGEMENT
Each Fund may invest in any money market fund, including those advised by
the Manager, provided that the investment is consistent with the Fund's
investment policies and restrictions.
Up to 5% of each Fund's total assets may be invested in this manner.
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.
A Fund's loans may not exceed 33-1/3% of its total assets.
PORTFOLIO TURNOVER
The portfolio turnover rates of the Funds are shown in the Performance
Information of Other Class 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
predicted.
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.
PERFORMANCE ADVERTISING
From time to time, the Funds may advertise performance data. Fund
performance may be shown by presenting 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). Performance data
may be quoted separately for the Advisor Class and for the other class offered
by the 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.
PROSPECTUS INFORMATION REGARDING THE FUNDS 13
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. Because yield accounting methods differ from the
methods used for other accounting purposes, a Fund's yield may not equal the
income paid on its shares 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. 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
---------------------------------------- = Tax-Equivalent
100% - State Tax Rate Yield
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) 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
The following section explains how to purchase, exchange and redeem Advisor
Class shares of the funds offered by this Prospectus.
HOW TO PURCHASE AND SELL AMERICAN
CENTURY FUNDS
One or more of the Funds offered by this Prospectus is available as an
investment option under your employer-sponsored retirement or savings plan or
through or in connection with a program, product or service offered by a
financial intermediary, such as a bank, broker-dealer or an insurance company.
Since all records of your share ownership are maintained by your plan sponsor,
plan recordkeeper, or other financial intermediary, all orders to purchase,
exchange and redeem shares must be made through your employer or other financial
intermediary, as applicable.
If you are purchasing through a retirement or savings plan, the
administrator of your plan or your employee benefits office can provide you with
information on how to participate in your plan and how to select American
Century funds as an investment option.
If you are purchasing through a financial intermediary, you should contact
your service representative at the financial intermediary for information about
how to select American Century funds.
If you have questions about a Fund, see "Investment Policies of the Funds,"
page 11, or call one of our Institutional Service Representative at
1-800-345-3533.
Orders to purchase shares are effective on the day we receive payment. See
"When Share Price Is Determined," page 16.
We may discontinue offering shares generally in the Funds (including any
class of shares of a fund) or in any particular state without notice to
shareholders.
HOW TO EXCHANGE FROM ONE AMERICAN
CENTURY FUND TO ANOTHER
Your plan or program may permit you to exchange your investment in the
shares of a Fund for shares of another fund in our family. See your plan
administrator, employee benefits office or financial intermediary for details on
the rules in your plan governing exchanges.
HOW TO REDEEM SHARES
Subject to any restrictions imposed by your employer's plan or financial
intermediary's program, you can sell ("redeem") your shares through the plan or
financial intermediary at their net asset value. Your plan administrator,
trustee, or financial intermediary or other designated person must provide us
with redemption instructions. The shares will be redeemed at the net asset value
next computed after receipt of the instructions in good order. See "When Share
Price Is Determined," page 16. If you have any questions about how to redeem,
contact your plan administrator, employee benefits office, or service
representative at your financial intermediary, as applicable.
TELEPHONE SERVICES
INVESTORS LINE
To request information about our funds and a current Prospectus, or get
answers to any questions that you may have about the funds and the services we
offer, call one of our Institutional Service Representatives at 1-800-345-3533.
PROSPECTUS HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS 15
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 Investor Class of the Funds are published in
leading newspapers daily. Because the total expense ratio for the Advisor Class
shares is 0.25% higher than the Investor Class, their net asset values will be
lower than the Investor Class. The net asset values of the Advisor Class may be
obtained by calling us.
16 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
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
Investment Company Act of 1940 (the "Investment Company 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 59(1)/(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 Target 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.
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 17
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 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, either we or your financial intermediary is 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 diversified, open-end 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 management agreement
entered into with the Funds, American Century Investment Management, Inc. serves
as the investment manager of the Funds. Its principal place of business is
American Century Tower, 4500 Main Street, Kansas City, Missouri 64111. The
Manager has been providing investment advisory
18 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
services to investment companies and institutional clients since it was founded
in 1958.
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 teams may also adjust portfolio holdings of the Funds or of
sectors of the Funds as necessary between team meetings.
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 Funds'
Board of Trustees. The Manager pays all the expenses of the Funds except
brokerage, taxes, portfolio insurance, interest, fees and expenses of the
non-interested person directors (including counsel fees) and extraordinary
expenses.
For the services provided to the Funds, the Manager receives a monthly fee
based on a percentage of the average net assets of each Fund. The annual rate at
which this fee is assessed is determined monthly in a two-step process: First, a
fee rate schedule is applied to the assets of all of the bond funds managed by
the Manager (the "Investment Category Fee"). Second, a separate fee rate
schedule is applied to the assets of all of the funds managed by the Manager
(the "Complex Fee"). The Investment Category Fee and the Complex Fee are then
added to determine the unified management fee payable by the Fund to the
Manager. Currently, the Investment Category Fee for each of the Funds is an
annual rate of 0.29% of the average net assets of each Fund. The Complex Fee is
currently an annual rate of 0.05% of the average net assets of each Fund.
Further information about the calculation of the annual management fee is
contained in the Statement of Additional Information.
On the first business day of each month, the Funds pay a management fee to
the Manager for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for a Fund by the
aggregate average daily closing value of a Fund's net assets during the previous
month by a fraction, the numerator of which is the number of days in the
previous month and the denominator of which is 365 (366 in leap years).
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 Manager. It provides facilities, equipment and
personnel to the Funds and is paid for such services by the Manager.
The Manager and the transfer agent are both wholly owned by American Century
Companies, Inc. (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.
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 19
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. As agent for the Funds and the Manager, the Distributor enters into
contracts with various banks, broker-dealers, insurance companies and other
financial intermediaries with respect to the sale of the Funds' shares and/or
the use of the Funds' shares in various financial services. The Manager (or an
affiliate) pays all expenses incurred in promoting sales of, and distributing
the Advisor Class and in securing such services out of the Rule 12b-1 fees
described in the section that follows.
SERVICE AND DISTRIBUTION FEES
Rule 12b-1 adopted by the SEC under the Investment Company Act permits
investment companies that adopt a written plan to pay certain expenses
associated with the distribution of their shares. Pursuant to that rule, the
Funds' Board of Trustees and the initial shareholder of the Funds' Advisor Class
shares have approved and adopted a Master Distribution and Shareholder Services
Plan (the "Plan"). Pursuant to the Plan, each Fund pays the Manager a
shareholder services fee and a distribution fee, each equal to 0.25% (for a
total of 0.50%) per annum of the average daily net assets of the shares of the
Fund's Advisor Class. The shareholder services fee is paid for the purpose of
paying the costs of securing certain shareholder and administrative services,
and the distribution fee is paid for the purpose of paying the costs of
providing various distribution services. All or a portion of such fees are paid
by the Manager to the banks, broker-dealers, insurance companies or other
financial intermediaries through which such shares are made available.
The Plan has been adopted and will be administered in accordance with the
requirements of Rule 12b-1 under the Investment Company Act. For additional
information about the Plan and its terms, see "Master Distribution and
Shareholder Services Plan" in the Statement of Additional Information. Fees paid
pursuant to the Plan may be paid for shareholder services and the maintenance of
accounts and therefore may constitute "service fees" for purposes of applicable
rules of the National Association of Securities Dealers.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
American Century Target Maturities Trust was organized as a Massachusetts
business trust on November 8, 1984. The Trust is an 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 Funds is
American Century Tower, 4500 Main Street, P. O. Box 419385, Kansas City,
Missouri 64141-6385. All inquiries may be made by mail to that address, or by
telephone to 1-800-345-3533 (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. The Funds do not issue
share certificates.
American Century offers two classes of each of the Funds offered by this
Prospectus: an Investor Class and an Advisor Class. The shares offered by this
Prospectus are Advisor Class shares.
The Investor Class is primarily made available to retail investors. This
other class has different fees, expenses, and/or minimum investment requirements
than the Advisor Class. The difference in the fee structures among the classes
is the result of their separate arrangements for shareholder and distribution
services and not the result of any difference in amounts charged by the Manager
for core investment advisory services. Accordingly, the core investment advisory
expenses do not vary by class. Different fees and expenses will affect
performance. For additional information concerning the Investor Class of shares,
call one of our Investor Services Representatives at 1-800-345-2021.
Except as described below, all classes of shares of a Fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class, and (d) each class
may have different exchange privileges.
Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable
20 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
to such share on all questions, except for those matters which must be voted on
separately by the series or class of shares affected. Matters affecting only one
series or class are voted upon only by that series or class.
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 Investment Company 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 represent ing 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 21
P.O. BOX 419385
KANSAS CITY, MISSOURI
64141-6385
INVESTOR SERVICES:
1-800-345-3533 OR 816-531-5575
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-345-1833 OR 816-444-3038
FAX: 816-340-4655
INTERNET: www.americancentury.com
[american century logo]
American
Century(reg. sm)
9708 [recycled logo]
SH-BKT-9213 Recycled
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[american century logo]
American
Century(reg.sm)
SEPTEMBER 2, 1997
BENHAM
GROUP(reg.tm)
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 2, 1997
AMERICAN CENTURY TARGET MATURITIES TRUST
This Statement is not a prospectus but should be read in conjunction with the
Funds' current Prospectus, dated September 2, 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 ........................................... 3
Predictability of Return .................................................... 4
Performance ................................................................. 6
Taxes ....................................................................... 7
About the Trust ............................................................. 8
Multiple Class Structure .................................................... 9
Trustees and Officers .......................................................10
Management ..................................................................12
Transfer and Administrative Services ........................................14
Distribution of Fund Shares .................................................15
Additional Purchase and Redemption Information ..............................15
Other Information ...........................................................16
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 over the value of the collateral, the Fund could suffer a loss. To
minimize the risk of default on securities loans, American Century Investment
Management, Inc. (the "Manager") adheres to the following guidelines prescribed
by the Board of Trustees governing lending of securities. These guidelines
strictly govern (1) the type and amount of collateral that must be received by
the Fund; (2) the circumstances under which additions to that collateral must be
made by borrowers; (3) the return received by the Fund on the loaned securities;
(4) the limitations on the percentage of Fund assets on loan; and (5) the credit
standards applied in evaluating potential borrowers of portfolio securities. In
addition, the guidelines require that the Fund have the option to terminate any
loan of a portfolio security at any time and set requirements for recovery of
securities from borrowers.
INVESTMENT RESTRICTIONS
The Funds' investment restrictions are set forth below. These investment
restrictions are fundamental and may not be changed without approval of "a
majority of the outstanding vote of shareholders" of a Fund, as determined in
accordance with the Investment Company Act of 1940 (the "Investment Company
Act").
AS A FUNDAMENTAL POLICY, EACH FUND SHALL NOT:
1) issue senior securities, except as permitted under the Investment Company
Act of 1940.
2) borrow money, except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 331/3% of the Fund's total assets (including the amount borrowed)
less liabilities (other than borrowings).
3) lend any security or make any other loan if, as a result, more than 33-1/3%
of the Fund's total assets would be lent to other parties, except, (i)
through the purchase of debt securities in accordance with its investment
objective, policies and limitations, or (ii) by engaging in repurchase
agreements with respect to portfolio securities.
4) purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments. This policy shall not prevent the Fund from
investment in securities or other instruments backed by real estate or
securities of companies that deal in real estate or are engaged in the real
estate business.
5) concentrate its investments in securities of issuers in a particular
industry (other than securities issued or guaranteed by the U.S. government
or any of its agencies or instrumentalities).
6) act as an underwriter of securities issued by others, except to the extent
that the Fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities.
7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; provided that this limitation
shall not prohibit the Fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities.
8) invest for purposes of exercising control over management.
In addition, the Funds are subject to the following additional investment
restrictions which are not fundamental and may be changed by the Board of
Trustees.
AS AN OPERATING POLICY, EACH FUND:
a) shall not purchase additional investment securities at any time during which
outstanding borrowings exceed 5% of the total assets of the Fund.
b) shall not purchase any security or enter into a repurchase agreement if, as
a result, more than 15% of its net assets would be invested in repurchase
agreements not entitling the holder to
2 AMERICAN CENTURY INVESTMENTS
payment of principal and interest within seven days and in securities that
are illiquid by virtue of legal or contractual restrictions on resale or the
absence of a readily available market.
c) shall not sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, and
provided that transaction in futures contracts and options are not deemed to
constitute selling securities short.
d) shall not purchase securities on margin, except that the Fund may obtain
such short-term credits as are necessary for the clearance of transactions,
and provided that margin payments in connection with futures contracts and
options on futures contracts shall not constitute purchasing securities on
margin.
For purposes of the investment restriction (5), relating to concentration, a
Fund shall not purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry, provided that (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government, any state, territory or
possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions and
repurchase agreements secured by such instruments; (b) wholly-owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents; (c)
utilities will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will each be considered a
separate industry; and (d) personal credit and business credit businesses will
be considered separate industries.
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 objectives, 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 efforts to obtain the 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 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
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 objectives and policies. The Funds' portfolio
turnover rates appear in the Financial Highlights section of the Prospectus.
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 p.m. Central time each day the Exchange
STATEMENT OF ADDITIONAL INFORMATION 3
is open for business. The Exchange has designated the following holiday closings
for 1997: New Year's Day (observed), Martin Luther King Jr. Day, 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.
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, and 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 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
business, 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
4 AMERICAN CENTURY INVESTMENTS
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 following table 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.
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 on the previous page 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.
STATEMENT OF ADDITIONAL INFORMATION 5
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 Funds' share prices 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%
- --------------------------------------------------------------------------------
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 during 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 total return
of 100% over ten years would produce an average annual return of 7.18%, which is
the steady annual rate that would equal 100% growth on a compounded basis in 10
years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that a Funds' 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.
6 AMERICAN CENTURY INVESTMENTS
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' performance 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 used for 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 historical
performances.
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, a Fund will not incur federal or state income taxes to the
extent that it distributes substantially all of its net investment income and
net realized capital gains (if any) 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.
STATEMENT OF ADDITIONAL INFORMATION 7
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. The Funds' distributions may also be
subject to state, local or foreign taxes. A prospective investor should consult
a tax advisor or state or local tax authorities to determine whether the Funds
are suitable investments.
ABOUT THE TRUST
American Century Target Maturities Trust (the "Trust"), formerly known as
Benham Target Maturities Trust, is a registered open-end management investment
company that was organized as a Massachusetts business trust on November 8,
1984. The Declaration of Trust permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest without
par value, which may be issued in series (or Funds). Shares issued are fully
paid and nonassessable and have no preemptive, conversion, or similar rights.
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
so that investors holding more than 50% of the Trust's outstanding shares may be
able to elect a Board of Trustees. The 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 their
series and to the net assets of such series upon its liquidation or dissolution
proportionate to his or her share ownership interest in the series.
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
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
FUND NAME AS OF JANUARY, 1997 FORMER FUND NAME
- ----------------------------------------------------------------------------------------------------------------
American Century--Benham Target Maturities Trust: 2000 Benham Target Maturities Trust 2000 Portfolio
American Century--Benham Target Maturities Trust: 2005 Benham Target Maturities Trust 2005 Portfolio
American Century--Benham Target Maturities Trust: 2010 Benham Target Maturities Trust 2010 Portfolio
American Century--Benham Target Maturities Trust: 2015 Benham Target Maturities Trust 2015 Portfolio
American Century--Benham Target Maturities Trust: 2020 Benham Target Maturities Trust 2020 Portfolio
American Century--Benham Target Maturities Trust: 2025 Benham Target Maturities Trust 2025 Portfolio
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
8 AMERICAN CENTURY INVESTMENTS
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 as a
result of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Trust is unable to meet its obligations.
CUSTODIAN BANKS: Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn,
New York 11245 and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri
64106, serve as custodians of the Funds' assets. Services provided by the
custodians include (i) settling portfolio purchases and sales, (ii) reporting
failed trades, (iii) identifying and collecting portfolio income, and (iv)
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 and provides
services including the audit of the annual financial statements.
For the fiscal year, which starts on October 1, 1997, the Trustees of the
Funds have selected Coopers & Lybrand LLP to serve as independent auditors of
the Funds. The address of Coopers & Lybrand LLP is City Center Square, 1100 Main
Street, Suite 900, Kansas City, Missouri 64105-2140.
MULTIPLE CLASS STRUCTURE
The funds' Board of Trustees has adopted a multiple class plan (the
"Multiclass Plan") pursuant to Rule 18f-3 adopted by the SEC. Pursuant to such
plan, the funds may issue up to three classes of funds: an Investor Class, an
Institutional Class and an Advisor Class. Not all funds offer all three classes.
The Investor Class is made available to investors directly by the investment
manager through its affiliated broker-dealer, American Century Investment
Services, Inc., for a single unified management fee, without any load or
commission. The Institutional and Advisor Classes are made available to
institutional shareholders or through financial intermediaries that do not
require the same level of shareholder and administrative services from the
Manager as Investor Class shareholders. As a result, the Manager is able to
charge these classes a lower unified management fee. In addition to the
management fee, however, the Advisor Class shares are subject to a Master
Distribution and Shareholder Services Plan. The plan has been adopted by the
funds' Board of Trustees and initial shareholder in accordance with Rule 12b-1
adopted by the SEC under the Investment Company Act.
RULE 12-B1
Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by the investment
company's Board of Trustees and approved by its shareholders. Pursuant to such
rule, the Board of Trustees and initial shareholder of the funds' Advisor Class
have approved and entered into a Master Distribution and Shareholder Services
Plan, with respect to the Advisor Class (the "Plan"). The Master Distribution
and Shareholder Services Plan is described below.
In adopting the Plan, the Board of Trustees [including a majority who are
not "interested persons" of the funds (as defined in the Investment Company Act)
, hereafter referred to as the "independent trustees"] determined that there was
a reasonable likelihood that the Plan would benefit the funds and the
shareholders of the affected class. Pursuant to Rule 12b-1, information with
respect to revenues and expenses under the Plan is presented to the Board of
Trustees quarterly for its consideration in connection with its deliberations as
to the continuance of the Plan. Continuance of the Plan must be approved by the
Board of Trustees (including a majority of the independent trustees) annually.
The Plan may be amended by a vote of the Board of Trustees (including a majority
of the independent trustees), except that the Plan may not be amended to
materially increase the amount to be spent for distribution without majority
approval of the shareholders of the affected class. The Plan terminates
automatically in the event of an assignment and may be terminated upon a vote of
a majority of the independent trustees
STATEMENT OF ADDITIONAL INFORMATION 9
or by vote of a majority of the outstanding voting securities of the affected
class.
All fees paid under the Plan will be made in accordance with Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers
(NASD).
MASTER DISTRIBUTION AND SHAREHOLDER
SERVICES PLAN
As described in the Prospectuses, the funds' Advisor Class of shares are
made available to participants in employer-sponsored retirement or savings plans
and to persons purchasing through financial intermediaries, such as banks,
broker-dealers and insurance companies. The Distributor enters into contracts
with various banks, broker-dealers, insurance companies and other financial
intermediaries with respect to the sale of the funds' shares and/or the use of
the funds' shares in various investment products or in connection with various
financial services.
Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for shareholders in
the Advisor Class. In addition to such services, the financial intermediaries
provide various distribution services.
To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
investment manager has reduced its management fee by 0.25% per annum with
respect to the Advisor Class shares and the funds' Board of Trustees has adopted
a Master Distribution and Shareholder Services Plan (the "Distribution Plan").
Pursuant to such Plan, the Advisor Class shares pay the Distributor a fee of
0.50% annually of the aggregate average daily assets of the funds' Advisor Class
shares, 0.25% of which is paid for Shareholder Services (as described above) and
0.25% of which is paid for distribution services.
Distribution services include any activity undertaken or expense incurred
that is primarily intended to result in the sale of Advisor Class shares, which
services may include but are not limited to, (a) the payment of sales
commission, ongoing commissions and other payments to brokers, dealers,
financial institutions or others who sell Advisor Class shares pursuant to
Selling Agreements; (b) compensation to registered representatives or other
employees of Distributor who engage in or support distribution of the funds'
Advisor Class shares; (c) compensation to, and expenses (including overhead and
telephone expenses) of the Distributor; (d) the printing of prospectuses,
statements of additional information and reports for other than existing
shareholders; (e) the preparation, printing and distribution of sales literature
and advertising materials provided to the funds' shareholders and prospective
shareholders; (f) receiving and answering correspondence from prospective
shareholders, including distributing prospectuses, statements of additional
information, and shareholder reports; (g) the providing of facilities to answer
questions from prospective investors about fund shares; (h) complying with
federal and state securities laws pertaining to the sale of fund shares; (i)
assisting investors in completing application forms and selecting dividend and
other account options; (j) the providing of other reasonable assistance in
connection with the distribution of fund shares; (k) the organizing and
conducting of sales seminars and payments in the form of transactional
compensation or promotional incentives; (l) profit on the foregoing; (m) the
payment of "service fees" for the provision of personal, continuing services to
investors, as contemplated by the Rules of Fair Practice of the NASD and (n)
such other distribution and services activities as the Manager determines may be
paid for by the funds pursuant to the terms of this Agreement and in accordance
with Rule 12b-1 of the Investment Company Act.
TRUSTEES AND OFFICERS
The Trust's activities are overseen by a Board of Trustees, including six
independent Trustees. The individuals listed, beginning in the next column,
whose names are marked by an asterisk (*) are "interested persons" of the Trust
(as defined in the Investment Company Act) by virtue of, among other
considerations, their affiliation with either the Trust; the Trust's investment
advisor, American Century Investment Management, Inc.; the Trust's agent for
transfer and administrative services, American
10 AMERICAN CENTURY INVESTMENTS
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. Each Trustee listed below serves as a Trustee or Director of other
funds advised by the Manager.
Unless otherwise noted, dates in parentheses indicate the dates 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 American Century Tower, 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 currently
the general partner of Discovery Ventures (1996), a venture capital firm. He is
also an independent Director of each of Commercial Metals Co. (1982), Sungard
Data Systems (1991) and Business Objects S/A (1994). Previously, he served as
Executive 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 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. (1994).
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 Chief Executive
Officer and Director of ACC; Chief Executive Officer and Director of 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); President, Chief
Operating Officer and General Counsel of ACC; Executive Vice President, Chief
Operating Officer and General Counsel of ACS and ACIS; Assistant Secretary of
ACC; Secretary of ACS and ACIS.
*DOUGLAS A. PAUL, Secretary (1988), Vice President (1990), and General
Counsel (1990); Vice President and Associate General Counsel, ACS.
*C. JEAN WADE, Controller (1996).
*MARYANNE ROEPKE, CPA, Chief Financial Officer and Treasurer (1995); Vice
President and Assistant Treasurer of ACS.
*JON ZINDEL, Tax Officer (1997); Director of Taxation (1996); Tax Manager,
Price Waterhouse LLP (1989).
STATEMENT OF ADDITIONAL INFORMATION 11
As of November 30, 1996, the Funds' Trustees and officers, 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
received for the Funds' fiscal year ended September 30, 1996, as well as the
compensation received for serving as a Director or Trustee of the other funds.
MANAGEMENT
Each Fund has an investment management agreement with the Manager dated
August 1, 1997. This agreement was approved by the shareholders of each of the
Funds on July 30, 1997.
For the services provided to the Funds, the Manager receives a monthly fee
based on a percentage of the average net assets of each Fund. The annual rate at
which this fee is assessed is determined monthly in a two-step process: First, a
fee rate schedule is applied to the assets of all of the funds in a fund's
investment category (Bond Funds) which are managed by the Manager (the
"Investment Category Fee"). Second, a separate fee rate schedule is applied to
the assets of all of the mutual funds managed by the Manager (the "Complex Fee")
. The Investment Category Fee and the Complex Fee are then added to determine
the unified management fee payable by the Fund to the Manager.
The schedule by which the Investment Category Fee is determined is as
follows:
Category Assets Fee Rate
- --------------------------------------------------------------------------------
First $1 billion 0.3100%
Next $1 billion 0.2580%
Next $3 billion 0.2280%
Next $5 billion 0.2080%
Next $15 billion 0.1950%
Next $25 billion 0.1930%
Thereafter 0.1925%
- --------------------------------------------------------------------------------
The Complex Fee Schedule (Investor Class) is as follows:
Complex Assets Fee Rate
- --------------------------------------------------------------------------------
First $2.5 billion 0.3100%
Next $7.5 billion 0.3000%
Next $15.0 billion 0.2985%
Next $25.0 billion 0.2970%
Next $50.0 billion 0.2960%
Next $100.0 billion 0.2950%
Next $100.0 billion 0.2940%
Next $200.0 billion 0.2930%
Next $250.0 billion 0.2920%
Next $500.0 billion 0.2910%
Thereafter 0.2900%
- --------------------------------------------------------------------------------
The Complex Fee schedule for the Institutional Class is lower by 0.2000% at
each graduated step. For example, if the Investor Class Complex Fee is 0.3000%
for the first $2 billion, the Institutional Class Complex Fee is 0.1000%
(0.3000% minus 0.2000%) for the first $2 billion. The Complex Fee schedule for
the Advisor Class is lower by 0.2500% at each graduated step.
On the first business day of each month, the Funds pay a management fee to
the Manager for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for the Fund by
the aggregate average daily closing value of a Fund's net assets during the
previous month by a fraction, the numerator of which is the number of days in
the previous month and the denominator of which is 365 (366 in leap years).
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by (1) the Funds'
Board of Trustees, or by the vote of a majority of outstanding votes (as defined
in the Investment Company Act) and (2) by the vote of a majority of the Trustees
of the Funds who are not parties to the agreement or interested persons of the
Manager, cast in person at a meeting called for the purpose of voting on such
approval.
12 AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
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 the American Century
Trustee* From The Fund of Fund Expenses Upon Retirement Family of Funds**
- --------------------------------------------------------------------------------------------------------------------------------
<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.
** Includes compensation paid by the 15 investment company members of the American Century family of funds.
*** Retired December, 1996.
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION 13
The management agreement provides that it may be terminated at any time
without payment of any penalty by the Funds' Board of Trustees, or by a vote of
a majority of the Funds' shareholders, on 60 days' written notice to the
Manager, and that it shall be automatically terminated if it is assigned.
The management agreement provides that the Manager shall not be liable to
the Funds or its shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties.
The management agreement also provides that the Manager and its officers,
trustees and employees may engage in other business, devote time and attention
to any other business whether of a similar or dissimilar nature, and render
services to others.
Certain investments may be appropriate for the Funds and also for other
clients advised by the Manager. Investment decisions for the Funds and other
clients are made with a view to achieving their respective investment objectives
after consideration of such factors as their current holdings, availability of
cash for investment, and the size of their investment generally. A particular
security may be bought or sold for only one client or series, or in different
amounts and at different times for more than one but less than all clients or
series. In addition, purchases or sales of the same security may be made for two
or more clients or series on the same date. Such transactions will be allocated
among clients in a manner believed by the Manager to be equitable to each. In
some cases this procedure could have an adverse effect on the price or amount of
the securities purchased or sold by a Fund.
The Manager may aggregate purchase and sale orders of the Funds with
purchase and sale orders of its other clients when the Manager believes that
such aggregation provides the best execution for the Funds. The Funds' Board of
Trustees has approved the policy of the Manager with respect to the aggregation
of portfolio transactions. Where portfolio transactions have been aggregated,
the Funds participate at the average share price for all transactions in that
security on a given day and share transaction costs on a pro rata basis. The
Manager will not aggregate portfolio transactions of the Funds unless it
believes such aggregation is consistent with its duty to seek best execution on
behalf of the Funds and the terms of the management agreement. The Manager
receives no additional compensation or remuneration as a result of such
aggregation.
In addition to managing the Funds, the Manager also acts as an investment
advisor to 12 institutional accounts and to the following registered investment
companies: American Century Mutual Funds, Inc., American Century World Mutual
Funds, Inc., American Century Premium Reserves, Inc., American Century Variable
Portfolios, Inc., American Century Capital Portfolios, Inc., American Century
Strategic Asset Allocations, Inc., American Century Municipal Trust, American
Century Government Income Trust, American Century Investment Trust, American
Century California Tax-Free and Municipal Funds, American Century Quantitative
Equity Funds and American Century International Bond Funds.
Prior to August 1, 1997, Benham Management Corporation served as the
investment advisor to the Funds. Benham Management Corporation is, like the
Manager, wholly-owned by ACC.
Investment advisory fees paid by each Fund for the fiscal years ended
September 30, 1996, 1995, and 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, acts as transfer agent and dividend paying agent for the Funds.
It provides physical facilities, including computer hardware and software and
personnel, for the day-to-day administration of the Funds and of the Manager.
The Manager pays American Century Services Corporation for such services.
14 AMERICAN CENTURY INVESTMENTS
Prior to August 1, 1997, the Funds paid American Century Services
Corporation directly for its services as transfer agent and administrative
services agent.
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."
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.
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 the Manager's
opinion, such rejection or limitation is in the Trust's or series' best
interest. As of November 30, 1996, to the Funds' knowledge, no shareholder was
the record holder or beneficial owner of 5% or more of a Fund's total
outstanding shares except for those listed below.
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%
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION 15
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.
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 American Century-Benham 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
For further information, please 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.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will eliminate duplicate copies of most
financial reports and prospectuses to most households and deliver account
statements to most households in a single envelope, even if they have more than
one account. If additional copies of financial reports and prospectuses or
separate mailing of account statements is desired, please call us.
16 AMERICAN CENTURY INVESTMENTS
P.O. Box 419200
Kansas City, Missouri
64141-6200
Investor Services:
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 816-444-3485
Fax: 816-340-7962
Internet: www.americancentury.com
[american century logo]
American
Century(reg.sm)
9709 [recycled logo]
SH-BKT-9214 Recycled
<PAGE>
AMERICAN CENTURY TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 27
1940 Act Amendment No. 29
- --------------------------------------------------------------------------------
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) (a) 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).
(b) Amendment to the Declaration of Trust dated October 21, 1996,
is included herein.
(c) Amendment to the Declaration of Trust dated August 1, 1997,
is included herein.
(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) (a) Investor Class Investment Management Agreement between
American Century Target Maturities Trust and American Century
Investment Management, Inc., dated August 1, 1997, is
incorporated herein by reference to Exhibit 5 of Post-Effective
Amendment #33 to the Registration Statement of American Century
Government Income Trust, filed July 31, 1997 (Accession
#773674-97-000014).
(b) Advisor Class Investment Management Agreement between
American Century Target Maturities Trust, American Century
Government Income Trust, American Century International Bond
Funds, and American Century Quantitative Equity Funds, dated
August 1, 1997, is included herein.
(6) Distribution Agreement between American Century Target Maturities
Trust and American Century Investment Services, Inc., dated
August 1, 1997, is incorporated herein by reference to Exhibit 6
of Post-Effective Amendment #33 to the Registration Statement of
American Century Government Income Trust, filed July 31, 1997
(Accession #773674-97-000014).
(7) Not applicable.
(8) Custodian Agreement between American Century Investments
(including American Century Target Maturities Trust), and
The Chase Manhattan Bank, dated August 9, 1996, is incorporated
herein by reference to Exhibit 8 of Post-Effective Amendment #31
to the Registration Statement for American Century Government
Income Trust, filed February 7, 1997 (Accession
#773674-97-000002).
(9) Transfer Agency Agreement between American Century Target
Maturities Trust and American Century Services Corporation, dated
August 1, 1997, is incorporated herein by reference to Exhibit 9
of Post-Effective Amendment #33 to the Registration Statement for
American Century Government Income Trust, filed on July 31, 1997
(Accession #773674-97-000014).
(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
incorporated herein by reference to Post-Effective Amendment #26
to the Registration Statement, filed on December 24, 1996
(Accession # 0000757928-96-000013).
(12) Not applicable.
(13) Not applicable.
(14) (a)American Century 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) American Century 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) Master Distribution and Shareholder Services Plan of American
Century Government Income Trust, American Century International
Bond Fund, American Century Target Maturities Trust and American
Century Quantitative Equity Funds (Advisor Class) dated August 1,
1997 is included herein.
(16) Schedule for computation of each performance quotation provided
in response to Item 22 is incorporated herein by reference to
Post-Effective Amendment #26 to the Registration Statement, filed
on December 24, 1996 (Accession # 0000757928-96-000013).
(17) Power of Attorney dated February 28, 1997 is included herein.
(18) Multiple Class Plan of American Century California Tax-Free and
Municipal Funds, American Century Government Income Trust,
American Century International Bond Funds, American Century
Investment Trust, American Century Municipal Trust, American
Century Target Maturities Trust and American Century Quantitative
Equity Funds dated August 1, 1997 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 July 31, 1997, each Portfolio of American Century Target Maturities Trust
had the following number of shareholders of record:
Target 2000 ........................10,701
Target 2005 ........................11,717
Target 2010 ........................ 6,320
Target 2015 ........................ 6,094
Target 2020 ........................17,443
Target 2025 ........................ 1,723
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.
American Century Investment Management, Inc., the investment manager to each of
the Registrant's Funds, is engaged in the business of managing investments for
deferred compensation plans and other institutional investors.
Item 29. Principal Underwriters.
The Registrant's distribution agent, American Century Investment Services, Inc.,
is distribution agent to American Century Capital Preservation Fund, Inc.,
American Century Capital Preservation Fund II, Inc., American Century California
Tax-Free and Municipal Funds, American Century Government Income Trust, American
Century Municipal Trust, American Century Target Maturities Trust, American
Century Quantitative Equity Funds, American Century International Bond Funds,
American Century Investment Trust, American Century Manager Funds, American
Century Variable Portfolios, Inc., American Century Capital Portfolios, Inc.,
American Century Mutual Funds, Inc., American Century Premium Reserves, Inc.,
American Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. The information required with respect to each director,
officer or partner of American Century Investment Services, Inc. is incorporated
herein by reference to American Century Investment Services, Inc. Form B-D filed
on November 21, 1985 (SEC File No. 8-35220; Firm CRD No. 17437).
Item 30. Location of Accounts and Records.
American Century Investment Management, Inc., the Registrant and its agent for
transfer and administrative services, American Century Services Corporation,
maintain their principal office at 4500 Main St., Kansas City, MO 64111.
American Century Services Corporation 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 annual report to shareholders, upon
request and without charge.
<PAGE>
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. 27/Amendment No. 29 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Mountain View, and State of
California, on the 27th day of August, 1997. I hereby certify that this
Amendment meets the requirements for immediate effectiveness pursuant to Rule
485(b).
AMERICAN CENTURY TARGET MATURITIES TRUST
By: /s/ Douglas A. Paul
Douglas A. Paul
Secretary, Vice President and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 27/Amendment No. 29 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, August 27, 1997
- --------------------------------- President, and
James M. Benham Chief Executive Officer
* Trustee August 27, 1997
- ---------------------------------
Albert A. Eisenstat
* Trustee August 27, 1997
- ---------------------------------
Ronald J. Gilson
* Trustee August 27, 1997
- ---------------------------------
Myron S. Scholes
* Trustee August 27, 1997
- ---------------------------------
Kenneth E. Scott
* Trustee August 27, 1997
- ---------------------------------
Isaac Stein
* Trustee August 27, 1997
- ---------------------------------
James E. Stowers III
* Trustee August 27, 1997
- ---------------------------------
Jeanne D. Wohlers
* Chief Financial Officer, Treasurer August 27, 1997
- ---------------------------------
Maryanne Roepke
</TABLE>
/s/ Douglas A. Paul
*by Douglas A. Paul, Attorney in Fact (pursuant to a Power of Attorney dated
February 28, 1997).
EXHIBIT DESCRIPTION
EX-99.B1a 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.B1b Amendment to the Declaration of Trust dated October 21, 1996, is
included herein.
EX-99.B1c Amendment to the Declaration of Trust dated August 1, 1997, is
included herein.
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.B5a Investor Class Investment Management Agreement between American
Century Target Maturities Trust and American Century Investment
Management, Inc., dated August 1, 1997, is incorporated herein by
reference to Exhibit 5 of Post-Effective Amendment #33 to the
Registration Statement of American Century Government Income Trust,
filed July 31, 1997 (Accession #773674-97-000014).
EX-99.B5b Advisor Class Investment Management Agreement between American
Century Target Maturities Trust, American Century Government Income
Trust, American Century International Bond Funds, and American
Century Quantitative Equity Funds, dated August 1, 1997, is included
herein.
EX-99.B6 Distribution Agreement between American Century Target Maturities
Trust and American Century Investment Services, Inc., dated August
1, 1997, is incorporated herein by reference to Exhibit 6 of
Post-Effective Amendment #33 to the Registration Statement of
American Century Government Income Trust, filed July 31, 1997
(Accession #773674-97-000014).
EX-99.B8 Custodian Agreement between American Century Investments (including
American Century Target Maturities Trust), and The Chase Manhattan
Bank, dated August 9, 1996, is incorporated herein by reference to
Exhibit 8 of Post-Effective Amendment #31 to the Registration
Statement for American Century Government Income Trust, filed
February 7, 1997 (Accession #773674-97-000002).
EX-99.B9 Transfer Agency Agreement between American Century Target Maturities
Trust and American Century Services Corporation, dated August 1,
1997, is incorporated herein by reference to Exhibit 9 of
Post-Effective Amendment #33 to the Registration Statement for
American Century Government Income Trust, filed on July 31, 1997
(Accession #773674-97-000014).
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
incorporated herein by reference to Post-Effective Amendment #26 to
the Registration Statement, filed on December 24, 1996 (Accession #
0000757928-96-000013).
EX-99.B14a American Century 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.
EX-99.B14b American Century 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.B15 Master Distribution and Shareholder Services Plan of American
Century Government Income Trust, American Century International Bond
Fund, American Century Target Maturities Trust and American Century
Quantitative Equity Funds (Advisor Class) dated August 1, 1997 is
included herein.
EX-99.B16 Schedule for computation of each performance quotation provided in
response to Item 22 is incorporated herein by reference to
Post-Effective Amendment #26 to the Registration Statement, filed on
December 24, 1996 (Accession # 0000757928-96-000013).
EX-99.B17 Power of Attorney dated February 28, 1997 is included herein.
EX-99.B18 Multiple Class Plan of American Century California Tax-Free and
Municipal Funds, American Century Government Income Trust, American
Century International Bond Funds, American Century Investment Trust,
American Century Municipal Trust, American Century Target Maturities
Trust and American Century Quantitative Equity Funds dated August 1,
1997 is included herein.
EX-27.5.1 FDS - Target 2000
EX-27.5.2 FDS - Target 2005
EX-27.5.3 FDS - Target 2010
EX-27.5.4 FDS - Target 2015
EX-27.5.5 FDS - Target 2020
EX-27.5.6 FDS - Target 2025
AMENDMENT
TO THE
DECLARATION OF TRUST
OF
BENHAM TARGET MATURITIES TRUST
Effective October 21, 1996
WHEREAS, Section 1 of Article I of the Declaration of Trust provides
that the Trustees may designate a new name for the Trust, or any Series, to be
effective upon execution by a majority of the Trustees of an instrument setting
forth the new names;
WHEREAS, the Trustees have determined that it is appropriate and in the
interests of the Trust to change the name of the Trust and its Series as set
forth below;
RESOLVED, that the Trust shall henceforth be known as the "American
Century Target Maturities Trust";
RESOLVED FURTHER, that the existing Series be renamed as follows (new
language appears in boldface type, deleted language is struck through):
<TABLE>
Former Name New Name
- ------------------------------------------------------------ --------------------------------------------------------
- ------------------------------------------------------------ --------------------------------------------------------
<S> <C>
Benham Target Maturities Trust: 2000 Portfolio American Century - Benham Target Maturities
Trust: 2000
- ------------------------------------------------------------ --------------------------------------------------------
- ------------------------------------------------------------ --------------------------------------------------------
Benham Target Maturities Trust: 2005 Portfolio American Century - Benham Target Maturities
Trust: 2005
- ------------------------------------------------------------ --------------------------------------------------------
- ------------------------------------------------------------ --------------------------------------------------------
Benham Target Maturities Trust: 2010 Portfolio American Century - Benham Target Maturities
Trust: 2010
- ------------------------------------------------------------ --------------------------------------------------------
- ------------------------------------------------------------ --------------------------------------------------------
Benham Target Maturities Trust: 2015 Portfolio American Century - Benham Target Maturities
Trust: 2015
- ------------------------------------------------------------ --------------------------------------------------------
- ------------------------------------------------------------ --------------------------------------------------------
Benham Target Maturities Trust: 2020 Portfolio American Century - Benham Target Maturities
Trust: 2020
- ------------------------------------------------------------ --------------------------------------------------------
- ------------------------------------------------------------ --------------------------------------------------------
Benham Target Maturities Trust: 2025 Portfolio American Century - Benham Target Maturities
Trust: 2025
- ------------------------------------------------------------ --------------------------------------------------------
</TABLE>
<TABLE>
Trustees of the Benham Target Maturities Trust
<S> <C> <C> <C>
/s/ James M. Benham 10/21/96 /s/ Ezra Solomon 10/21/96
- ---------------------------------------- ------------- ---------------------------------------- --------
James M. Benham* Date Ezra Solomon* Date
/s/ Albert A. Eisenstat 10/21/96 /s/ Isaac Stein 10/21/96
- ---------------------------------------- ------------- ---------------------------------------- --------
Albert A. Eisenstat* Date Isaac Stein* Date
/s/ Ronald J. Gilson 10/21/96 /s/ James E. Stowers III 10/21/96
- ---------------------------------------- ------------- ---------------------------------------- --------
Ronald J. Gilson* Date James E. Stowers III* Date
/s/ Myron S. Scholes 10/21/96 /s/ Jeanne D. Wohlers 10/21/96
- ---------------------------------------- ------------- ---------------------------------------- --------
Myron S. Scholes* Date Jeanne D. Wohlers* Date
/s/ Kenneth E. Scott 10/21/96
- ---------------------------------------- --------
Kenneth E. Scott* Date
*By: Date: October 21, 1996
/s/Douglas A. Paul
Douglas A. Paul, Esq.
Pursuant to Power of Attorney dated March 4, 1996
</TABLE>
AMENDMENT NO. 2
TO THE
DECLARATION OF TRUST
OF
AMERICAN CENTURY TARGET MATURITIES TRUST
Effective August 1, 1997
WHEREAS, Section 5 of Article III of the Declaration of Trust provides
that the Trustees may modify provisions relating to the shares of the various
series of the Trust;
WHEREAS, the Trustees have adopted a Multiple Class Plan dated August
1, 1997 on behalf of the Trust, which authorizes the issuance of additional
classes of shares as indicated in this Amendment No. 2;
RESOLVED, that the Declaration of Trust is hereby amended as follows:
1. The following subsection is added to Article I, Subsection 2:
(k). "Class" shall have the meaning prescribed in the Multiple Class
Plan dated August 1, 1997 as amended from time to time (the "Multiple Class
Plan").
2. Article III, Section 6 is amended to read as follows:
Section 6. Establishment and Designation of Series. The establishment
and designation of any Series of Shares shall be effective upon resolution by a
majority of the then Trustees, setting forth such establishment and designation
and the relative rights and preferences of such Series, or as otherwise provided
in such resolution. Such establishment and designation shall be set forth in an
amendment to this Declaration of Trust by execution of a new Schedule A to this
Declaration of Trust.
Shares of each Series established pursuant to this Section 6, unless
otherwise provided in the resolution establishing such Series or as modified by
the Multiple Class Plan, shall have the following rights and preferences:
3. Article III, Section 8 is deleted.
<TABLE>
Trustees of the American Century Target Maturities Trust
<S> <C> <C> <C>
/s/ James M. Benham 8/1/97 /s/ Kenneth E. Scott 8/1/97
- ---------------------------------------- ------------- ---------------------------------------- ------
James M. Benham* Date Kenneth E. Scott* Date
/s/ Albert A. Eisenstat 8/1/97 /s/ Isaac Stein 8/1/97
- ---------------------------------------- ------------- ---------------------------------------- ------
Albert A. Eisenstat* Date Isaac Stein* Date
/s/ Ronald J. Gilson 8/1/97 /s/ James E. Stowers III 8/1/97
- ---------------------------------------- ------------- ---------------------------------------- ------
Ronald J. Gilson* Date James E. Stowers III* Date
/s/ Myron S. Scholes 8/1/97 /s/ Jeanne D. Wohlers 8/1/97
- ---------------------------------------- ------------- ---------------------------------------- ------
Myron S. Scholes* Date Jeanne D. Wohlers* Date
*By: /s/Douglas A. Paul Date: August 1, 1997
Douglas A. Paul, Esq.
Pursuant to Power of Attorney dated March 4, 1996
</TABLE>
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
AMERICAN CENTURY TARGET MATURITIES TRUST
Schedule A
Pursuant to Article III, Section 6, the Trustess hereby establish and designate
the following Series as Series of the Trust (and the Classes thereof) with the
relative rights and preferences as described in Section 6:
<TABLE>
- ------------------------------------------------------------------------------------ ------------ -------------------
Date of
<S> <C> <C>
Series Class Establishment
- ------------------------------------------------------------------------------------ ------------ -------------------
- ------------------------------------------------------------------------------------ ------------ -------------------
American Century--Benham Target Maturities Trust: 2000 Investor 3/25/1985
Advisor 8/1/1997
- ------------------------------------------------------------------------------------ ------------ -------------------
American Century--Benham Target Maturities Trust: 2005 Investor 3/25/1985
Advisor 8/1/1997
- ------------------------------------------------------------------------------------ ------------ -------------------
American Century--Benham Target Maturities Trust: 2010 Investor 3/25/1985
Advisor 8/1/1997
- ------------------------------------------------------------------------------------ ------------ -------------------
American Century--Benham Target Maturities Trust: 2015 Investor 9/1/1986
Advisor 8/1/1997
- ------------------------------------------------------------------------------------ ------------ -------------------
American Century--Benham Target Maturities Trust: 2020 Investor 12/29/1989
Advisor 8/1/1997
- ------------------------------------------------------------------------------------ ------------ -------------------
American Century--Benham Target Maturities Trust: 2025 Investor 2/16/1996
Advisor 8/1/1997
- ------------------------------------------------------------------------------------ ------------ -------------------
</TABLE>
This Schedule A shall supersede any previously adopted Schedule A to the
Declaration of Trust.
<TABLE>
Trustees of the American Century Target Maturities Trust
<S> <C> <C> <C>
/s/ James M. Benham 8/1/97 /s/ Kenneth E. Scott 8/1/97
- ---------------------------------------- ------------- ---------------------------------------- ------
James M. Benham* Date Kenneth E. Scott* Date
/s/ Albert A. Eisenstat 8/1/97 /s/ Isaac Stein 8/1/97
- ---------------------------------------- ------------- ---------------------------------------- ------
Albert A. Eisenstat* Date Isaac Stein* Date
/s/ Ronald J. Gilson 8/1/97 /s/ James E. Stowers III 8/1/97
- ---------------------------------------- ------------- ---------------------------------------- ------
Ronald J. Gilson* Date James E. Stowers III* Date
/s/ Myron S. Scholes 8/1/97 /s/ Jeanne D. Wohlers 8/1/97
- ---------------------------------------- ------------- ---------------------------------------- ------
Myron S. Scholes* Date Jeanne D. Wohlers* Date
*By: /s/Douglas A. Paul Date: August 1, 1997
Douglas A. Paul, Esq.
Pursuant to Power of Attorney dated March 4, 1996
</TABLE>
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
MANAGEMENT AGREEMENT
Advisor Class
This MANAGEMENT AGREEMENT is made and entered into by and between the
registered investment companies listed on Exhibit A to this Agreement (the
"Companies"), as of the dates noted on such Exhibit A, and American Century
Investment Management, Inc., a Delaware corporation (the "Investment Manager").
WHEREAS, the Companies have adopted a Multiple Class Plan dated as of
August 1, 1997, (as the same may be amended from time to time, the "Multiple
Class Plan"), pursuant to Rule 18f-3 of the Investment Company Act of 1940, as
amended (the "Investment Company Act"); and
WHEREAS, the Multiple Class Plan establishes three classes of shares of
certain series of shares of the Companies: the Investor Class, the Institutional
Class and the Advisor Class; and
WHEREAS, the sole class of shares issued by each series of shares of
the Companies prior to the adoption of the Multiple Class Plan has been
designated as the Investor Class, the investment management services for which
are provided by the Investment Manager pursuant to that certain Management
Agreement dated as of August 1, 1997 and its predecessors; and
IN CONSIDERATION of the mutual promises and agreements herein
contained, the parties agree as follows:
1. Investment Management Services. The Investment Manager shall supervise the
investments of the Advisor Class of each series of shares of the Companies
contemplated as of the date hereof, and the Advisor Class of such
subsequent series of shares as the Companies shall select the Investment
Manager to manage. In such capacity, the Investment Manager shall maintain
a continuous investment program for the Advisor Class of each such series,
determine what securities shall be purchased or sold by each series, secure
and evaluate such information as it deems proper and take whatever action
is necessary or convenient to perform its functions, including the placing
of purchase and sale orders. In performing its duties hereunder, the
Investment Manager will manage the portfolio of all classes of a particular
series as a single portfolio.
2. Compliance With Laws. All functions undertaken by the Investment Manager
hereunder shall at all times conform to, and be in accordance with, any
requirements imposed by:
(a) the Investment Company Act and any rules and regulations promulgated
thereunder;
(b) any other applicable provisions of law;
(c) the Declaration of Trust or Articles of Incorporation applicable to
each of the Companies as amended from time to time;
(d) the By-Laws of the Companies as amended from time to time; and
(e) The Multiple Class Plan; and
(f) the registration statement of the Companies, as amended from time to
time, filed under the Securities Act of 1933 and the Investment
Company Act.
3. Board Supervision. All of the functions undertaken by the Investment
Manager hereunder shall at all times be subject to the direction of the
Board of Trustees or Board of Directors (collectively, the "Board of
Directors") of the Companies, its executive committee, or any committee or
officers of the Companies acting under the authority of the Board of
Directors.
4. Payment Of Expenses. The Investment Manager will pay all of the expenses of
the Advisor Class of each series of the Companies' shares that it shall
manage, other than interest, taxes, brokerage commissions, portfolio
insurance, extraordinary expenses and the fees and expenses of those
Directors who are not "interested persons" as defined in 1940 Act
(hereinafter referred to as the "Independent Directors") (including counsel
fees) and expenses incurred in connection with the provision of shareholder
services and distribution services under the Master Distribution and
Shareholder Services Plan dated as of August 1, 1997. The Investment
Manager will provide the Companies with all physical facilities and
personnel required to carry on the business of the Advisor Class of each
series that the Investment Manager shall manage, including but not limited
to office space, office furniture, fixtures and equipment, office supplies,
computer hardware and software and salaried and hourly paid personnel. The
Investment Manager may at its expense employ others to provide all or any
part of such facilities and personnel.
5. Account Fees. The Board of Directors may impose fees for various account
services, proceeds of which may be remitted to the appropriate Fund or the
Investment Manager at the discretion of the Board. At least 60 days' prior
written notice of the intent to impose such fee must be given to the
shareholders of the affected series.
6. Management Fees.
(a) In consideration of the services provided by the Investment Manager,
the Advisor Class of each series of shares of the Companies managed by
the Investment Manager shall pay to the Investment Manager a per annum
management fee (hereinafter, the "Applicable Fee"). The calculation of
the Applicable Fee for the Advisor Class of a series is performed as
follows:
(i) Each series is assigned to one of three categories based on its
overall investment objective ("Investment Category"). The
Investment Category assignments appear in Exhibit B to this
Agreement.
(ii) Each series is assigned a fee schedule within its Investment
Category in Exhibit C to this Agreement. The Investment Category
assets managed by the Investment Manager determines the first
component of a series' fee. This fee is referred to as the
"Investment Category Fee". The determination of the Investment
Category assets is as follows:
a) Money Market Fund Category. The assets which are used to
determine the fee for this Investment Category is the sum of
the assets of all of the open-end investment company series
which invest primarily in debt securities, are subject to
Rule 2a-7 under the 1940 Act, managed by the Investment
Manager and distributed to the public by American Century
Investment Services, Inc.
b) Bond Fund Category. The assets which are used to determine
the fee for this Investment Category is the sum the assets
of all of the open-end investment company series which
invest primarily in debt securities, are not subject to Rule
2a-7 under the 1940 Act, are managed by the Investment
Manager and are distributed to the public by American
Century Investment Services, Inc.
c) Equity Fund Category. The assets which are used to determine
the fee for this Investment Category is the sum the assets
of all of the open-end investment company series which
invest primarily in equity securities, are managed by the
Investment Manager and are distributed to the public by
American Century Investment Services, Inc.
(iii)A fee which is based on the total assets in all of the Investment
Categories is determined by the schedule which appears in Exhibit
D. This fee is referred to as the series' "Complex Fee".
(iv) The Applicable Fee for a series is the sum of the Investment
Category Fee and the Complex Fee.
(v) The assets which are used to compute the Applicable Fee shall be
the assets of all of the open-end investment companies managed by
the Investment Manager. Any exceptions to this requirement shall
be approved by the Board of Directors of the Companies.
(b) On the first business day of each month, the Advisor Class of each
series of shares shall pay the management fee at the rate specified by
subparagraph (a) of this paragraph 6 to the Investment Manager for the
previous month. The fee for the previous month shall be calculated by
multiplying the Applicable Fee for such series by the aggregate
average daily closing value of the series' net assets during the
previous month, and further multiplying that product by a fraction,
the numerator of which shall be the number of days in the previous
month, and the denominator of which shall be 365 (366 in leap years).
(c) In the event that the Board of Directors of a Company shall determine
to issue an Advisor Class of any additional series of shares for which
it is proposed that the Investment Manager serve as investment
manager, the Company and the Investment Manager shall enter into an
Addendum to this Agreement setting forth the name of the series, the
Applicable Fee and such other terms and conditions as are applicable
to the management of such series of shares.
7. Continuation Of Agreement. This Agreement shall continue in effect, unless
sooner terminated as hereinafter provided, for a period of two years from
the execution hereof, and for as long thereafter as its continuance is
specifically approved, as to each series of the Companies, at least
annually (i) by the Board of Directors of the Companies or by the vote of a
majority of the outstanding Advisor Class voting securities of the
Companies, and (ii) by the vote of a majority of the Directors of the
Companies, who are not parties to the agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of
voting on such approval.
8. Termination. This Agreement may be terminated, with respect to any series,
by the Investment Manager at any time without penalty upon giving the
appropriate Company 60 days' written notice, and may be terminated, with
respect to any series, at any time without penalty by the Board of
Directors of a Company or by vote of a majority of the outstanding Advisor
Class voting securities of such series on 60 days' written notice to the
Investment Manager.
9. Effect Of Assignment. This Agreement shall automatically terminate in the
event of assignment by the Investment Manager, the term "assignment" for
this purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
10. Other Activities. Nothing herein shall be deemed to limit or restrict the
right of the Investment Manager, or the right of any of its officers,
directors or employees (who may also be a trustee, officer or employee of a
Company), to engage in any other business or to devote time and attention
to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any
other corporation, firm, individual or association.
11. Standard Of Care. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or duties hereunder on
the part of the Investment Manager, it, as an inducement to it to enter
into this Agreement, shall not be subject to liability to the Companies or
to any shareholder of the Companies for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
12. Separate Agreement. The parties hereto acknowledge that certain provisions
of the 1940 Act, in effect, treat each series of shares of a registered
investment company as a separate investment company. Accordingly, the
parties hereto hereby acknowledge and agree that, to the extent deemed
appropriate and consistent with the 1940 Act, this Agreement shall be
deemed to constitute a separate agreement between the Investment Manager
and each series of shares of the Companies managed by the Investment
Manager.
13. Use of the Names "American Century" and "Benham." The name "American
Century" and all rights to the use of the names "American Century" and
"Benham" are the exclusive property of American Century Services
Corporation ("ACSC"), an affiliate of the Investment Manager. ACSC has
consented to, and granted a non-exclusive license for, the use by the
Companies and their respective series of the names "American Century" and
"Benham" in the name of the Companies and any series of shares thereof.
Such consent and non-exclusive license may be revoked by ACSC in its
discretion if ACSC, the Investment Manager, or a subsidiary or affiliate of
either of them is not employed as the investment manager of each series of
shares of the Companies. In the event of such revocation, the Companies and
each series of shares thereof using the name "American Century" or "Benham"
shall cease using the name "American Century" or "Benham", unless otherwise
consented to by ACSC or any successor to its interest in such names.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
indicated on Exhibit A.
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
Attest: AMERICAN CENTURY TARGET MATURITIES TRUST
/*/Douglas A. Paul /*/James M. Benham
Douglas A. Paul James M. Benham
Secretary President and Chief Executive Officer
Attest: AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
/*/William M. Lyons /*/James E. Stowers III
William M. Lyons James E. Stowers III
Secretary President and Chief Executive Officer
<PAGE>
<TABLE>
<CAPTION>
Exhibit A
Registered Investment Companies Subject to Management Agreement
- --------------------------------------------------------------------------------- ----------------------------------
Registered Investment Company and Advisor Class Funds Date
- --------------------------------------------------------------------------------- ----------------------------------
<S> <C>
American Century Government Income Trust
Benham GNMA Fund August 1, 1997
Benham Government Agency Money Market Fund August 1, 1997
Benham Intermediate-Term Treasury Fund August 1, 1997
Benham Long-Term Treasury Fund August 1, 1997
Benham Short-Term Government Fund August 1, 1997
Benham Short-Term Treasury Fund August 1, 1997
American Century International Bond Funds
Benham International Bond Fund August 1, 1997
American Century Quantitative Equity Funds
American Century Equity Growth Fund August 1, 1997
American Century Global Gold Fund August 1, 1997
American Century Global Natural Resources Fund August 1, 1997
American Century Income & Growth Fund August 1, 1997
American Century Utilities Fund August 1, 1997
American Century Target Maturities Trust
Benham Target Maturities Trust: 2000 August 1, 1997
Benham Target Maturities Trust: 2005 August 1, 1997
Benham Target Maturities Trust: 2010 August 1, 1997
Benham Target Maturities Trust: 2015 August 1, 1997
Benham Target Maturities Trust: 2020 August 1, 1997
Benham Target Maturities Trust: 2025 August 1, 1997
- --------------------------------------------------------------------------------- ----------------------------------
By executing this Exhibit A, each Fund executes the Management Agreement to
which it is attached and all of its Exhibits and amendments as of the date
specified above.
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
AMERICAN CENTURY TARGET MATURITIES TRUST
/*/James E. Stowers III /*/James M. Benham
James E. Stowers III James M. Benham
President and Chief Executive Officer President and Chief Executive Officer
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit B
Series Investment Categories
- ----------------------------------------- --------------------------------------------------------------------------
Investment Category Series
- ----------------------------------------- --------------------------------------------------------------------------
<S> <C>
Money Market Funds Benham Government Agency Money Market Fund
Bond Funds Benham GNMA Fund
Benham Intermediate-Term Treasury Fund
Benham International Bond Fund
Benham Long-Term Treasury Fund
Benham Short-Term Government Fund
Benham Short-Term Treasury Fund
Benham Target Maturities Trust: 2000
Benham Target Maturities Trust: 2005
Benham Target Maturities Trust: 2010
Benham Target Maturities Trust: 2015
Benham Target Maturities Trust: 2020
Benham Target Maturities Trust: 2025
Equity Funds American Century Equity Growth Fund
American Century Global Gold Fund
American Century Global Natural Resources Fund
American Century Income & Growth Fund
American Century Utilities Fund
- ----------------------------------------- --------------------------------------------------------------------------
Dated: August 1, 1997
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
AMERICAN CENTURY TARGET MATURITIES TRUST
As executed on behalf of the above in As executed on behalf of the above in
Exhibit A by Exhibit A by
James E. Stowers III James M. Benham
President and Chief Executive Officer President and Chief Executive Officer
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit C
Investment Category Fee Schedules: Money Market Funds
Schedule 1
------------------------------------------------------------------
CATEGORY ASSETS FEE RATE Schedule 1 Funds:
<S> <C> <C>
First $1 billion 0.2500% Benham Government Agency Money Market Fund
Next $1 billion 0.2070% ------------------------------------------------------------------
Next $3 billion 0.1660%
Next $5 billion 0.1490%
Next $15 billion 0.1380%
Next $25 billion 0.1375%
Thereafter 0.1370%
Schedule 2
------------------------------------------------------------------
CATEGORY ASSETS FEE RATE Schedule 2 Funds:
First $1 billion 0.2700% NONE
Next $1 billion 0.2270% ------------------------------------------------------------------
Next $3 billion 0.1860%
Next $5 billion 0.1690%
Next $15 billion 0.1580%
Next $25 billion 0.1575%
Thereafter 0.1570%
Schedule 3
------------------------------------------------------------------
CATEGORY ASSETS FEE RATE Schedule 3 Funds:
First $1 billion 0.3700% NONE
Next $1 billion 0.3270% ------------------------------------------------------------------
Next $3 billion 0.2860%
Next $5 billion 0.2690%
Next $15 billion 0.2580%
Next $25 billion 0.2575%
Thereafter 0.2570%
<PAGE>
Category Fee Schedules: Bond Funds
Schedule 1
------------------------------------------------------------------
CATEGORY ASSETS FEE RATE Schedule 1 Funds:
First $1 billion 0.2800% Benham Short-Term Treasury Fund
Next $1 billion 0.2280% Benham Intermediate-Term Treasury Fund
Next $3 billion 0.1980% Benham Long-Term Treasury Fund
Next $5 billion 0.1780% ------------------------------------------------------------------
Next $15 billion 0.1650%
Next $25 billion 0.1630%
Thereafter 0.1625%
Schedule 2
------------------------------------------------------------------
CATEGORY ASSETS FEE RATE Schedule 2 Funds:
First $1 billion 0.3100% NONE
Next $1 billion 0.2580% ------------------------------------------------------------------
Next $3 billion 0.2280%
Next $5 billion 0.2080%
Next $15 billion 0.1950%
Next $25 billion 0.1930%
Thereafter 0.1925%
Schedule 3
------------------------------------------------------------------
CATEGORY ASSETS FEE RATE Schedule 3 Funds:
First $1 billion 0.3600% Benham GNMA Fund
Next $1 billion 0.3080% Benham Short-Term Government Fund
Next $3 billion 0.2780% Benham Target Maturities Trust: 2000
Next $5 billion 0.2580% Benham Target Maturities Trust: 2005
Next $15 billion 0.2450% Benham Target Maturities Trust: 2010
Next $25 billion 0.2430% Benham Target Maturities Trust: 2015
Thereafter 0.2425% Benham Target Maturities Trust: 2020
Benham Target Maturities Trust: 2025
------------------------------------------------------------------
Category Fee Schedules: Bond Funds
(continued)
Schedule 4
------------------------------------------------------------------
CATEGORY ASSETS FEE RATE Schedule 4 Funds:
First $1 billion 0.6100% Benham International Bond Fund
Next $1 billion 0.5580% ------------------------------------------------------------------
Next $3 billion 0.5280%
Next $5 billion 0.5080%
Next $15 billion 0.4950%
Next $25 billion 0.4930%
Thereafter 0.4925%
Category Fee Schedules: Equity Funds
Schedule 1
------------------------------------------------------------------
CATEGORY ASSETS FEE RATE Schedule 1 Funds:
First $1 billion 0.5200% American Century Equity Growth Fund
Next $5 billion 0.4600% American Century Global Gold Fund
Next $15 billion 0.4160% American Century Global Natural Resources Fund
Next $25 billion 0.3690% American Century Income & Growth Fund
Next $50 billion 0.3420% American Century Utilities Fund
Next $150 billion 0.3390% ------------------------------------------------------------------
Thereafter 0.3380%
Dated: August 1, 1997
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
AMERICAN CENTURY TARGET MATURITIES TRUST
As executed on behalf of the above in As executed on behalf of the above in
Exhibit A by Exhibit A by
James E. Stowers III James M. Benham
President and Chief Executive Officer President and Chief Executive Officer
</TABLE>
<PAGE>
Exhibit D
Complex Fee Schedule
Complex Assets Fee Rate
-------------- --------
First $2.5 billion 0.0600%
Next $7.5 billion 0.0500%
Next $15.0 billion 0.0485%
Next $25.0 billion 0.0470%
Next $50.0 billion 0.0460%
Next $100.0 billion 0.0450%
Next $100.0 billion 0.0440%
Next $200.0 billion 0.0430%
Next $250.0 billion 0.0420%
Next $500.0 billion 0.0410%
Thereafter 0.0400%
Dated: August 1, 1997
<TABLE>
<S> <C>
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
AMERICAN CENTURY TARGET MATURITIES TRUST
As executed on behalf of the above in As executed on behalf of the above in
Exhibit A by Exhibit A by
James E. Stowers III James M. Benham
President and Chief Executive Officer President and Chief Executive Officer
</TABLE>
MASTER DISTRIBUTION AND SHAREHOLDER SERVICES PLAN
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUND
AMERICAN CENTURY TARGET MATURITIES TRUST
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
(THE "ISSUERS")
Advisor Class
Section 1. Distribution Fees
a. Distribution Fee. For purposes of paying costs and expenses incurred in
providing the services set forth in Section 2 below, the series of the
Issuers identified SCHEDULE A (the "Funds") shall pay the Manager a fee
equal to 25 basis points (0.25%) per annum of the average daily net
assets of the shares of the Funds' Advisor Class of shares (the
"Distribution Fee").
b. Shareholder Services Fees. For purposes of paying costs and expenses
incurred in providing the services set forth in Section 2 below, the
Funds shall pay the Manager a fee equal to 25 basis points (0.25%) per
annum of the average daily net assets of the shares of the Funds'
Advisor Class of shares (the "Shareholder Services Fee").
c. Applicability to Additional and Future Funds. If any of the Issuers
desire to add additional, currently-existing funds to the Plan or
establish additional funds in the future, and the applicability of the
Plan with respect to such existing or new funds is approved in the
manner set forth in Section 4 of this Plan, as well as by the then-sole
shareholder of the Advisor Class shares of such new funds (to the
extent shareholder approval of new funds is required by then-current
1940 Act Rules), this Plan may be amended to provide that such new
funds will become subject to this Plan and will pay the Distribution
Fee and the Shareholder Services Fee set forth in Sections 1(a) and
1(b) above, unless the Board specifies otherwise. After the adoption of
this Plan by the Board with respect to the Advisor Class of shares of
the existing or new funds, the term "Funds" under this Plan shall
thereafter be deemed to include the existing or new funds.
d. Calculation and Assessment. Distribution Fees and the Shareholder
Services Fees under this Plan will be calculated and accrued daily by
each Fund and paid monthly to the Distributor or at such other
intervals as the Issuers and the Distributor may agree.
Section 2. Distribution Services
a. The amount set forth in Section 1(a) of this Plan shall be paid for
services in connection with any activities undertaken or expenses
incurred by the Distributor or its affiliates primarily intended to
result in the sale of Advisor Class shares of the Funds, which services
may include but are not limited to, (A) the payment of sales
commission, ongoing commissions and other payments to brokers, dealers,
financial institutions or others who sell Advisor Class shares pursuant
to Selling Agreements; (B) compensation to registered representatives
or other employees of Distributor who engage in or support distribution
of the Funds' Advisor Class shares; (C) compensation to, and expenses
(including overhead and telephone expenses) of, Distributor; (D) the
printing of prospectuses, statements of additional information and
reports for other than existing shareholders; (E) the preparation,
printing and distribution of sales literature and advertising materials
provided to the Funds' shareholders and prospective shareholders; (F)
receiving and answering correspondence from prospective shareholders,
including distributing prospectuses, statements of additional
information, and shareholder reports; (G) the providing of facilities
to answer questions from prospective investors about Fund shares; (H)
complying with federal and state securities laws pertaining to the sale
of Fund shares; (I) assisting investors in completing application forms
and selecting dividend and other account options; (J) the providing of
other reasonable assistance in connection with the distribution of Fund
shares; (K) the organizing and conducting of sales seminars and
payments in the form of transactional compensation or promotional
incentives; (L) profit on the foregoing; (M) the payment of "service
fees", as contemplated by the Rules of Fair Practice of the National
Association of Securities Dealers; Inc. ("NASD") and (N) such other
distribution and services activities as the Issuers determine may be
paid for by the Issuers pursuant to the terms of this Agreement and in
accordance with Rule 12b-1 of the 1940 Act.
b. For purposes of the Plan, "service fees" shall mean payments in
connection with the provision of personal, continuing services to
investors in each Fund and/or the maintenance of shareholder accounts,
excluding (i) transfer agent and subtransfer agent services for
beneficial owners of a Fund's Advisor Class shares, (ii) aggregating
and processing purchase and redemption orders, (iii) providing
beneficial owners with account statements, processing dividend
payments, (iv) providing subaccounting services for Advisor Class
shares held beneficially, (v) forwarding shareholder communications to
beneficial owners, and (vi) receiving, tabulating and transmitting
proxies executed by beneficial owners; provided, however, that if the
NASD adopts a definition of "service fees" for purposes of Section
26(d) of the Rules of Fair Practice of the NASD (or any successor to
such rule) that differs from the definition of "service activities"
hereunder, or if the NASD adopts a related definition intended to
define the same concept, the definition of "service fees" in this
Section shall be automatically amended, without further action of the
parties, to conform to such NASD definition. Overhead and other
expenses of Distributor related to its service activities, including
telephone and other communications expenses, may be included in the
information regarding amounts expended for such activities.
Section 3. Shareholder Services Defined
As manager of the Funds' Advisor Class of shares, the Manager may cause one of
its affiliates to provide shareholder and administrative services to the
shareholders of the Advisor Class shares of the Funds ("Shareholder Services")
or it may engage third parties to do so. The payments authorized by this Plan
are intended to reimburse the Manager for expenses incurred by it or its
affiliates as a result of these arrangements. Such Shareholder Services and
related expenses may include, but are not limited to, (A) receiving, aggregating
and processing purchase, exchange and redemption request from beneficial owners
(including contract owners of insurance products that utilize the Funds as
underlying investment media) of Advisor Class shares and placing purchase,
exchange and redemption orders with the funds' transfer agency; (B) providing
shareholders with a service that invests the assets of their accounts in shares
pursuant to specific or pre-authorized instructions; (C) processing dividend
payments from a Fund on behalf of shareholders and assisting shareholders in
changing dividend options, account designations and addresses; (D) providing and
maintaining elective services such as check writing and wire transfer services;
(E) acting as sole shareholder of record and nominee for beneficial owners; (F)
maintaining account records for shareholders and/or other beneficial owners; (G)
issuing confirmations of transactions; (H) providing subaccounting with respect
to shares beneficially owned by customers of third parties or providing the
information to a Fund as necessary for such subaccounting; (I) creating and
forwarding shareholder communications from the Funds (such as proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to shareholders and/or other beneficial owners;
and (J) providing other similar administrative and sub-transfer agency services.
Shareholder Services do not include those activities and expenses that are
primarily intended to result in the sale of additional shares of the Advisor
Class of the Funds.
Section 4. Effectiveness
Upon receipt of approval by vote of both (a) the Board of Trustees/Directors of
the Issuers, and (b) the Independent Trustees/Directors, this Plan shall become
effective as of August 1, 1997.
Section 5. Term
This Plan will continue in effect until December 31, 1998, and will continue
thereafter in full force and effect for successive periods of up to one year,
provided that each such continuance is approved in the manner provided in
Sections 3(b) and 3(c).
Section 6. Reporting Requirements
The Manager shall administer this Plan in accordance with Rule 12b-1 of the 1940
Act. The Manager will provide to each Issuer's Board, and the Independent
Trustees/Directors will review and approve, in exercise of their fiduciary
duties, at least quarterly, a written report of the amounts expended with
respect to the Advisor Class shares of each Fund by the Manager under this Plan
and such other information as may be required by the 1940 Act and Rule 12b-1
thereunder.
Section 7. Termination
This Plan may be terminated without penalty at any time with respect to the
Advisor Class shares of any Fund by vote of the Board of the Issuer of which the
Fund is a series, by votes of a majority of the Independent Trustees/Directors,
or by vote of a majority of the outstanding voting Advisor Class shares of that
Fund. Termination of the Plan with respect to the Advisor Class shares of one
Fund will not affect the continued effectiveness of this Plan with respect to
the Advisor Class shares of any other Fund.
Section 8. Amendments to this Plan
This Plan may not be amended to increase materially the amount of compensation a
Fund is authorized to pay under Section 1 hereof unless such amendment is
approved in the manner provided for initial approval in Sections 3(b) and 3(c)
hereof, and such amendment is further approved by a majority of the outstanding
voting securities of the Advisor Class shares of the Fund, and no other material
amendment to the Plan will be made unless approved in the manner provided for
approval and annual renewal in Section 4 hereof.
Section 9. Recordkeeping
The Issuers will preserve copies of this Plan (including any amendments thereto)
and any related agreements and all reports made pursuant to Section 5 hereof for
a period of not less than six years from the date of this Plan, the first two
years in an easily accessible place.
IN WITNESS WHEREOF, the Issuers have executed this Distribution Plan as
of August 1, 1997.
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUND
AMERICAN CENTURY TARGET MATURITIES TRUST
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
Attest:
/s/Douglas A. Paul /s/James M. Benham
Douglas A. Paul James M. Benham
Secretary President and Chief Executive Officer
<PAGE>
SCHEDULE A
Funds Offering Advisor Class Shares
- ----------------------------------------------------------- --------------------
Issuer and Fund(s) Date Plan Adopted
- ----------------------------------------------------------- --------------------
AMERICAN CENTURY GOVERNMENT INCOME TRUST
Benham GNMA Fund August 1, 1997
Benham Intermediate-Term Treasury Fund August 1, 1997
Benham Long-Term Treasury Fund August 1, 1997
Benham Short-Term Government Fund August 1, 1997
Benham Short-Term Treasury Fund August 1, 1997
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
Benham International Bond Fund August 1, 1997
AMERICAN CENTURY TARGET MATURITIES TRUST
Benham Target Maturities Trust: 2000 August 1, 1997
Benham Target Maturities Trust: 2005 August 1, 1997
Benham Target Maturities Trust: 2010 August 1, 1997
Benham Target Maturities Trust: 2015 August 1, 1997
Benham Target Maturities Trust: 2020 August 1, 1997
Benham Target Maturities Trust: 2025 August 1, 1997
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
American Century Equity Growth Fund August 1, 1997
American Century Income & Growth Fund August 1, 1997
American Century Global Gold Fund August 1, 1997
American Century Global Natural Resources Fund August 1, 1997
American Century Utilities Fund August 1, 1997
- ----------------------------------------------------------- --------------------
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUND
AMERICAN CENTURY TARGET MATURITIES TRUST
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
/s/James M. Benham
James M. Benham
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, AMERICAN CENTURY
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; the Registration Statement on
Form N-14 and any amendments or supplements thereto to be 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 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 28th day of February, 1997.
AMERICAN CENTURY BENHAM TARGET MATURITIES TRUST
(A Massachusetts Business Trust)
By:/*/James M. Benham
James M. Benham, President
SIGNATURE AND TITLE
/*/James M. Benham /*/Isaac Stein
James M. Benham Isaac Stein
Chairman Director
/*/Albert A. Eisenstat /*/Jeanne D. Wohlers
Albert A. Eisenstat Jeanne D. Wohlers
Director Director
/*/Ronald J. Gilson /*/James E. Stowers, III
Ronald J. Gilson James E. Stowers, III
Director Director
/*/Myron S. Scholes /*/Maryanne Roepke
Myron S. Scholes Maryanne Roepke
Director Treasurer
/*/Kenneth E. Scott
Kenneth E. Scott
Director Attest:
By:/*/Douglas A. Paul, Secretary
Douglas A. Paul, Secretary
MULTIPLE CLASS PLAN
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY INVESTMENT TRUST
AMERICAN CENTURY MUNICIPAL TRUST
AMERICAN CENTURY TARGET MATURITIES TRUST
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
(THE "ISSUERS")
Section 1. Establishment of Plan
As required by Rule 18f-3 under the 1940 Act, this Plan describes the multiple
class system for certain series of shares of the Issuers, including the separate
class arrangements for shareholder services and/or distribution of shares, the
method for allocating expenses to classes and any related conversion features or
exchange privileges applicable to the classes. Upon the effective date of this
Plan, the Issuers elect to offer multiple classes of their shares, as described
herein, pursuant to Rule 18f-3 and this Plan.
Section 2. Features of the Classes
a. Division into Classes. Each series of shares of the Issuers identified
in SCHEDULE A attached hereto, and each series of shares of any Issuer
subsequently added to this Plan (collectively, the "Funds"), may offer
two or more classes of shares: the Investor Class, the Institutional
Class and the Advisor Class. The classes that each Fund is authorized
to issue pursuant to this Plan are set forth in SCHEDULE A. Shares of
each class of a Fund shall represent an equal pro rata interest in such
Fund, and generally, shall have identical voting, dividend, liquidation
and other rights, preferences, powers, restrictions, limitations,
qualifications, and terms and conditions, except that: (A) each class
shall have a different designation; (B) each class of shares shall bear
any Class Expenses, as defined in Section 3d(3) below; (C) each class
shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its service arrangement; and (D)
each class shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class.
b. Management Fees.
(1) Investor Class Unified Fee. The Issuers of the Funds listed on
SCHEDULE A are each party to a Management Agreement with
American Century Investment Management, Inc. ("the Manager"),
the Funds' investment adviser, for the provision of investment
advisory and management services in exchange for a single,
unified fee. Such Management Agreement and such unified fee
applies to each Fund's Investor Class of shares. Shares issued
and outstanding prior to the effective date of this Plan shall
become Investor Class shares following the effective date.
(2) Institutional Class Unified Fee. The Issuers of the Funds
listed on SCHEDULE A as being authorized to issue
Institutional Class shares shall enter into a Management
Agreement with the Manager providing for a unified fee of 20
basis points less than the existing unified fee in place for
the corresponding Investor Class of such Funds, as described
in each Fund's current prospectus or prospectus supplement.
Institutional Class shares will be made available to large
institutional shareholders, such as corporations and
retirement plans that are not participant directed, and to
other pooled accounts that meet certain investment minimums
established from time to time by the Manager. Institutional
Class shares are not eligible for purchase by insurance
companies, except in connection with a product for defined
benefit plans not involving a group annuity contract.
(3) Advisor Class Unified Fee. The Issuers of the Funds listed on
SCHEDULE A as being authorized to issue Advisor Class shares
shall enter into a Management Agreement with the Manager
providing for a unified fee of 25 basis points less than the
existing unified fee in place for the corresponding Investor
Class of such Funds, as described in each Fund's current
prospectus or prospectus supplement. The Advisor Class shares
are intended to be sold to employer-sponsored retirement plans
(including participant directed plans), insurance companies,
broker dealers, banks and other financial intermediaries.
c. Shareholder Services and Distribution Services. Shares of the Advisor
Class of each Fund are offered subject to a Master Distribution and
Shareholder Services Plan pursuant to Rule 12b-1 under the 1940 Act
(the "12b-1 Plan") between the Issuers and the Distributor. The 12b-1
Plan governs the imposition of fees for Shareholder Services and
Distribution Services.
(1) Shareholder Services. Shareholders of the Advisor Class of
each Fund typically receive most or all shareholder services
from independent third parties rather than from American
Century Services Corporation, the Funds' transfer agent. The
cost of some or all of such services is borne by the
shareholders of the Advisor Class through the payment of the
Shareholder Services Fee under the 12b-1 Plan.
Under the 12b-1 Plan, each Fund is authorized to pay to the
Distributor, as compensation for shareholder service
activities rendered by the Manager, its affiliates, or
independent third party service providers, to holders of
shares of the Advisor Class of a Fund, a shareholder service
fee at the rate of 0.25% on an annualized basis of the average
net asset value of each such class of shares of the Fund (the
"Shareholder Services Fee").
Under the 12b-1 Plan, shareholder and administrative service
activities may include: (A) receiving, aggregating and
processing purchase, exchange and redemption request from
beneficial owners of Advisor Class shares (including contract
owners of insurance products that utilize the Funds as
underlying investment media) and placing purchase, exchange
and redemption orders with the Distributor; (B) providing
shareholders with a service that invests the assets of their
accounts in shares pursuant to specific or pre-authorized
instructions; (C) processing dividend payments from a Fund on
behalf of shareholders and assisting shareholders in changing
dividend options, account designations and addresses; (D)
providing and maintaining elective services such as check
writing and wire transfer services; (E) acting as sole
shareholder of record and nominee for beneficial owners; (F)
maintaining account records for shareholders; (G) issuing
confirmations of transactions; (H) providing subaccounting
with respect to shares beneficially owned by customers or
providing the information to a Fund as necessary for such
subaccounting; (I) creating and forwarding shareholder
communications from the Funds (such as proxies, shareholder
reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to shareholders; and
(J) providing other similar administrative and sub-transfer
agency services.
(2) Distribution Services. Advisor Class shares of each Fund shall
pay the Distributor for "distribution expenses" incurred in
connection with providing distribution services for shares of
the Funds, as provided in the 12b-1 Plan, at an annual rate of
.25% of the average daily net assets of such class.
Under the Distribution Agreement, "distribution expenses"
include, but are not limited to, expenses incurred in
connection with (A) payment of sales commission, ongoing
commissions and other payments to brokers, dealers, financial
institutions or others who sell Advisor Class shares pursuant
to Selling Agreements; (B) compensation to employees of
Distributor who engage in or support distribution of the
Fund's Advisor Class shares; (C) compensation to, and expenses
(including overhead and telephone expenses) of, Distributor;
(D) the printing of prospectuses, statements of additional
information and reports for other than existing shareholders;
(E) the preparation, printing and distribution of sales
literature and advertising materials provided to the Funds'
shareholders and prospective shareholders; (F) receiving and
answering correspondence from prospective shareholders,
including distributing prospectuses, statements of additional
information, and shareholder reports; (G) the providing of
facilities to answer questions from prospective investors
about Fund shares; (H) complying with federal and state
securities laws pertaining to the sale of Fund Shares; (I)
assisting investors in completing application forms and
selecting dividend and other account options; (J) the
providing of other reasonable assistance in connection with
the distribution of Fund shares; (K) the organizing and
conducting of sales seminars and payments in the form of
transactional compensation or promotional incentives; (L)
profit on the foregoing; (M) the payment of "service fees", as
contemplated by the Rules of Fair Practice of the National
Association of Securities Dealers; and (N) such other
distribution and services activities as the Issuers determine
may be paid for by the Issuers pursuant to the terms of this
Agreement and in accordance with Rule 12b-1 of the 1940 Act.
Section 3. Allocation of Income and Expenses
a. Daily Dividend Funds. Funds that declare distributions of net
investment income daily to maintain the same net asset value per share
in each class ("Daily Dividend Funds") will allocate gross income and
expenses (other than Class Expenses, as defined below) to each class on
the basis of "relative net assets (settled shares)". Realized and
unrealized capital gains and losses will be allocated to each class on
the basis of relative net assets. "Relative net assets (settled
shares)," for this purpose, are net assets valued in accordance with
generally accepted accounting principles but excluding the value of
subscriptions receivable, in relation to the net assets of the
particular Daily Dividend Fund. Expenses to be so allocated include
Issuer Expenses and Fund Expenses, each as defined below.
b. Non-Daily Dividend Funds. The gross income, realized and unrealized
capital gains and losses and expenses (other than Class Expenses) of
each Fund, other than the Daily Dividend Funds, shall be allocated to
each class on the basis of its net asset value relative to the net
asset value of the Fund. Expenses to be so allocated also include
Issuer Expenses and Fund Expenses.
c. Apportionment of Certain Expenses. Expenses of a Fund shall be
apportioned to each class of shares depending on the nature of the
expense item. Issuer Expenses and Fund Expenses will be allocated among
the classes of shares pro rata based on their relative net asset values
in relation to the net asset value of all outstanding shares in the
Fund. Approved Class Expenses shall be allocated to the particular
class to which they are attributable. In addition, certain expenses may
be allocated differently if their method of imposition changes. Thus,
if a Class Expense can no longer be attributed to a class, it shall be
charged to a Fund for allocation among classes, as determined by the
Manager.
d. Definitions.
(1) Issuer Expenses. "Issuer Expenses" include expenses of an
Issuer that are not attributable to a particular Fund or class
of a Fund. Issuer Expenses include fees and expenses of those
Trustees/Directors who are not "interested persons" as defined
in the 1940 Act ("Independent Trustees"), including counsel
fees for the Independent Trustees, and certain extraordinary
expenses of the Issuer that are not attributable to a
particular Fund or class of a Fund.
(2) Fund Expenses. "Fund Expenses" include expenses of an Issuer
that are attributable to a particular fund but are not
attributable to a particular class of the Fund. Fund Expenses
include (i) interest expenses, (ii) taxes, (iii) brokerage
expenses, and (iv) certain extraordinary expenses of a Fund
that are not attributable to a particular class of a Fund.
(3) Class Expenses. "Class Expenses" are expenses that are
attributable to a particular class of a Fund and shall be
limited to: (i) applicable unified fee; (ii) payments made
pursuant to a Rule 12b-1 Plan ("12b-1 Plan Fee"); (iii)
payments made pursuant to the shareholder Services Plan; and
(iv) certain extraordinary expenses of an Issuer or Fund that
are attributable to a particular class of a Fund.
(4) Extraordinary Expenses. "Extraordinary expenses" shall be
allocated as an Issuer Expense, a Fund Expense or a Class
Expense in such manner and utilizing such methodology as the
Manager shall reasonably determine, which determination shall
be subject to ratification or approval of the Board of
Trustees/Directors and shall be consistent with applicable
legal principles and requirements under the 1940 Act and the
Internal Revenue Code, as amended. the Manager shall report to
the Board of Trustees/Directors quarterly regarding those
extraordinary expenses that have been allocated as Class
Expenses. Any such allocations shall be reviewed by, and
subject to the approval of, the Board of Trustees/Directors.
Section 4. Exchange Privileges
Subject to the restrictions and conditions set forth in the Funds' prospectuses,
shareholders may (i) exchange shares of one class of a Fund for shares of the
same class of another Fund, (ii) exchange Investor Class shares for shares of
any fund within the American Century family of funds that only offers a single
class of shares (a "Single Class Fund"), and (iii) exchange shares of any Single
Class Fund for Investor Class shares of another Fund, provided that the amount
to be exchanged meets the applicable minimum investment requirements and the
shares to be acquired in the exchange are qualified for sale in the
stockholder's state of residence.
Section 5. Conversion Features
Conversions from one class of shares into another class of shares are not
permitted; provided, however, that if a shareholder of a particular class is no
longer eligible to own shares of that class, such shareholders' shares will be
converted to shares of the same Fund but of another class in which such
shareholder is eligible to invest. Similarly, if a shareholder becomes eligible
to invest in shares of another class that has lower expenses than the class in
which such shareholder is invested, such shareholder may be eligible to convert
into shares of the same Fund but of the class with the lower expenses.
Section 6. Quarterly and Annual Reports
The Board of Trustees/Directors shall receive quarterly and annual reports
concerning all allocated Class Expenses and distribution and servicing
expenditures complying with paragraph (b)(3)(ii) of Rule 12b-1, as it may be
amended from time to time. In the reports, only expenditures properly
attributable to the sale or servicing of a particular class of shares will be
used to justify any distribution or servicing fee or other expenses charged to
that class. Expenditures not related to the sale or servicing of a particular
class shall not be presented to the Board of Trustees/Directors to justify any
fee attributable to that class. The reports, including the allocations upon
which they are based, shall be subject to the review and approval of the
Independent Trustees of the Issuers who have no direct or indirect financial
interest in the operation of this Plan in the exercise of their fiduciary
duties.
Section 7. Waiver or Reimbursement of Expenses
Expenses may be waived or reimbursed by any adviser to the Issuers, by the
Issuers' underwriter or by any other provider of services to the Issuers without
the prior approval of the Issuers' Board of Trustees/Directors, provided that
the fee is waived or reimbursed to all shares of a particular Fund in proportion
to their relative average daily net asset values.
Section 8. Effectiveness of Plan
Upon receipt of approval by votes of a majority of both (a) the Board of
Trustees/Directors of the Issuers and (b) the Independent Trustees, this Plan
shall become effective October 1, 1997.
Section 9. Material Modifications
This Plan may not be amended to modify materially its terms unless such
amendment is approved in the manner provided for initial approval in Section 8
herein.
IN WITNESS WHEREOF, the Issuers have adopted this Multiple Class Plan
as of the 1st day of August, 1997.
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY INVESTMENT TRUST
AMERICAN CENTURY MUNICIPAL TRUST
AMERICAN CENTURY TARGET MATURITIES TRUST
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
Attest:
/s/Douglas A. Paul /s/James M. Benham
Douglas A. Paul James M. Benham
Secretary President and Chief Executive Officer
<PAGE>
<TABLE>
SCHEDULE A
Funds Covered by Multiclass Plan dated August 1, 1997
- ------------------------------------------------------------------ --------------- -------------- ----------------
Investor Advisor Institutional
Fund Class Class Class
- ------------------------------------------------------------------ --------------- -------------- ----------------
<S> <C> <C> <C>
American Century Equity Growth Fund X X X
American Century Global Gold Fund X X
American Century Global Natural Resources Fund X X
American Century Income & Growth Fund X X X
American Century Utilities Fund X X
Benham GNMA Fund X X
Benham Government Agency Money Market Fund X X
Benham Intermediate-Term Treasury Fund X X
Benham International Bond Fund X X
Benham Long-Term Treasury Fund X X
Benham Short-Term Government Fund X X
Benham Short-Term Treasury Fund X X
Benham Target Maturities Trust: 2000 X X
Benham Target Maturities Trust: 2005 X X
Benham Target Maturities Trust: 2010 X X
Benham Target Maturities Trust: 2015 X X
Benham Target Maturities Trust: 2020 X X
Benham Target Maturities Trust: 2025 X X
- ------------------------------------------------------------------ --------------- -------------- ----------------
Dated: August 1, 1997 AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY INVESTMENT TRUST
AMERICAN CENTURY MUNICIPAL TRUST
AMERICAN CENTURY TARGET MATURITIES TRUST
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
Attest:
/s/Douglas A. Paul /s/James M. Benham
Douglas A. Paul James M. Benham
Secretary President and Chief Executive Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> BENHAM TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 1
<NAME> BENHAM TARGET MATURITIES TRUST - 2000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 262,433,118
<INVESTMENTS-AT-VALUE> 267,868,915
<RECEIVABLES> 0
<ASSETS-OTHER> 276,873
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 268,145,788
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 389,200
<TOTAL-LIABILITIES> 389,200
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 253,946,244
<SHARES-COMMON-STOCK> 3,349,052
<SHARES-COMMON-PRIOR> 3,834,562
<ACCUMULATED-NII-CURRENT> 12,967,238
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,592,691)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,435,797
<NET-ASSETS> 267,756,588
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,747,463
<OTHER-INCOME> 0
<EXPENSES-NET> 1,512,558
<NET-INVESTMENT-INCOME> 17,234,905
<REALIZED-GAINS-CURRENT> 1,066,551
<APPREC-INCREASE-CURRENT> (6,811,361)
<NET-CHANGE-FROM-OPS> 11,490,095
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,295,441
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,519,287
<NUMBER-OF-SHARES-REDEEMED> 1,999,924
<SHARES-REINVESTED> 183,642
<NET-CHANGE-IN-ASSETS> (26,979,392)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 815,109
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,534,353
<AVERAGE-NET-ASSETS> 286,612,002
<PER-SHARE-NAV-BEGIN> 76.86
<PER-SHARE-NII> 5.16
<PER-SHARE-GAIN-APPREC> (2.07)
<PER-SHARE-DIVIDEND> 3.94
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 79.95
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
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<SERIES>
<NUMBER> 2
<NAME> BENHAM TARGET MATURITIES TRUST - 2005
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 231,440,990
<INVESTMENTS-AT-VALUE> 238,552,314
<RECEIVABLES> 0
<ASSETS-OTHER> 754,765
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 239,307,079
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 443,151
<TOTAL-LIABILITIES> 443,151
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 219,630,148
<SHARES-COMMON-STOCK> 4,130,406
<SHARES-COMMON-PRIOR> 3,240,460
<ACCUMULATED-NII-CURRENT> 10,806,954
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,315,502
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,111,324
<NET-ASSETS> 238,863,928
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15,071,147
<OTHER-INCOME> 0
<EXPENSES-NET> 1,302,016
<NET-INVESTMENT-INCOME> 13,769,131
<REALIZED-GAINS-CURRENT> 1,459,753
<APPREC-INCREASE-CURRENT> (12,781,340)
<NET-CHANGE-FROM-OPS> 2,447,544
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,101,012
<DISTRIBUTIONS-OF-GAINS> 2,276,770
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,554,065
<NUMBER-OF-SHARES-REDEEMED> 1,660,146
<SHARES-REINVESTED> 177,478
<NET-CHANGE-IN-ASSETS> 55,411,853
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 655,073
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,305,175
<AVERAGE-NET-ASSETS> 226,788,584
<PER-SHARE-NAV-BEGIN> 56.61
<PER-SHARE-NII> 3.83
<PER-SHARE-GAIN-APPREC> (2.61)
<PER-SHARE-DIVIDEND> 2.06
<PER-SHARE-DISTRIBUTIONS> 0.58
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 57.83
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
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