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._28_ X
-----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----
File No. 811-4165:
Amendment No._30_
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: 650-965-8300
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 February 1, 1998, 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, 1997, the Registrant filed a
Rule 24f-2 Notice on Form 24f-2 with respect to its fiscal year ended September
30, 1997.
<PAGE>
AMERICAN CENTURY TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 28
1940 Act Amendment No. 30
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 Taxation of Debt Instruments
21 Distribution of Fund Shares, Additional Purchase and
Redemption Information
22 Performance
23 Cover Page
<PAGE>
PROSPECTUS
[american century logo]
American
Century(reg.sm)
FEBRUARY 1, 1998
BENHAM
GROUP(reg.tm)
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
INVESTOR CLASS
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.
AMERICAN CENTURY INVESTMENTS
- -------------------------------------------------------------------------------
Benham American Century Twentieth Century
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
FEBRUARY 1, 1998
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 February 1, 1998, 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 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 ............................ 22
Distributions .............................................................. 22
Buying a Dividend ...................................................... 22
Reverse Share Splits ................................................... 22
Fund Liquidation ....................................................... 22
Taxes ...................................................................... 22
Tax-Deferred Accounts .................................................. 23
Taxable Accounts ....................................................... 23
Management ................................................................. 24
Investment Management .................................................. 24
Code of Ethics ......................................................... 25
Transfer and Administrative Services ................................... 25
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. 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 25.
The purpose of this 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 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 the other class. 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.
1997 1996 1995 1994 1993 1992 1991 1990 1989(1) 1988
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............. $79.95 $76.86 $66.93 $72.40 $62.16 $52.67 $43.11 $42.79 $37.16 $33.33
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From
Investment Operations
Net Investment Income(2) ...... 5.10 4.75 4.37 3.99 3.94 3.90 3.69 3.40 2.36 2.94
Net Realized and
Unrealized Gain (Loss)
on Investment Transactions .... 1.00 (1.66) 5.56 (9.46) 6.30 5.59 5.87 (3.08) 3.27 0.89
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ......... 6.10 3.09 9.93 (5.47) 10.24 9.49 9.56 0.32 5.63 3.83
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net Investment Income .... (5.20) (3.94) (3.42) (3.25) (2.34) (2.22) (2.09) (2.35) -- (2.23)
From Net Realized
Capital Gains ................. -- -- -- (2.95) (1.83) (0.16) -- (0.10) -- --
In Excess of Net
Realized Gains ................ -- -- -- (1.20) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ........... (5.20) (3.94) (3.42) (7.40) (4.17) (2.38) (2.09) (2.45) -- (2.23)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............. 5.20 3.94 3.42 7.40 4.17 2.38 2.09 2.45 -- 2.23
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period .. $86.05 $79.95 $76.86 $66.93 $72.40 $62.16 $52.67 $43.11 $42.79 $37.16
. ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................. 7.64% 4.01% 14.84% (7.54)% 16.46% 18.02% 22.18% 0.75% 15.15% 11.49%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......... 0.56% 0.53% 0.63% 0.59% 0.60% 0.66% 0.66% 0.70% 0.70%(5) 0.70%
Ratio of Net Investment
Income to Average Net Assets .. 6.14% 5.99% 6.13% 5.74% 5.94% 6.90% 7.67% 7.84% 7.81%(5) 8.33%
Portfolio Turnover Rate ....... 10% 29% 53% 89% 77% 93% 67% 79% 49% 163%
Net Assets, End of Period
(in thousands) ................$248,377 $267,757 $294,736 $243,895 $291,418 $190,063 $89,655 $53,216 $34,820 $14,073
(1) IN 1989, THE FISCAL YEAR-END FOR AMERICAN CENTURY TARGET MATURITIES TRUST
WAS CHANGED FROM DECEMBER 31 TO SEPTEMBER 30.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) 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.
1997 1996 1995 1994 1993 1992 1991 1990 1989(1) 1988
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............. $57.83 $56.61 $45.22 $51.84 $41.18 $35.13 $27.74 $28.61 $24.36 $21.28
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From
Investment Operations
Net Investment Income(2) ...... 3.74 3.50 3.33 3.11 2.90 2.69 2.47 2.27 1.54 1.90
Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ....... 2.97 (2.28) 8.06 (9.73) 7.76 3.36 4.92 (3.14) 2.71 1.18
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ......... 6.71 1.22 11.39 (6.62) 10.66 6.05 7.39 (0.87) 4.25 3.08
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net Investment Income .... (3.61) (2.06) (2.41) (2.70) (2.51) (1.75) (0.86) (1.60) -- (1.53)
From Net Realized
Capital Gains ................. (0.44) (0.58) (0.67) (8.47) (1.01) (0.37) -- (0.07) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ........... (4.05) (2.64) (3.08) (11.17) (3.52) (2.12) (0.86) (1.67) -- (1.53)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............. 4.05 2.64 3.08 11.17 3.52 2.12 0.86 1.67 -- 1.53
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period .. $64.54 $57.83 $56.61 $45.22 $51.84 $41.18 $35.13 $27.74 $28.61 $24.36
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................. 11.60% 2.15% 25.16% (12.75)% 25.89% 17.22% 26.64% (3.04)% 17.45% 14.48%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......... 0.57% 0.58% 0.71% 0.64% 0.62% 0.63% 0.70% 0.70% 0.70%(5) 0.70%
Ratio of Net Investment
Income to Average Net Assets .. 6.15% 6.05% 6.58% 6.37% 6.44% 7.27% 7.80% 7.93% 7.66%(5) 8.44%
Portfolio Turnover Rate ....... 15% 31% 34% 68% 50% 64% 85% 186% 72% 27%
Net Assets, End of Period
(in thousands) ................ $281,677 $238,864 $183,452 $96,207 $149,890 $168,697 $161,388 $46,303 $24,955 $8,948
(1) IN 1989, THE FISCAL YEAR-END FOR AMERICAN CENTURY TARGET MATURITIES TRUST
WAS CHANGED FROM DECEMBER 31 TO SEPTEMBER 30.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) 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.
1997 1996 1995 1994 1993 1992 1991 1990 1989(1) 1988
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............. $42.47 $42.14 $31.67 $38.13 $28.53 $25.08 $19.18 $20.59 $17.31 $14.96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From
Investment Operations
Net Investment Income(2) ...... 2.79 2.58 2.41 2.24 2.05 1.88 1.72 1.61 1.08 1.29
Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ....... 3.90 (2.25) 8.06 (8.70) 7.55 1.57 4.18 (3.02) 2.20 1.06
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ......... 6.69 0.33 10.47 (6.46) 9.60 3.45 5.90 (1.41) 3.28 2.35
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net Investment Income .... (2.82) (1.57) (1.48) (1.46) (1.58) (1.14) (1.05) (1.50) -- (0.42)
From Net Realized
Capital Gains ................. (1.17) -- (0.48) (4.31) (1.14) -- -- (0.09) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ........... (3.99) (1.57) (1.96) (5.77) (2.72) (1.14) (1.05) (1.59) -- (0.42)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............. 3.99 1.57 1.96 5.77 2.72 1.14 1.05 1.59 -- 0.42
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period .. $49.16 $42.47 $42.14 $31.67 $38.13 $28.53 $25.08 $19.18 $20.59 $17.31
. ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................. 15.75% 0.78% 33.06% (16.92)% 33.61% 13.76% 30.76% (6.85)% 18.95% 15.71%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......... 0.62% 0.67% 0.71% 0.68% 0.66% 0.70% 0.70% 0.70% 0.70%(5) 0.70%
Ratio of Net Investment
Income to Average Net Assets .. 6.15% 5.98% 6.56% 6.35% 6.32% 7.20% 7.73% 7.82% 7.34%(5) 8.11%
Portfolio Turnover Rate ....... 26% 24% 26% 35% 132% 95% 131% 191% 88% 259%
Net Assets, End of Period
(in thousands) ................ $124,812 $111,117 $95,057 $46,312 $70,551 $55,565 $47,661 $37,222 $42,439 $9,617
(1) IN 1989, THE FISCAL YEAR-END FOR AMERICAN CENTURY TARGET MATURITIES TRUST
WAS CHANGED FROM DECEMBER 31 TO SEPTEMBER 30.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) 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.
1997 1996 1995 1994 1993 1992 1991 1990 1989(1) 1988
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............. $31.96 $32.20 $22.79 $29.04 $20.39 $18.44 $13.75 $15.62 $12.63 $11.37
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From
Investment Operations
Net Investment Income(2) ...... 2.00 1.85 1.71 1.57 1.46 1.33 1.26 1.18 0.79 0.94
Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ....... 4.38 (2.09) 7.70 (7.82) 7.19 0.62 3.43 (3.05) 2.20 0.32
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ......... 6.38 (0.24) 9.41 (6.25) 8.65 1.95 4.69 (1.87) 2.99 1.26
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net Investment Income .... (2.05) (1.28) (0.87) (1.19) (1.45) (1.23) (0.97) (0.50) -- (0.55)
From Net Realized
Capital Gains ................. (0.34) (1.61) -- (7.08) (0.34) -- -- (0.01) -- --
In Excess of Net
Realized Gains ................ -- -- -- (0.37) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ........... (2.39) (2.89) (0.87) (8.64) (1.79) (1.23) (0.97) (0.51) -- (0.55)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............. 2.39 2.89 0.87 8.64 1.79 1.23 0.97 0.51 -- 0.55
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period .. $38.34 $31.96 $32.20 $22.79 $29.04 $20.39 $18.44 $13.75 $15.62 $12.63
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................. 19.96% (0.74)% 41.29% (21.52)% 42.42% 10.57% 34.11% (11.97)% 23.67% 11.08%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......... 0.61% 0.65% 0.71% 0.68% 0.63% 0.62% 0.61% 0.70% 0.70%(5) 0.70%
Ratio of Net Investment
Income to Average Net Assets .. 5.79% 5.63% 6.40% 5.97% 6.28% 7.04% 7.79% 7.74% 7.02%(5) 7.97%
Portfolio Turnover Rate ....... 21% 17% 70% 65% 138% 103% 40% 81% 48% 188%
Net Assets, End of Period
(in thousands) ................ $114,900 $115,654 $114,647 $66,073 $89,023 $131,106 $222,118 $295,577 $233,792 $11,790
(1) IN 1989, THE FISCAL YEAR-END FOR AMERICAN CENTURY TARGET MATURITIES TRUST
WAS CHANGED FROM DECEMBER 31 TO SEPTEMBER 30.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) 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.
1997 1996 1995 1994 1993 1992 1991 1990(1)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............................... $22.00 $22.47 $15.28 $20.72 $13.63 $12.54 $9.63 $12.00
------ ------ ------ ------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income(2) ........................ 1.51 1.41 1.19 1.13 1.00 0.92 0.85 0.60
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ............... 3.66 (1.88) 6.00 (6.57) 6.09 0.17 2.06 (2.97)
------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ........................... 5.17 (0.47) 7.19 (5.44) 7.09 1.09 2.91 (2.37)
------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net Investment Income ...................... (1.45) (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 ............................. (1.45) (0.44) (0.21) (2.77) (1.25) (0.71) (0.21) --
------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............................... 1.45 0.44 0.21 2.77 1.25 0.71 0.21 --
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period .................... $27.17 $22.00 $22.47 $15.28 $20.72 $13.63 $12.54 $9.63
====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................................... 23.50% (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 .............................. 0.53% 0.61% 0.72% 0.70% 0.70% 0.66% 0.67% 0.70%(5)
Ratio of Net Investment Income
to Average Net Assets ........................... 6.29% 6.25% 6.24% 6.28% 6.10% 7.19% 7.50% 7.79%(5)
Portfolio Turnover Rate ......................... 14% 47% 78% 116% 179% 144% 151% 189%
Net Assets, End of Period
(in thousands) .................................. $553,551 $926,319 $574,702 $58,535 $56,125 $41,793 $88,332 $53,198
(1) FROM DECEMBER 29, 1989 INCEPTION THROUGH SEPTEMBER 30, 1990.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) ANNUALIZED.
</TABLE>
PROSPECTUS FINANCIAL HIGHLIGHTS 9
<TABLE>
<CAPTION>
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.
1997 1996(1)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ......................... $17.91 $19.85
------ ------
Income From Investment Operations
Net Investment Income(2) ................................... 1.21 0.72
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ................................. 3.15 (2.66)
------ ------
Total From Investment Operations ........................... 4.36 (1.94)
------ ------
Distributions
From Net Investment Income ................................. (0.72) --
------ ------
Reverse Share Split .......................................... 0.72 --
------ ------
Net Asset Value, End of Period ............................... $22.27 $17.91
====== ======
Total Return(3) .............................................. 24.34% (9.77)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............ 0.62% 0.67%(4)
Ratio of Net Investment Income to Average Net Assets ......... 6.14% 6.57%(4)
Portfolio Turnover Rate ...................................... 58% 61%
Net Assets, End of Period (in thousands) ..................... $73,821 $35,661
(1) FEBRUARY 15, 1996 (INCEPTION) THROUGH SEPTEMBER 30, 1996.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE YEAR.
(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>
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 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 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 table on the following page 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.)
The funds' share prices and growth rates are not guaranteed by the Trust,
the manager, or any of their affiliates. There is no guarantee that the funds'
AVMs will fluctuate as little in the future as they have in the past.
*A FUND'S WEIGHTED AVERAGE MATURITY DATE CAN BE CALCULATED AT ANY POINT IN
TIME BY ADDING ITS WAM TO THE CURRENT DATE. FOR EXAMPLE, IF TODAY WERE NOVEMBER
17, 1998, AND THE FUND'S WAM WERE SIX YEARS, THE FUND'S WEIGHTED AVERAGE
MATURITY DATE WOULD BE NOVEMBER 17, 2004. 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.
PROSPECTUS INFORMATION REGARDING THE FUNDS 11
Anticipated Value At Maturity
9/30/93 9/30/94 9/30/95 9/30/96 9/30/97
- --------------------------------------------------------------------------
Target 2000 $100.69 $100.86 $100.99 $101.10 $101.13
Target 2005 100.21 100.58 100.32 100.71 100.85
Target 2010 100.94 101.38 101.02 102.53 103.40
Target 2015 106.84 107.95 109.62 110.11 110.52
Target 2020 100.76 102.11 102.31 103.60 104.84
Target 2025 N/A N/A N/A 109.24 110.88
- --------------------------------------------------------------------------
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. REFCORP zeros are the unmatured coupons and principal
portions of Resolution Funding Corporation bonds. The U.S. government and its
agencies may issue securities in zero-coupon form. These securities are referred
to as "original issue zero-coupon securities."
OTHER INVESTMENTS
As a fund's target maturity year approaches, the manager may buy
coupon-bearing securities whose duration and price characteristics are similar
to those of aging zero-coupon securities. Towards the end of a fund's target
maturity year and until the fund is liquidated, the proceeds of maturing
zero-coupon securities are invested in U.S. Treasury bills.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
The funds are designed for investors with long-term financial goals that
correspond to one or more of the target maturities offered. Investors who use
zeros or the funds for short-term speculative purposes should understand that,
although most of the reinvestment risk associated with coupon-bearing bonds has
been eliminated, the prices of zeros can fluctuate dramatically between issuance
and maturity. When interest rates rise, the price of a zero falls more sharply
than the price of a coupon-bearing security of the same maturity.
Correspondingly, when interest rates fall, the price of a zero rises more
sharply than the price of a coupon-bearing security.
Each fund's share price will fluctuate daily in response to fund activity
and changes in the market value of its investments. Due to the price volatility
of zeros, redemptions made prior to a fund's target maturity year may result in
unanticipated capital gains or losses for the funds. These capital gains and
losses will be distributed to shareholders regardless of whether they have
redeemed shares. Although shareholders have the option to redeem shares on any
business day, those seeking to minimize their exposure to share price volatility
should plan to hold their shares until the end of their fund's target maturity
year.
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.
12 INFORMATION REGARDING THE FUNDS AMERICAN CENTURY INVESTMENTS
For additional information, see "Additional Investment Restrictions" in 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 of this Prospectus.
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to a 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. Higher turnover
would generate 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.
Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.
A quotation of yield reflects a fund's income over a stated period expressed
as a percentage of the fund's share price. The effective yield is calculated in
a similar manner but, when annualized, the income earned by the investment is
assumed to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect on the assumed reinvestment.
Yield is calculated by adding over a 30-day (or one-month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of fund shares
outstanding during the period, and expressing the result as a percentage of the
fund's share price on the last day of the 30-day (or one month) period. The
percentage is then annualized. Capital gains and losses are not included in the
calculation.
Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules. Because yield accounting methods differ from
PROSPECTUS INFORMATION REGARDING THE FUNDS 13
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 that 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 formula 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 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.
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.
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:
* RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)
* BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111
* BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918
* 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.
PROSPECTUS HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS 15
* ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.
* 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.
* 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
4917 Town Center Drive
Leawood, Kansas
1665 Charleston Road
Mountain View, California
2000 S. Colorado Blvd.
Denver, Colorado
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 the confirmation from a previous investment. If the investment
slip is not available, indicate your name, address and account number on your
check or a separate piece of paper. (PLEASE BE AWARE THAT THE INVESTMENT MINIMUM
FOR SUBSEQUENT INVESTMENTS IS HIGHER WITHOUT AN INVESTMENT SLIP.)
BY TELEPHONE
Once your account is open, you may make investments by telephone if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account. You may call an Investor Services Representative or use our
Automated Information Line.
BY ONLINE ACCESS
Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.
BY WIRE
You may make subsequent investments by wire. Follow the wire transfer
instructions on page 15 and indicate your account number.
IN PERSON
You may make subsequent investments in person at one of our Investor
Centers. The locations of our 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 an Investor Services Representative.
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 day it is received, if it is
received before the funds' net asset values are calculated, which is one hour
prior to
16 HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS AMERICAN CENTURY INVESTMENTS
the close of the New York Stock Exchange for the funds described in this
Prospectus, and at the close of the Exchange for all of our other funds. See
"WHEN SHARE PRICE IS DETERMINED," page 21.
For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an Automatic
Exchange Plan between any two funds in the amount of at least $50 per month. See
our Investor Services Guide for further information about exchanges.
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 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 to you or to your
account at a bank or other financial institution. To set up automatic
redemptions, call an Investor Services Representative.
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.
PROSPECTUS HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS 17
Wired funds are subject to a $10 fee to cover bank wire charges, which is
deducted from redemption proceeds. Once the funds are transmitted, the time of
receipt and the funds' availability are not under our control.
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you to either bring the value
of the shares held in the account up to the minimum or to establish an 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 the 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 is required
when:
* redeeming more than $25,000; or
* establishing or increasing a Check-A-Month or automatic transfer on an
existing account.
You can 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 price, receive updates
on major market indices and view historical performance of your fund. If you
select "Full Services" on your application, you can use your personal access
code and Social Security number to view your account balance 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
18 HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS AMERICAN CENTURY INVESTMENTS
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.
Because of their time-sensitive nature, open order transactions are accepted
only by telephone or in person. These transactions are subject to exchange
limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.
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.
PROSPECTUS HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS 19
(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to
cover the penalty the IRS will impose on us for failure to report your
correct taxpayer identification number on information reports.
(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 per hour may be applied.
REPORTS TO SHAREHOLDERS
At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all 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
transaction. 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 31 of each year, we will send you reports that you may
use in completing your U.S. income tax return. See the Investor Services Guide
for more information.
Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.
EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS
Information contained in our Investor Services Guide pertains to
shareholders who invest directly with American Century rather than through an
employer-sponsored retirement plan or through a financial intermediary.
If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the
funds, exchange them for shares of other American Century funds, and redeem them
will depend on the terms of your plan.
If you own or are considering purchasing fund shares through a bank,
broker-dealer, insurance company or other financial intermediary, your ability
to purchase, exchange and redeem shares will depend on your agreement with, and
the policies of, such financial intermediary.
You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your plan administrator or financial intermediary.
20 HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS AMERICAN CENTURY INVESTMENTS
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. Net asset value for the Funds offered by this Prospectus is
determined one hour before the close of regular trading on each day that the New
York Stock Exchange is open, usually 2 p.m. Central time. Net asset value for
all other American Century funds is determined at the close of regular trading
on the Exchange.
Investments and requests to redeem or exchange shares will receive the share
price next determined after receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents before the time as of which the net
asset value is determined, are effective on, and will receive the price
determined that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined as of, one hour
prior to 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 before the time as of which the net asset value of
the fund is determined.
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 time as of which the net asset value of the fund is
determined, 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.
We have contractual relationships with certain financial intermediaries in
which such intermediairies represent that they have systems to track the time at
which investment orders are received and to segregate orders received at
different times. Based on these representations, each fund has authorized such
intermediaries and their designees to accept purchase and redemption orders on
the fund's behalf up to the applicable cut-off time. The fund will be deemed to
have received such orders upon acceptance by the duly authorized intermediary,
and such orders will be priced at the fund's net asset value next determined
after acceptance on the fund's behalf by such intermediary.
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.
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 21
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.
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) when the fund is liquidated in the January following the
fund's target maturity year. If CPF is not available, fund shares will be
exchanged 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 tax.
22 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
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.
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. Distributions from
gains on assets held greater than 12 months but not more than 18 months (28%
rate gain) and/or assets held greater than 18 months (20% rate gain) are taxable
as long-term gains regardless of the length of time you have held the shares.
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 (28% or 20% rate
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 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 distributions 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 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 considered long-term subject to tax
at a maximum rate of 28% (28% rate gain/loss) if shareholders
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 23
have held such shares for a period of more than 12 months but not more than 18
months and long-term subject to tax at a maximum rate of 20%, minimum of 10%
(20% rate gain/loss) if shareholders have held such shares for a period of more
than 18 months. 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. 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 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 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, Senior 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 Target funds
since July, 1990.
JEREMY FLETCHER, Associate Portfolio Manager, joined the manager in 1991 and
has been a member of the team that manages the Target funds since August, 1997.
The activities of the manager are subject only to directions of the fund's
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, each series of shares 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
such series by the aggregate average daily closing value of the series' net
assets during the previous month, and further by multiplying that product 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).
24 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
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, 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.
Pursuant to a Sub-Administration Agreement with the manager, Funds
Distributor, Inc. (FDI) serves as the Co-Administrator for the funds. FDI is
responsible for (i) providing certain officers of the funds and (ii) reviewing
and filing marketing and sales literature on behalf of the funds. The fees and
expenses of FDI are paid by the manager.
Although there is no sales charge levied by the funds, transactions in
shares of the funds may be executed by brokers or investment advisors who charge
a transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the funds or the
manager. You should be aware of the fact that these transactions may be made
directly with American Century without incurring such fees.
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 FDI, a registered broker-dealer (the
distributor). FDI is a wholly-owned indirect subsidiary of Boston Institutional
Group, Inc. FDI's principal business address is 60 State Street, Suite 1300,
Boston, Massachusetts 02109.
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.
Investors may open accounts with American Century only through the
distributor. All purchase transactions in the funds offered by this Prospectus
are processed by the transfer agent, which is authorized to accept any
instructions relating to fund accounts. All purchase orders must be accepted by
the distributor.
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 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.
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 25
American Century Target Maturities Trust 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 Advisor class is 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. This other class has 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 class 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
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 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 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
NOTES
NOTES 27
NOTES
28 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)
9802 [recycled logo]
SH-BKT-10354 Recycled
<PAGE>
PROSPECTUS
[american century logo]
American
Century(reg.sm)
FEBRUARY 1, 1998
BENHAM
GROUP(reg.tm)
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
ADVISOR CLASS
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.
AMERICAN CENTURY INVESTMENTS
- -------------------------------------------------------------------------------
Benham American Century Twentieth Century
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
FEBRUARY 1, 1998
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 February 1, 1998, 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 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 ............................ 17
Distributions .............................................................. 17
Buying a Dividend ...................................................... 17
Reverse Share Splits ................................................... 17
Fund Liquidation ....................................................... 17
Taxes ...................................................................... 17
Tax-Deferred Accounts .................................................. 17
Taxable Accounts ....................................................... 18
Management ................................................................. 19
Investment Management .................................................. 19
Code of Ethics ......................................................... 20
Transfer and Administrative Services ................................... 20
Distribution of Fund Shares ................................................ 20
Service and Distribution Fees .......................................... 20
Further Information About American Century ................................. 21
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. 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 20.
(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 this 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 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 class. For additional information about the various classes, see "FURTHER
INFORMATION ABOUT AMERICAN CENTURY," page 21.
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.
1997 1996 1995 1994 1993 1992 1991 1990 1989(1) 1988
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............ $79.95 $76.86 $66.93 $72.40 $62.16 $52.67 $43.11 $42.79 $37.16 $33.33
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From
Investment Operations
Net Investment Income(2) ..... 5.10 4.75 4.37 3.99 3.94 3.90 3.69 3.40 2.36 2.94
Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ...... 1.00 (1.66) 5.56 (9.46) 6.30 5.59 5.87 (3.08) 3.27 0.89
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ........ 6.10 3.09 9.93 (5.47) 10.24 9.49 9.56 0.32 5.63 3.83
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net
Investment Income ............ (5.20) (3.94) (3.42) (3.25) (2.34) (2.22) (2.09) (2.35) -- (2.23)
From Net Realized
Capital Gains ................ -- -- -- (2.95) (1.83) (0.16) -- (0.10) -- --
In Excess of Net
Realized Gains ............... -- -- -- (1.20) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions .......... (5.20) (3.94) (3.42) (7.40) (4.17) (2.38) (2.09) (2.45) -- (2.23)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............ 5.20 3.94 3.42 7.40 4.17 2.38 2.09 2.45 -- 2.23
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period .................. $86.05 $79.95 $76.86 $66.93 $72.40 $62.16 $52.67 $43.11 $42.79 $37.16
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................ 7.64% 4.01% 14.84% (7.54)% 16.46% 18.02% 22.18% 0.75% 15.15% 11.49%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ........ 0.56% 0.53% 0.63% 0.59% 0.60% 0.66% 0.66% 0.70% 0.70%(5) 0.70%
Ratio of Net Investment
Income to Average Net Assets . 6.14% 5.99% 6.13% 5.74% 5.94% 6.90% 7.67% 7.84% 7.81%(5) 8.33%
Portfolio Turnover Rate ...... 10% 29% 53% 89% 77% 93% 67% 79% 49% 163%
Net Assets, End of Period
(in thousands) ............... $248,377 $267,757 $294,736 $243,895 $291,418 $190,063 $89,655 $53,216 $34,820 $14,073
(1) IN 1989, THE FISCAL YEAR-END FOR AMERICAN CENTURY TARGET MATURITIES TRUST
WAS CHANGED FROM DECEMBER 31 TO SEPTEMBER 30.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) 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.
1997 1996 1995 1994 1993 1992 1991 1990 1989(1) 1988
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............. $57.83 $56.61 $45.22 $51.84 $41.18 $35.13 $27.74 $28.61 $24.36 $21.28
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From
Investment Operations
Net Investment Income(2) ...... 3.74 3.50 3.33 3.11 2.90 2.69 2.47 2.27 1.54 1.90
Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ....... 2.97 (2.28) 8.06 (9.73) 7.76 3.36 4.92 (3.14) 2.71 1.18
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ......... 6.71 1.22 11.39 (6.62) 10.66 6.05 7.39 (0.87) 4.25 3.08
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net
Investment Income ............. (3.61) (2.06) (2.41) (2.70) (2.51) (1.75) (0.86) (1.60) -- (1.53)
From Net Realized
Capital Gains ................. (0.44) (0.58) (0.67) (8.47) (1.01) (0.37) -- (0.07) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ........... (4.05) (2.64) (3.08) (11.17) (3.52) (2.12) (0.86) (1.67) -- (1.53)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............. 4.05 2.64 3.08 11.17 3.52 2.12 0.86 1.67 -- 1.53
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period ................... $64.54 $57.83 $56.61 $45.22 $51.84 $41.18 $35.13 $27.74 $28.61 $24.36
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................. 11.60% 2.15% 25.16% (12.75)% 25.89% 17.22% 26.64% (3.04)% 17.45% 14.48%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......... 0.57% 0.58% 0.71% 0.64% 0.62% 0.63% 0.70% 0.70% 0.70%(5) 0.70%
Ratio of Net Investment
Income to Average Net Assets .. 6.15% 6.05% 6.58% 6.37% 6.44% 7.27% 7.80% 7.93% 7.66%(5) 8.44%
Portfolio Turnover Rate ....... 15% 31% 34% 68% 50% 64% 85% 186% 72% 27%
Net Assets, End of Period
(in thousands) ................ $281,677 $238,864 $183,452 $96,207 $149,890 $168,697 $161,388 $46,303 $24,955 $8,948
(1) IN 1989, THE FISCAL YEAR-END FOR AMERICAN CENTURY TARGET MATURITIES TRUST
WAS CHANGED FROM DECEMBER 31 TO SEPTEMBER 30.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) 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.
1997 1996 1995 1994 1993 1992 1991 1990 1989(1) 1988
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............. $42.47 $42.14 $31.67 $38.13 $28.53 $25.08 $19.18 $20.59 $17.31 $14.96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From
Investment Operations
Net Investment Income(2) ...... 2.79 2.58 2.41 2.24 2.05 1.88 1.72 1.61 1.08 1.29
Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ....... 3.90 (2.25) 8.06 (8.70) 7.55 1.57 4.18 (3.02) 2.20 1.06
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ......... 6.69 0.33 10.47 (6.46) 9.60 3.45 5.90 (1.41) 3.28 2.35
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net
Investment Income ............. (2.82) (1.57) (1.48) (1.46) (1.58) (1.14) (1.05) (1.50) -- (0.42)
From Net Realized
Capital Gains ................. (1.17) -- (0.48) (4.31) (1.14) -- -- (0.09) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ........... (3.99) (1.57) (1.96) (5.77) (2.72) (1.14) (1.05) (1.59) -- (0.42)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............. 3.99 1.57 1.96 5.77 2.72 1.14 1.05 1.59 -- 0.42
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period ................... $49.16 $42.47 $42.14 $31.67 $38.13 $28.53 $25.08 $19.18 $20.59 $17.31
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................. 15.75% 0.78% 33.06% (16.92)% 33.61% 13.76% 30.76% (6.85)% 18.95% 15.71%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......... 0.62% 0.67% 0.71% 0.68% 0.66% 0.70% 0.70% 0.70% 0.70%(5) 0.70%
Ratio of Net Investment
Income to Average Net Assets .. 6.15% 5.98% 6.56% 6.35% 6.32% 7.20% 7.73% 7.82% 7.34%(5) 8.11%
Portfolio Turnover Rate ....... 26% 24% 26% 35% 132% 95% 131% 191% 88% 259%
Net Assets, End of Period
(in thousands) ................ $124,812 $111,117 $95,057 $46,312 $70,551 $55,565 $47,661 $37,222 $42,439 $9,617
(1) IN 1989, THE FISCAL YEAR-END FOR AMERICAN CENTURY TARGET MATURITIES TRUST
WAS CHANGED FROM DECEMBER 31 TO SEPTEMBER 30.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) 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.
1997 1996 1995 1994 1993 1992 1991 1990 1989(1) 1988
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............. $31.96 $32.20 $22.79 $29.04 $20.39 $18.44 $13.75 $15.62 $12.63 $11.37
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From
Investment Operations
Net Investment Income(2) ...... 2.00 1.85 1.71 1.57 1.46 1.33 1.26 1.18 0.79 0.94
Net Realized and
Unrealized Gain (Loss) on
Investment Transactions ....... 4.38 (2.09) 7.70 (7.82) 7.19 0.62 3.43 (3.05) 2.20 0.32
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ......... 6.38 (0.24) 9.41 (6.25) 8.65 1.95 4.69 (1.87) 2.99 1.26
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net
Investment Income ............. (2.05) (1.28) (0.87) (1.19) (1.45) (1.23) (0.97) (0.50) -- (0.55)
From Net Realized
Capital Gains ................. (0.34) (1.61) -- (7.08) (0.34) -- -- (0.01) -- --
In Excess of Net
Realized Gains ................ -- -- -- (0.37) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions ........... (2.39) (2.89) (0.87) (8.64) (1.79) (1.23) (0.97) (0.51) -- (0.55)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............. 2.39 2.89 0.87 8.64 1.79 1.23 0.97 0.51 -- 0.55
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
End of Period ................... $38.34 $31.96 $32.20 $22.79 $29.04 $20.39 $18.44 $13.75 $15.62 $12.63
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................. 19.96% (0.74)% 41.29% (21.52)% 42.42% 10.57% 34.11% (11.97)% 23.67% 11.08%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......... 0.61% 0.65% 0.71% 0.68% 0.63% 0.62% 0.61% 0.70% 0.70%(5) 0.70%
Ratio of Net Investment
Income to Average Net Assets .. 5.79% 5.63% 6.40% 5.97% 6.28% 7.04% 7.79% 7.74% 7.02%(5) 7.97%
Portfolio Turnover Rate ....... 21% 17% 70% 65% 138% 103% 40% 81% 48% 188%
Net Assets, End of Period
(in thousands) ................ $114,900 $115,654 $114,647 $66,073 $89,023 $131,106 $222,118 $295,577 $233,792 $11,790
(1) IN 1989, THE FISCAL YEAR-END FOR AMERICAN CENTURY TARGET MATURITIES TRUST
WAS CHANGED FROM DECEMBER 31 TO SEPTEMBER 30.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) 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.
1997 1996 1995 1994 1993 1992 1991 1990(1)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period ............................ $22.00 $22.47 $15.28 $20.72 $13.63 $12.54 $9.63 $12.00
------ ------ ------ ------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income(2) ..................... 1.51 1.41 1.19 1.13 1.00 0.92 0.85 0.60
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ............ 3.66 (1.88) 6.00 (6.57) 6.09 0.17 2.06 (2.97)
------ ------ ------ ------ ------ ------ ------ ------
Total From
Investment Operations ........................ 5.17 (0.47) 7.19 (5.44) 7.09 1.09 2.91 (2.37)
------ ------ ------ ------ ------ ------ ------ ------
Distributions(3)
From Net Investment Income ................... (1.45) (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 .......................... (1.45) (0.44) (0.21) (2.77) (1.25) (0.71) (0.21) --
------ ------ ------ ------ ------ ------ ------ ------
Reverse Share Split ............................ 1.45 0.44 0.21 2.77 1.25 0.71 0.21 --
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period ................. $27.17 $22.00 $22.47 $15.28 $20.72 $13.63 $12.54 $9.63
====== ====== ====== ====== ====== ====== ====== ======
Total Return(4) ................................ 23.50% (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 ........................... 0.53% 0.61% 0.72% 0.70% 0.70% 0.66% 0.67% 0.70%(5)
Ratio of Net Investment Income
to Average Net Assets ........................ 6.29% 6.25% 6.24% 6.28% 6.10% 7.19% 7.50% 7.79%(5)
Portfolio Turnover Rate ...................... 14% 47% 78% 116% 179% 144% 151% 189%
Net Assets, End of Period
(in thousands) ............................... $553,551 $926,319 $574,702 $58,535 $56,125 $41,793 $88,332 $53,198
(1) FROM DECEMBER 29, 1989, (INCEPTION) THROUGH SEPTEMBER 30, 1990.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE YEAR.
(3) FOR PERIODS PRIOR TO SEPTEMBER 30, 1997, DISTRIBUTIONS WERE CALCULATED
USING AVERAGE SHARES OUTSTANDING DURING THE PERIOD. DISTRIBUTIONS INDICATED
FOR THOSE PERIODS WILL BE DIFFERENT THAN THE ACTUAL PER-SHARE DISTRIBUTIONS
TO SHAREHOLDERS.
(4) TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(5) ANNUALIZED.
</TABLE>
PROSPECTUS PERFORMANCE INFORMATION OF OTHER CLASS 9
<TABLE>
<CAPTION>
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.
1997 1996(1)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period .................................... $17.91 $19.85
------ ------
Income From Investment Operations
Net Investment Income(2) .............................................. 1.21 0.72
Net Realized and Unrealized Gain (Loss) on Investment Transactions .... 3.15 (2.66)
------ ------
Total From Investment Operations ...................................... 4.36 (1.94)
------ ------
Distributions
From Net Investment Income ............................................ (0.72) --
------ ------
Reverse Share Split ..................................................... 0.72 --
------ ------
Net Asset Value, End of Period .......................................... $22.27 $17.91
====== ======
Total Return(3) ......................................................... 24.34% (9.77)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ....................... 0.62% 0.67%(4)
Ratio of Net Investment Income to Average Net Assets .................... 6.14% 6.57%(4)
Portfolio Turnover Rate ................................................. 58% 61%
Net Assets, End of Period (in thousands) ................................ $73,821 $35,661
(1) FEBRUARY 15, 1996 (INCEPTION) THROUGH SEPTEMBER 30, 1996.
(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE YEAR.
(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>
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 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 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 table on the following page 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.)
The funds' share prices and growth rates are not guaranteed by the Trust,
the manager, or any of their affiliates. There is no guarantee that the funds'
AVMs will fluctuate as little in the future as they have in the past.
*A FUND'S WEIGHTED AVERAGE MATURITY DATE CAN BE CALCULATED AT ANY POINT IN
TIME BY ADDING ITS WAM TO THE CURRENT DATE. FOR EXAMPLE, IF TODAY WERE NOVEMBER
17, 1998, AND THE FUND'S WAM WERE SIX YEARS, THE FUND'S WEIGHTED AVERAGE
MATURITY DATE WOULD BE NOVEMBER 17, 2004. 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
Anticipated Value At Maturity
9/30/93 9/30/94 9/30/95 9/30/96 9/30/97
- -------------------------------------------------------------------------------
Target 2000 $100.69 $100.86 $100.99 $101.10 $101.13
Target 2005 100.21 100.58 100.32 100.71 100.85
Target 2010 100.94 101.38 101.02 102.53 103.40
Target 2015 106.84 107.95 109.62 110.11 110.52
Target 2020 100.76 102.11 102.31 103.60 104.84
Target 2025 N/A N/A N/A 109.24 110.88
- -------------------------------------------------------------------------------
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. REFCORP zeros are the unmatured coupons and principal
portions Resolution Funding Corporation bonds. The U.S. government and its
agencies may issue securities in zero-coupon form. These securities are referred
to as "original issue zero-coupon securities."
OTHER INVESTMENTS
As a fund's target maturity year approaches, the manager may buy
coupon-bearing securities whose duration and price characteristics are similar
to those of aging zero-coupon securities. Towards the end of a fund's target
maturity year and until the Fund is liquidated, the proceeds of maturing
zero-coupon securities are invested in U.S. Treasury bills.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
The funds are designed for investors with long-term financial goals that
correspond to one or more of the target maturities offered. Investors who use
zeros or the funds for short-term speculative purposes should understand that,
although most of the reinvestment risk associated with coupon-bearing bonds has
been eliminated, the prices of zeros can fluctuate dramatically between issuance
and maturity. When interest rates rise, the price of a zero falls more sharply
than the price of a coupon-bearing security of the same maturity.
Correspondingly, when interest rates fall, the price of a zero rises more
sharply than the price of a coupon-bearing security.
Each fund's share price will fluctuate daily in response to fund activity
and changes in the market value of its investments. Due to the price volatility
of zeros, redemptions made prior to a fund's target maturity year may result in
unanticipated capital gains or losses for the funds. These capital gains and
losses will be distributed to shareholders regardless of whether they have
redeemed shares. Although shareholders have the option to redeem shares on any
business day, those seeking to minimize their exposure to share price volatility
should plan to hold their shares until the end of their fund's target maturity
year.
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.
12 INFORMATION REGARDING THE FUNDS AMERICAN CENTURY INVESTMENTS
For additional information, see "Additional Investment Restrictions" in 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 of this Prospectus.
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to a 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. Higher turnover
would generate 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.
Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.
A quotation of yield reflects a fund's income over a stated period expressed
as a percentage of the fund's share price. The effective yield is calculated in
a similar manner but, when annualized, the income earned by the investment is
assumed to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect on the assumed reinvestment.
Yield is calculated by adding over a 30-day (or one-month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of fund shares
outstanding during the period, and expressing the result as a percentage of the
fund's share price on the last day of the 30-day (or one month) period. The
percentage is then annualized. Capital gains and losses are not included in the
calculation.
Yields are calculated according to accounting methods that are standardized
in accordance with SEC
PROSPECTUS INFORMATION REGARDING THE FUNDS 13
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 that 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 formula 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 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.
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.
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 before the time as of which the net
asset value is determined, are effective on and will receive the price
determined that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined as of, one hour
prior to 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 before the time as of which the net asset value is
determined.
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 time as of which the net asset value of the fund is
determined, 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.
We have contractual relationships with certain financial intermediaries in
which such intermediaries represent that they have systems to track the time at
which investment orders are received and to segregate orders received at
different times. Based on these representations, each fund has authorized such
intermediaries and their designees to accept purchase and redemption orders on
the fund's behalf up to the applicable cut-off time. The fund will be deemed to
have received such orders upon acceptance by the duly authorized intermediary,
and such orders will be priced at the fund's net asset value next determined
after acceptance on the fund's behalf by such intermediary.
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.
16 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
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.
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) when the fund is liquidated in the January following the
fund's target maturity year. If CPF is not available, fund shares will be
exchanged 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 tax.
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
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 17
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.
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. Distributions from
gains on assets held greater than 12 months but not more than 18 months (28%
rate gain) and/or assets held greater than 18 months (20% rate gain) are taxable
as long-term gains regardless of the length of time you have held the shares.
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 (28% or 20% rate
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 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 distributions 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 regulations, 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 considered long-term subject tax at
a maximum rate of 28% (28% rate gain/loss) if shareholders have held such shares
for a period of more than 12 months but not more than 18 months and long-term
subject to tax at a maximum rate of 20%, minimum of 10% (20% rate gain/loss) if
shareholders have held such shares for
18 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
a period of more than 18 months. 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. 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 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 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, Senior 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 Target funds
since July, 1990.
JEREMY FLETCHER, Associate Portfolio Manager, joined the manager in 1991 and
has been a member of the team that manages the Target funds since August, 1997.
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, each series of shares 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
such series by the aggregate average daily closing value of the series' net
assets during the previous month, and further by multiplying that product 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).
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 19
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, 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.
Pursuant to a Sub-Administration Agreement with the manager, Funds
Distributor, Inc. (FDI) serves as the Co-Administrator for the funds. FDI is
responsible for (i) providing certain officers of the funds and (ii) reviewing
and filing marketing and sales literature on behalf of the funds. The fees and
expenses of FDI are paid 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.
DISTRIBUTION OF FUND SHARES
The funds' shares are distributed by FDI, a registered broker-dealer (the
distributor). FDI is a wholly-owned indirect subsidiary of Boston Institutional
Group, Inc. FDI's principal business address is 60 State Street, Suite 1300,
Boston, Massachusetts 02109. 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.
Investors may open accounts with American Century only through the
distributor. All purchase transactions in the funds offered by this Prospectus
are processed by the transfer agent, which is authorized to accept any
instructions relating to fund accounts. All purchase orders must be accepted by
the distributor.
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.
20 ADDITIONAL INFORMATION YOU SHOULD KNOW AMERICAN CENTURY INVESTMENTS
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 Target Maturities Trust 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 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 representing at
least 10% of the votes entitled to be cast may request that the Trust hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND PROCEDURES
DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL INFORMATION,
WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE SHAREHOLDER
APPROVAL IS EXPRESSLY REQUIRED.
THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL SECURITIES OF A FUND ONLY IN
THOSE STATES WHERE THE FUND'S SHARES HAVE BEEN REGISTERED OR OTHERWISE QUALIFIED
FOR SALE. A FUND WILL NOT ACCEPT APPLICATIONS FROM PERSONS RESIDING IN STATES
WHERE THE FUND'S SHARES ARE NOT REGISTERED.
PROSPECTUS ADDITIONAL INFORMATION YOU SHOULD KNOW 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)
9802 [recycled logo]
SH-BKT-10355 Recycled
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[american century logo]
American
Century(reg.sm)
FEBRUARY 1, 1998
BENHAM
GROUP(reg.tm)
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 1998
AMERICAN CENTURY TARGET MATURITIES TRUST
This Statement is not a prospectus but should be read in conjunction with the
Funds' current Prospectus, dated February 1, 1998. The Funds' annual report for
the fiscal year ended September 30, 1997, 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
Taxation of Debt Instruments ............................................... 7
About the Trust ............................................................ 8
Multiple Class Structure ................................................... 9
Trustees and Officers ...................................................... 10
Management ................................................................. 12
Transfer and Administrative Services ....................................... 15
Distribution of Fund Shares ................................................ 15
Additional Purchase and Redemption Information ............................. 15
Other Information .......................................................... 17
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 331/3%
of the Fund's total assets would be lent to other parties, except, (i)
through the purchase of debt securities in accordance with its investment
objective, policies and limitations, or (ii) by engaging in repurchase
agreements with respect to portfolio securities.
4) 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, 1997, 1996, and 1995.
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 1998: 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 AMERICAN CENTURY INVESTMENTS
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 above may not reconcile precisely due to rounding
of share price, AGR, and weighted average maturity to two decimal points.
Note that the Target 1990's share price on December 31, 1990, was not the
same as its AVM on that date because the Fund had not yet been liquidated and
still held short-term Treasury securities with a 25-day maturity. The Fund was
liquidated on January 25, 1991, at a final share price of $101.46.
As a further demonstration of how the Funds have behaved over time, the
following tables show each Fund's AGR and AVM as of September 30 for each of the
past five years.
STATEMENT OF ADDITIONAL INFORMATION 5
9/30/93 9/30/94 9/30/95 9/30/96 9/30/97
AGR AGR AGR AGR AGR
- --------------------------------------------------------------------------------
Target 2000 4.66% 6.76% 5.37% 5.75% 5.24%
Target 2005 5.53 7.33 5.75 6.17 5.57
Target 2010 5.92 7.54 6.04 6.44 5.80
Target 2015 6.04 7.56 6.21 6.58 5.93
Target 2020 6.02 7.52 6.20 6.59 5.98
Target 2025 N/A N/A N/A 6.43 5.86
- --------------------------------------------------------------------------------
9/30/93 9/30/94 9/30/95 9/30/96 9/30/97
AVM AVM AVM AVM AVM
- --------------------------------------------------------------------------------
Target 2000 $100.21 $100.86 $100.99 $101.10 $101.13
Target 2005 100.21 100.58 100.32 100.71 100.85
Target 2010 100.94 101.38 101.02 102.53 103.40
Target 2015 106.84 107.95 109.62 110.11 110.52
Target 2020 100.76 102.11 102.31 103.60 104.84
Target 2025 N/A N/A N/A 109.24 110.88
- --------------------------------------------------------------------------------
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, 1997, calculated
using the SEC yield formula described above, is indicated below.
Fund 30-Day Yield
- ----------------------------------------
Target 2000 5.51%
Target 2005 5.82%
Target 2010 6.02%
Target 2015 6.12%
Target 2020 6.19%
Target 2025 6.00%
- ----------------------------------------
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, 1997, 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) 7.64% 6.72% 11.43% 12.59%
Target 2005(1) 11.60% 9.40% 13.66% 14.48%
Target 2010(1) 15.75% 11.50% 15.10% 15.79%
Target 2015(2) 19.96% 13.46% 15.56% 10.59%
Target 2020(3) 23.50% 14.79% N/A 11.12%
Target 2025(4) 24.34% N/A N/A 7.35%
- -----------------------------------------------------------------
(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.
MULTIPLE CLASS PERFORMANCE ADVERTISING
Pursuant to the Multiple Class Plan, the funds may issue additional classes
of existing funds or introduce new funds with multiple classes available for
purchase. To the extent a new class is added to an existing fund, the manager
may, in compliance with SEC and NASD rules, regulations and guidelines, market
the new class of shares using the historical performance information of the
original class of shares. When quoting performance information for the new class
of shares for periods prior to the first full quarter after inception, the
original class' performance will be restated to reflect the expenses of the new
class. For periods after the first full quarter after inception, actual
performance of the new class will be used.
TAXATION OF DEBT INSTRUMENTS
For Federal income tax purposes, debt securities purchased by the funds may
be treated as having original issue discount. Original issue discount can
generally be defined as the excess of the stated redemption price at maturity of
a debt obligation over the issue price. Original issue discount is treated as
interest earned by the fund for Federal income tax purposes, whether or not any
income is actually received, and therefore is subject to the distribution
requirements of the Code. However, original issue discount with respect to
tax-exempt obligations gen-
STATEMENT OF ADDITIONAL INFORMATION 7
erally will be excluded from a fund's taxable income. Original issue discount
with respect to tax-exempt securities is accrued and added to the adjusted tax
basis of such securities for purposes of determining gain or loss upon sale or
at maturity. Generally, the amount of original issue discount for any period is
determined on the basis of a constant yield to maturity which takes into account
the compounding of accrued interest. Under section 1286 of the Code, an
investment in a stripped bond or stripped coupon will result in original issue
discount.
A fund may purchase debt securities at a discount which exceeds the original
issue price plus previously accrued original issue discount remaining on the
securities, at the time of purchase. This additional discount represents market
discount for income tax purposes. Generally, market discount is accrued on a
daily basis.
A fund may purchase debt securities at a premium, i.e., at a purchase price
in excess of face amount. With respect to tax-exempt securities, the premium
must be amortized to the maturity date but no deduction is allowed for the
premium amortization. Instead, the amortized bond premium will reduce the fund's
adjusted tax basis in the securities. For taxable securities, the premium may be
amortized if the fund so elects. The amortized premium on taxable securities is
allowed as a deduction, and, generally for securities issued after September 27,
1985, must be amortized under a constant yield method.
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
<TABLE>
FUND NAME AS OF JANUARY, 1997 FORMER FUND NAME
- -----------------------------------------------------------------------------------------------------------
<S> <C>
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
Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust. The Declaration of Trust also provides for
indemnification and reimbursement of expenses of any shareholder held personally
liable for obligations of the Trust. The Declaration of Trust provides that the
Trust will, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. The Declaration of Trust further provides that the Trust may maintain
appropriate insurance (for example, fidelity, bonding, and errors and omissions
insurance) for the protection of the Trust, its shareholders, Trustees,
officers, employees, and agents to cover possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss 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, served as the Trust's independent auditors and provided
services including the audit of the annual financial statements.
For the fiscal year, which started 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 12B-1
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
STATEMENT OF ADDITIONAL INFORMATION 9
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 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,
10 AMERICAN CENTURY INVESTMENTS
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 Century Services Corporation
(ACS); the Trust's distribution agent and co-administrator, Funds Distributor,
Inc. (FDI); 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
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). Mr. Gilson is 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). Previously, he was counsel to Marron, Reid & Sheehy (a San Francisco law
firm, 1984).
*WILLIAM M. LYONS, Trustee (1998). Mr. Lyons is President, Chief Operating
Officer and General Counsel of ACC; Executive Vice President and General Counsel
of ACS and ACIS; Assistant Secretary of ACC; and Secretary of ACS and ACIS.
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, Chairman of the Board of Trustees (1998); 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
RICHARD W. INGRAM; President (1998); Executive Vice President and Director
of Client Services and Treasury Administration of FDI. Mr. Ingram joined FDI in
1995. Prior to joining FDI, Mr. Ingram served as Vice President and Division
Manager of First Data Investor Services Group, Inc. (from March 1994 to November
1995), and before that as Vice President, Assistant Treasurer and Tax Director -
Mutual Funds of The Boston Company, Inc. (from 1989 to 1994).
STATEMENT OF ADDITIONAL INFORMATION 11
*DOUGLAS A. PAUL, Secretary (1988), Vice President (1990), and General
Counsel (1990); Vice President and Associate General Counsel, ACS.
*MARYANNE ROEPKE, CPA, Chief Financial Officer and Treasurer (1995); Vice
President (1998); Vice President and Assistant Treasurer of ACS.
CHRISTOPHER J. KELLEY, Vice President (1998); Vice President and Associate
General Counsel of FDI. Mr. Kelley joined FDI in 1996. Prior to joining FDI, Mr.
Kelley served as Assistant Counsel at Forum Financial Group (from April 1994 to
July 1996), and before that as a compliance officer for Putnam Investments (from
1992 to 1994).
MARY A. NELSON; Vice President (1998); Vice President and Manager of
Treasury Services and Administration of FDI. Ms. Nelson joined FDI in 1995.
Prior to joining FDI, Ms. Nelson served as Assistant Vice President and Client
Manager for The Boston Company, Inc. (from 1989 to 1994).
*PATRICK A. LOOBY, Vice President and Assistant Secretary (1998); Vice
President of ACS.
*JON ZINDEL, Tax Officer (1997); Director of Taxation (1996); Tax Manager,
Price Waterhouse LLP (1989).
As of January 5, 1998, the Funds' Trustees and officers, as a group, owned
less than 1% of each Fund's total shares outstanding.
*C. JEAN WADE, Controller (1996).
The table on the next page summarizes the compensation that the Trustees
received for the Funds' fiscal year ended September 30, 1997, 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 0.3600%
Next $1 billion 0.3080%
Next $3 billion 0.2780%
Next $5 billion 0.2580%
Next $15 billion 0.2450%
Next $25 billion 0.2430%
Thereafter 0.2425%
- ---------------------------------------------------------------------------
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).
12 AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
TRUSTEE COMPENSATION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
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 $1,310 (Target 2000) Not Applicable Not Applicable $59,500
1,281 (Target 2005)
1,127 (Target 2010)
1,134 (Target 2015)
2,045 (Target 2020)
1,053 (Target 2025)
- --------------------------------------------------------------------------------------------------------------------------------
Ronald J. Gilson $1,343 (Target 2000) Not Applicable Not Applicable $61,250
1,312 (Target 2005)
1,139 (Target 2010)
1,146 (Target 2015)
2,146 (Target 2020)
1,066 (Target 2025)
- --------------------------------------------------------------------------------------------------------------------------------
Myron S. Scholes $1,219 (Target 2000) Not Applicable Not Applicable $55,250
1,200 (Target 2005)
1,089 (Target 2010)
1,094 (Target 2015)
1,731 (Target 2020)
1,043 (Target 2025)
- --------------------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $1,509 (Target 2000) Not Applicable Not Applicable $68,750
1,463 (Target 2005)
1,209 (Target 2010)
1,220 (Target 2015)
2,717 (Target 2020)
1,089 (Target 2025)
- --------------------------------------------------------------------------------------------------------------------------------
Ezra Solomon*** $319 (Target 2000) Not Applicable Not Applicable $5,000
313 (Target 2005)
279 (Target 2010)
281 (Target 2015)
485 (Target 2020)
261 (Target 2025)
- --------------------------------------------------------------------------------------------------------------------------------
Isaac Stein $1,334 (Target 2000) Not Applicable Not Applicable $60,750
1,304 (Target 2005)
1,136 (Target 2010)
1,143 (Target 2015)
2,118 (Target 2020)
1,063 (Target 2025)
- --------------------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $1,411 (Target 2000) Not Applicable Not Applicable $64,250
1,373 (Target 2005)
1,170 (Target 2010)
1,178 (Target 2015)
2,388 (Target 2020)
1,069 (Target 2025)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
STATEMENT OF ADDITIONAL INFORMATION 13
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.
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, 1997, 1996, and 1995, are indicated in the following table. Fee
amounts are net of amounts reimbursed or recouped.
14 AMERICAN CENTURY INVESTMENTS
Investment Advisory Fees*
- ----------------------------------------------------------------
Fiscal Fiscal Fiscal
Fund 1997 1996 1995
- ----------------------------------------------------------------
Target 2000 $902,194 $815,109 $984,031
Target 2005 875,825 672,052 420,328
Target 2010 380,066 368,802 175,368
Target 2015 386,638 410,846 336,887
Target 2020 2,691,970 2,525,244 422,436
Target 2025 181,630 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.
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, 1997, 1996, and 1995, are indicated in the
following tables. Fee amounts are net of reimbursements.
Administrative Fees
- ----------------------------------------------------------------
Fiscal Fiscal Fiscal
Fund 1997 1996 1995
- ----------------------------------------------------------------
Target 2000 $207,663 $274,837 $274,835
Target 2005 193,216 217,047 121,534
Target 2010 85,820 106,951 64,928
Target 2015 89,672 117,664 108,475
Target 2020 685,160 744,692 185,592
Target 2025 42,716 14,090 --
- ----------------------------------------------------------------
Transfer Agent Fees
- ----------------------------------------------------------------
Fiscal Fiscal Fiscal
Fund 1997 1996 1995
- ----------------------------------------------------------------
Target 2000 $196,492 $267,353 $285,145
Target 2005 213,613 266,687 183,211
Target 2010 131,294 178,493 130,450
Target 2015 132,040 178,562 202,013
Target 2020 618,798 858,442 350,332
Target 2025 57,380 32,597 --
- ----------------------------------------------------------------
DISTRIBUTION OF FUND SHARES
The Funds' shares are distributed by Funds Distributor, Inc. (FDI). The
Manager pays all expenses for promoting and distributing the Fund shares offered
by this Prospectus. The Funds do not pay any commissions or other fees to the
distributor or to any other broker-dealers or financial intermediaries in
connection with the distribution of Fund shares.
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 January 5, 1998, 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.
STATEMENT OF ADDITIONAL INFORMATION 15
FUND TARGET 2000
- ---------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101-4122
- ---------------------------------------------------------------------------
# of Shares Held 422,409
- ---------------------------------------------------------------------------
% of Total Shares
Outstanding 15.3%
- ---------------------------------------------------------------------------
FUND TARGET 2005
- ---------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101
- ---------------------------------------------------------------------------
# of Shares Held 763,404
- ---------------------------------------------------------------------------
% of Total Shares
Outstanding 17.1%
- ---------------------------------------------------------------------------
FUND TARGET 2010
- ---------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101-4122
- ---------------------------------------------------------------------------
# of Shares Held 593,960
- ---------------------------------------------------------------------------
% of Total Shares
Outstanding 19.7%
- ---------------------------------------------------------------------------
FUND TARGET 2015
- ---------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101
- ---------------------------------------------------------------------------
# of Shares Held 824,592
- ---------------------------------------------------------------------------
% of Total Shares
Outstanding 26.1%
- ---------------------------------------------------------------------------
FUND TARGET 2020
- ---------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101-4122
- ---------------------------------------------------------------------------
# of Shares Held 6,357,487
- ---------------------------------------------------------------------------
% of Total Shares
Outstanding 32.7%
- ---------------------------------------------------------------------------
FUND TARGET 2025
- ---------------------------------------------------------------------------
Shareholder Name and Raymond James & Associates
Address P.O. Box 14547
800 Carillon Pkwy
St. Petersburg, FL 33716
- ---------------------------------------------------------------------------
# of Shares Held 475,877
- ---------------------------------------------------------------------------
% of Total Shares
Outstanding 6.2%
- ---------------------------------------------------------------------------
Shareholder Name and Charles Schwab & Co.
Address 101 Montgomery Street
San Francisco, CA 94101-4122
- ---------------------------------------------------------------------------
# of Shares Held 2,504,870
- ---------------------------------------------------------------------------
% of Total Shares
Outstanding 32.4%
- ---------------------------------------------------------------------------
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.
16 AMERICAN CENTURY INVESTMENTS
FUND LIQUIDATIONS. On or before January 31st of the year following a Fund's
target maturity year, its investments will be sold or allowed to mature; its
liabilities will be discharged, or a provision will be made for their discharge,
and its accounts will be closed. A shareholder may choose to redeem his or her
shares in one of the following ways: (i) by receiving redemption proceeds or
(ii) by exchanging shares for shares of another American Century fund. If the
Fund receives no instructions from a shareholder, his or her shares will be
exchanged for shares of 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.
STATEMENT OF ADDITIONAL INFORMATION 17
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)
9802 [recycled logo]
SH-BKT-10356 Recycled
<PAGE>
AMERICAN CENTURY TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 28
1940 Act Amendment No. 30
- --------------------------------------------------------------------------------
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, 1997, are
incorporated herein by reference to the Registrant's Annual Report
dated September 30, 1997 filed on November 21, 1997 (Accession #
757928-97-000008).
(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 incorporated herein by reference to Exhibit 1 of
Post-Effective Amendment No. 27 filed on August 28, 1997
(Accession # 757928-97-000004).
(c) Amendment to the Declaration of Trust dated August 1, 1997,
is incorporated herein by reference to Exhibit 1 of
Post-Effective Amendment No. 27 filed on August 28, 1997
(Accession # 757928-97-000004).
(2) Amended and Restated Bylaws, dated May 17, 1995, are incorporated
herein by reference to Exhibit 2 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 incorporated herein by reference to Exhibit 5
of Post-Effective Amendment No. 27 filed on August 28, 1997
(Accession # 757928-97-000004).
(6) Distribution Agreement between American Century Target Maturities
Trust and Funds Distributor, Inc., dated January 15, 1998 is
included herein.
(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, 1997 is
incorporated herein by reference to the Rule 24f-2 Notice filed
on November 14, 1997 (Accession # 757928-96-000006).
(11) Consent of KPMG Peat Marwick, LLP, independent auditors, is
included herein.
(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 filed on September 17, 1992.
(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 filed on September 17, 1992.
(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 incorporated herein by reference to Exhibit 15 of
Post-Effective Amendment No. 27 filed on August 28, 1997
(Accession # 757928-97-000004).
(16) Schedule for computation of each performance quotation provided
in response to Item 22 is included herein.
(17) Power of Attorney dated January 15, 1998 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 incorporated herein by
reference to Exhibit 18 of Post-Effective Amendment No. 27 filed
on August 28, 1997 (Accession # 757928-97-000004).
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
As of December 31, 1997, each Portfolio of American Century Target Maturities
Trust had the following number of shareholders of record:
Target 2000 ........................ 9,956
Target 2005 ........................11,797
Target 2010 ........................ 6,915
Target 2015 ........................ 6,149
Target 2020 ........................15,973
Target 2025 ........................ 3,147
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, Funds Distributor, Inc., is distribution
agent to American Century California 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 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 by this Item 29(b)
with respect to each director, officer and partner of FDI is incorporated herein
by reference to Schedule A of Form BD filed by FDI with the Securities and
Exchange Commission pursuant to the Securities Act of 1934 (SEC File No.
8-20518).
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. 28/Amendment No. 30 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 January, 1998. 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. 28/Amendment No. 30 has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
Date
<S> <C> <C>
* Trustee January 27, 1998
- ---------------------------------
Albert A. Eisenstat
* Trustee January 27, 1998
- ---------------------------------
Ronald J. Gilson
* Trustee January 27, 1998
- ---------------------------------
William M. Lyons
* Trustee January 27, 1998
- ---------------------------------
Myron S. Scholes
* Trustee January 27, 1998
- ---------------------------------
Kenneth E. Scott
* Trustee January 27, 1998
- ---------------------------------
Isaac Stein
* Chairman of the Board, Trustee January 27, 1998
- ---------------------------------
James E. Stowers III
* Trustee January 27, 1998
- ---------------------------------
Jeanne D. Wohlers
* Treasurer January 27, 1998
- ---------------------------------
Maryanne Roepke
</TABLE>
/s/ Douglas A. Paul
*by Douglas A. Paul, Attorney in Fact (pursuant to a Power of Attorney dated
January 15, 1998).
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
incorporated herein by reference to Exhibit 1 of Post-Effective
Amendment No. 27 filed on August 28, 1997 (Accession #
757928-97-000004).
EX-99.B1c Amendment to the Declaration of Trust dated August 1, 1997, is
incorporated herein by reference to Exhibit 1 of Post-Effective
Amendment No. 27 filed on August 28, 1997 (Accession #
757928-97-000004).
EX-99.B2 Amended and Restated Bylaws, dated May 17, 1995, are incorporated
herein by reference to Exhibit 2 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
incorporated herein by reference to Exhibit 5 of Post-Effective
Amendment No. 27 filed on August 28, 1997 (Accession #
757928-97-000004).
EX-99.B6 Distribution Agreement between American Century Target Maturities
Trust and Funds Distributor, Inc., dated January 15, 1998 is
included herein.
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, 1997 is incorporated herein by
reference to the Rule 24f-2 Notice filed on November 14, 1997
(Accession # 757928-97-000006).
EX-99.B11 Consent of KPMG Peat Marwick, LLP, independent auditors, is included
herein.
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 filed on September 17, 1992.
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 filed on September 17, 1992.
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
incorporated herein by reference to Exhibit 15 of Post-Effective
Amendment No. 27 filed on August 28, 1997 (Accession #
757928-97-000004).
EX-99.B16 Schedule for computation of each performance quotation provided in
response to Item 22 is included herein.
EX-99.B17 Power of Attorney dated January 15, 1998 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 incorporated herein by reference to Exhibit 18 of
Post-Effective Amendment No. 27 filed on August 28, 1997 (Accession
# 757928-97-000004).
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
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made and entered into this 15th day of
January, 1998, by and between each of the open-end management investment
companies listed on SCHEDULE A, attached hereto, as of the dates noted on such
SCHEDULE A, together with all other open end management investment companies
subsequently established and made subject to this Agreement in accordance with
Section 11 (the "Issuers") and FUNDS DISTRIBUTOR, INC. ("Distributor"), a
Massachusetts corporation.
WHEREAS, the common stock of each of the Issuers is currently divided
into a number of separate series of shares, or funds, each corresponding to a
distinct portfolio of securities, and many of which are also divided into
multiple classes of shares; and
WHEREAS, Distributor is a registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934 and is a member of the National Association of Securities Dealers, Inc.;
and
WHEREAS, American Century Investment Management, Inc. (the "Manager")
is the registered investment adviser to the Issuers; and
WHEREAS, the Boards of Directors/Trustees of the Funds (the "Board")
wish to engage the Distributor to act as the distributor of the Funds;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties agree as follows:
Section 1. General Responsibilities
Each Issuer hereby engages Distributor to act as exclusive distributor of the
shares of each class of its separate series, and any other series and classes as
may be designated from time to time hereafter (the "Funds"). The Funds subject
to this Distribution Agreement are identified on SCHEDULE A, as the same may be
amended from time to time. Sales of a Fund's shares shall be made only to
investors residing in those states in which such Fund is registered. After
effectiveness of each Fund's registration statement, Distributor will hold
itself available to receive, as agent for the Funds, and will receive, by mail,
telex, telephone, and/or such other method as may be agreed upon between
Distributor and Issuers, orders for the purchase of Fund shares, and will accept
or reject such orders on behalf of the Funds in accordance with the provisions
of the applicable Fund's prospectus. Distributor will be available to transmit
such orders as are so accepted to the Fund's transfer agent as promptly as
possible for processing at the shares' net asset value next determined in
accordance with the prospectuses. Distributor shall promptly forward to the
Funds' custodian funds received in respect of purchases of shares.
a. Offering Price. All shares sold by Distributor under this Agreement shall
be sold at the net asset value per share ("Net Asset Value") determined in
the manner described in each Fund's prospectus, as it may be amended from
time to time, next computed after the order is accepted by Distributor or
its agents or affiliates. Each Fund shall determine and promptly furnish to
Distributor a statement of the Net Asset Value of shares of said Fund's
series at least once on each day on which the Fund is open for business, as
described in its current prospectus.
b. Promotion Support. Each Fund shall furnish to Distributor for use in
connection with the sale of its shares such written information with
respect to said Fund as Distributor may reasonably request. Each Fund
represents and warrants that such information, when authenticated by the
signature of one of its officers, shall be true and correct. Each Fund
shall also furnish to Distributor copies of its reports to its shareholders
and such additional information regarding said Fund's financial condition
as Distributor may reasonably request. Any and all representations,
statements and solicitations respecting a Fund's shares made in
advertisements, sales literature and in any other manner whatsoever shall
be limited to and conform in all respects to the information provided
hereunder.
c. Regulatory Compliance. Each Fund shall furnish to Distributor copies of its
current form of prospectus, as filed with the SEC, in such quantity as
Distributor may reasonably request from time to time, and authorizes
Distributor to use the prospectus in connection with the sale of such
Fund's shares. All such sales shall be initiated by offer of, and conducted
in accordance with, such prospectus and all of the provisions of the
Securities Act of 1933 ("1933 Act"), the Investment Company Act of 1940
("1940 Act") and all the rules and regulations thereunder. Distributor
shall furnish applicable federal and state regulatory authorities with any
information or reports related to its services under this Agreement which
such authorities may lawfully request in order to ascertain whether the
Funds' operations are being conducted in a manner consistent with any
applicable law or regulations.
d. Availability of Shares. Each Fund agrees to sell shares of that Fund so
long as it has shares available for sale and to cause each Fund's transfer
agent to record on its books the ownership of (or deliver certificates, if
any, for) such Shares registered in such names and amounts as the
Distributor has requested in writing or other means of data transmission,
as promptly as practicable after receipt by each Fund of the net asset
value thereof and written request of the Distributor therefor.
e. Federal Registration of Shares. Each Fund shall, from time to time, take
such steps as may be necessary to register its shares under the 1933 Act,
including payment of the related filing fee, to the end that there will be
available for sale such number of shares as the Distributor may be expected
to sell. Each Fund agrees to file, from time to time, such amendments,
reports and other documents as may be necessary in order that there may be
no untrue statement of a material fact in a registration statement or
prospectus pertaining to the Fund, or no omission to state therein a
material fact required to be stated therein, which misstatement or omission
would make the statements therein misleading.
f. State Registration of Shares. Each Fund shall, from time to time, take such
steps as may be necessary to qualify and maintain the qualification of an
appropriate number of the shares of each Fund for sale under the securities
laws of such states as the Distributor and each Fund may approve, and, if
necessary or appropriate in connection therewith, to qualify and maintain
the qualification of each Fund as a broker or dealer in such states;
provided that each Fund shall not be required to amend its Articles of
Incorporation, Declaration of Trust or By-laws to comply with the laws of
any state, to maintain an office in any state, to change the terms of the
offering of the shares in any state from the terms set forth in its
registration statement and prospectus, to qualify as a foreign corporation
in any state or to consent to service of process in any state other than
with respect to claims arising out of the offering of the shares. If a Fund
determines not to sell shares in a particular state or jurisdiction, the
Fund or its Administrator shall notify Distributor and Distributor shall
not sell shares in such state or jurisdiction. The Distributor shall
furnish such information and other material relating to its affairs and
activities as may be required by such Fund (or Administrator) in connection
with such qualifications.
g. Sales Through Intermediaries. Distributor will enter into selling
agreements with various financial intermediaries for the sale or
distribution of Fund shares. Any payment obligations arising thereunder for
distribution services shall be made by Distributor or the Administrator, as
paying agent for the Fund, out of any 12b-1 fee payable by the applicable
Funds or, where appropriate, out of the profits the Administrator earns
from fees earned under its Management Agreement with the Fund.
h. Acceptance. All orders for the purchase of its shares are subject to
acceptance by each Fund.
Section 2. Compensation
a. Investor Class, Institutional Class and Single Class Shares. Except for the
promises of the Funds contained in this Agreement and their performance
thereof, Distributor shall not be entitled to compensation for its services
hereunder with respect to the Investor Class or the Institutional Class of
shares or funds that offer a single class of shares.
b. Advisor Class and Service Class Shares. For the services provided and
expenses incurred by Distributor as described in Section 2 and Section 3 of
the Master Distribution and Shareholder Services Plan adopted by the Board
with respect to the Advisor Class of such Funds, and for the services
provided and expenses incurred by Distributor as described in Section 2 of
the Shareholder Services Plan adopted by the Board with respect to the
Service Class of such Funds, Distributor shall be compensated by the
Manager, not by the Funds.
Section 3. Expenses
a. Distributor Expenses. In connection with the sale and distribution of
shares pursuant to this Agreement, the Distributor shall pay all of its own
expenses and such other expenses as are not specifically assumed by the
Funds or its Administrator as hereinafter provided.
b. Payments to Third Parties. The Administrator shall be responsible for
paying all administrative services fees payable to financial intermediaries
pursuant to contractual arrangements entered into by Administrator and/or
Distributor for the provision of shareholder and administrative services to
beneficial owners of Fund shares. The Funds, through the Distributor or the
Administrator, as paying agent, shall be responsible for paying all 12b-1
fees payable to financial intermediaries pursuant to contractual
arrangements entered into by Distributor for the distribution and sale of
Advisor Class shares.
c. Fund Expenses. The parties acknowledge that the Distributor shall not be
liable for any fees or expenses incurred in (a) the preparation of audited
financial statements for the Fund; (b) the preparation and printing of
post-effective amendments, supplements and revisions of its registration
statements and prospectuses; (c) the preparation, printing and distributing
to its shareholders copies of any prospectus; (d) the preparation, printing
and distributing to its shareholders of shareholder reports and other
shareholder communications; (e) the registration of the Fund and its shares
with the Securities and Exchange Commission; and (f) the qualification of
the Fund and its shares in each state in which its shares will be qualified
for sale. Nothing contained herein shall be deemed to require the Funds to
pay any of the costs of advertising the sale of Fund shares.
Section 4. Independent Contractor
Distributor shall be an independent contractor. Neither Distributor nor any of
its officers, trustees, employees or representatives is or shall be an employee
of a Fund in connection with the performance of Distributor's duties hereunder.
Distributor shall be responsible for its own conduct and the employment,
control, compensation and conduct of its agents and employees, and for any
injury to such agents or employees or to others through its agents and
employees. Any obligations of Distributor hereunder may be performed by one or
more affiliates of Distributor.
Section 5. Affiliation with the Funds
Subject to and in accordance with each Fund's formative documents, Section 10 of
the 1940 Act, it is understood: that the directors, trustees, officers, agents
and shareholders of the Funds are or may be interested in Distributor as
directors, officers, or shareholders of Distributor; that directors, officers,
agents or shareholders of Distributor are or may be interested in the Funds as
directors, trustees, officers, shareholders (directly or indirectly) or
otherwise; and that the affect of any such interest shall be governed by the
1940 Act and Section 4.
Section 6. Books and Records
It is expressly understood and agreed that all documents, reports, records,
books, files and other materials ("Fund Records") relating to this Agreement and
the services to be performed hereunder shall be the sole property of the Funds
and that such property, to the extent held by Distributor, shall be held by
Distributor as agent during the effective term of this Agreement. All Fund
Records shall be delivered to the applicable Fund upon the termination of this
Agreement, free from any claim or retention of rights by Distributor.
Section 7. Indemnification
a. The parties acknowledge that the obligations of the Funds to take any
action or perform any duties under this Agreement have been delegated to
the Administrator pursuant to the terms of a Management Agreement and that
the liability for breach or nonperformance under this Agreement and all
indemnification obligations for damages shall be governed under the Master
Consulting Agreement between Distributor and Administrator.
b. The Distributor agrees to indemnify, defend and hold each Fund, its
directors, trustees and officers and any person who controls Each Fund, if
any, within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending against such claims,
demands or liabilities and any counsel fees incurred in connection
therewith) which each Fund, its directors, trustees or officers of any such
controlling person may incur under the 1933 Act or under common law or
otherwise, but only to the extent that such liability or expense incurred
by each Fund, its directors, trustees or officers or such controlling
person resulting from such claims or demands shall arise out of or be based
upon any alleged untrue statement of a material fact contained in
information furnished in writing by the Distributor to each Fund for use in
the preparation of the registration statement or prospectus or shall arise
out of or be based upon any alleged omission to state a material fact in
such information or a fact necessary to make such information not
misleading, it being understood that each Fund will rely upon the
information provided by the Distributor for use in the preparation of the
registration statement and prospectus. The Distributor's agreement to
indemnify each Fund, its directors, trustees and officers, and any such
controlling person as aforesaid is expressly conditioned upon the
Distributor's being promptly notified of any action brought against each
Fund, its directors, trustees or officers or any such controlling person,
such notification to be given to the Distributor in accordance with Section
11.
Section 8. Limitation of Liability
The Distributor shall not be liable for any error of judgment or for any loss
suffered by each Fund in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or for reckless
disregard by it of its obligations and duties under this Agreement.
Section 9. Compliance with Securities Laws
Each Fund represents that it is registered as an open-end management investment
company under the 1940 Act, and agrees that it will comply with the provisions
of the 1940 Act and of the rules and regulations thereunder. Each Fund and the
Distributor each agree to comply with the applicable terms and provisions of the
1940 Act, the 1933 Act and, subject to the provisions of Section 1(f),
applicable state securities laws. The Distributor agrees to comply with the
applicable terms and provisions of the Securities Exchange Act of 1934.
Section 10. Confidentiality
The Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of each Fund all records and other
information not otherwise publicly available relative to each Fund and its
prior, present or potential shareholders and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
each Fund or the Fund's Administrator, which approval shall not be unreasonably
withheld and may not be withheld where the Distributor reasonably believes that
the disclosure is necessary to avoid exposure to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by each Fund.
Section 11. Notices
Any notice required to be given pursuant to this Agreement shall be deemed duly
given if delivered or mailed by registered mail, postage prepaid: (1) to the
Distributor at Funds Distributor, Inc., 60 State Street, 13th Floor, Boston,
Massachusetts 02109, Attention: President with a copy to General Counsel; or (2)
to the Fund at its address as set forth in its Prospectuses, Attention: General
Counsel, or at such other address as either party may from time to time specify
to the other party pursuant to this Section 11.
Section 12. Services Not Exclusive
The services of Distributor to the Funds hereunder are not to be deemed
exclusive, and Distributor shall be free to render similar services to others.
Section 13. Renewal and Termination
a. Term and Annual Renewal. The term of this Agreement shall be from the date
of its approval by the vote of a majority of the Board of each Issuer, and
it shall continue in effect from year to year thereafter only so long as
such continuance is specifically approved at least annually by the vote of
a majority of its Board, and the vote of a majority of said
directors/trustees who are neither parties to the Agreement nor interested
persons of any such party, cast at a meeting called for the purpose of
voting on such approval. "Approved at least annually" shall mean approval
occurring, with respect to the first continuance of the Agreement, during
the 90 days prior to and including the date of its termination in the
absence of such approval, and with respect to any subsequent continuance,
during the 90 days prior to and including the first anniversary of the date
upon which the most recent previous annual continuance of the Agreement
became effective. The effective date of the Agreement with respect to each
Fund is identified in the Schedules attached to this Agreement.
b. Termination. This Agreement may be terminated at any time, without payment
of any penalty, by a Fund's Board, upon 60 days' written notice to
Distributor, and by Distributor upon 60 days' written notice to the Fund.
This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" shall have the meaning set forth for such
term in Section 2(a)(4) of the 1940 Act.
Section 14. Severability
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or similar authority, the remainder of this Agreement
shall not be affected thereby.
Section 15. Applicable Law
This Agreement shall be construed in accordance with the laws of the State of
Missouri.
Section 16. Amendment
This Agreement and the Schedules forming a part hereof may be amended at any
time by a writing signed by each of the parties hereto. In the event that the
Board or trustees of any additional funds indicate by resolution that such funds
are to be made parties to this Agreement, whether such funds were in existence
at the time of the effective date of this Agreement or subsequently formed,
SCHEDULE A hereto shall be amended to reflect the addition of such new funds and
such new funds shall thereafter become parties hereto. In the event that such
new funds issue multiple classes of shares, SCHEDULES B, C, D, and E, as
appropriate, shall be amended to reflect the addition of such new funds'
classes. In the event that any of the Funds listed on SCHEDULE A terminates its
registration as a management investment company, or otherwise ceases operations,
SCHEDULE A (and, as appropriate, SCHEDULES B, C, D, and E) shall be amended to
reflect the deletion of such Fund and its various classes.
FUNDS DISTRIBUTOR, INC.
By:/s/ Marie E. Connolly
Marie E. Connolly
President
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
AMERICAN CENTURY INVESTMENT TRUST
AMERICAN CENTURY MUNICIPAL TRUST
AMERICAN CENTURY MUTUAL FUNDS, INC.
AMERICAN CENTURY PREMIUM RESERVES, INC.
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
AMERICAN CENTURY TARGET MATURITIES TRUST
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
By:/s/ William M. Lyons
William M. Lyons
Executive Vice President of each of the Issuers
<PAGE>
SCHEDULE A
Companies and Funds Covered by this Distribution Agreement
FUND DATE OF AGREEMENT
- --------------------------------------------------------------------------------
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
Benham California Municipal Money Market Fund January 15, 1998
Benham California High-Yield Municipal Fund January 15, 1998
Benham California Tax-Free Money Market Fund January 15, 1998
Benham California Limited Term Tax-Free Fund January 15, 1998
Benham California Intermediate-Term Tax-Free Fund January 15, 1998
Benham California Long-Term Tax-Free Fund January 15, 1998
Benham California Insured Tax-Free Fund January 15, 1998
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund January 15, 1998
American Century Real Estate Fund January 15, 1998
American Century Value Fund January 15, 1998
AMERICAN CENTURY GOVERNMENT INCOME TRUST
Benham Short-Term Treasury Fund January 15, 1998
Benham Intermediate-Term Treasury Fund January 15, 1998
Benham Long-Term Treasury Fund January 15, 1998
Benham Government Agency Money Market Fund January 15, 1998
Benham Short-Term Government Fund January 15, 1998
Benham GNMA Fund January 15, 1998
Benham Inflation-Adjusted Treasury Fund January 15, 1998
Benham Capital Preservation Fund January 15, 1998
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
Benham International Bond Fund January 15, 1998
AMERICAN CENTURY INVESTMENT TRUST
Benham Prime Money Market Fund January 15, 1998
AMERICAN CENTURY MUNICIPAL TRUST
Benham Arizona Intermediate-Term Municipal Fund January 15, 1998
Benham Florida Municipal Money Market Fund January 15, 1998
Benham Florida Intermediate-Term Municipal Fund January 15, 1998
Benham Tax-Free Money Market Fund January 15, 1998
Benham Intermediate-Term Tax-Free Fund January 15, 1998
Benham Long-Term Tax-Free Fund January 15, 1998
Benham Limited-Term Tax-Free Fund January 15, 1998
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund January 15, 1998
Benham Cash Reserve Fund January 15, 1998
Twentieth Century Growth Fund January 15, 1998
Twentieth Century Heritage Fund January 15, 1998
Benham Intermediate-Term Bond Fund January 15, 1998
Benham Limited-Term Bond Fund January 15, 1998
Benham Bond Fund January 15, 1998
Twentieth Century Select Fund January 15, 1998
Benham Intermediate-Term Government Fund January 15, 1998
Benham Short-Term Government Fund January 15, 1998
Twentieth Century Ultra Fund January 15, 1998
Twentieth Century Vista Fund January 15, 1998
Twentieth Century Giftrust January 15, 1998
Twentieth Century New Opportunities Fund January 15, 1998
AMERICAN CENTURY PREMIUM RESERVES, INC.
Benham Premium Government Reserve Fund January 15, 1998
Benham Premium Capital Reserve Fund January 15, 1998
Benham Premium Managed Bond Fund January 15, 1998
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
American Century Equity Growth Fund January 15, 1998
American Century Income & Growth Fund January 15, 1998
American Century Global Gold Fund January 15, 1998
American Century Global Natural Resources Fund January 15, 1998
American Century Utilities Fund January 15, 1998
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Allocation: Aggressive January 15, 1998
American Century Strategic Allocation: Conservative January 15, 1998
American Century Strategic Allocation: Moderate January 15, 1998
AMERICAN CENTURY TARGET MATURITIES TRUST
Benham Target Maturities Trust: 2000 January 15, 1998
Benham Target Maturities Trust: 2005 January 15, 1998
Benham Target Maturities Trust: 2010 January 15, 1998
Benham Target Maturities Trust: 2015 January 15, 1998
Benham Target Maturities Trust: 2020 January 15, 1998
Benham Target Maturities Trust: 2025 January 15, 1998
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century VP Advantage January 15, 1998
American Century VP Balanced January 15, 1998
American Century VP Capital Appreciation January 15, 1998
American Century VP International January 15, 1998
American Century VP Income & Growth January 15, 1998
American Century VP Value January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund January 15, 1998
Twentieth Century International Growth Fund January 15, 1998
Twentieth Century International Discovery Fund January 15, 1998
<PAGE>
SCHEDULE B
Investor Class and Single Class Funds
FUND DATE OF AGREEMENT
- --------------------------------------------------------------------------------
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
Benham California Municipal Money Market Fund January 15, 1998
Benham California High-Yield Municipal Fund January 15, 1998
Benham California Tax-Free Money Market Fund January 15, 1998
Benham California Limited Term Tax-Free Fund January 15, 1998
Benham California Intermediate-Term Tax-Free Fund January 15, 1998
Benham California Long-Term Tax-Free Fund January 15, 1998
Benham California Insured Tax-Free Fund January 15, 1998
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund(1) January 15, 1998
American Century Real Estate Fund January 15, 1998
American Century Value Fund(2) January 15, 1998
AMERICAN CENTURY GOVERNMENT INCOME TRUST
Benham Short-Term Treasury Fund January 15, 1998
Benham Intermediate-Term Treasury Fund January 15, 1998
Benham Long-Term Treasury Fund January 15, 1998
Benham Government Agency Money Market Fund January 15, 1998
Benham Short-Term Government Fund January 15, 1998
Benham GNMA Fund January 15, 1998
Benham Inflation-Adjusted Treasury Fund January 15, 1998
Benham Capital Preservation Fund January 15, 1998
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
Benham International Bond Fund January 15, 1998
AMERICAN CENTURY INVESTMENT TRUST
Benham Prime Money Market Fund January 15, 1998
AMERICAN CENTURY MUNICIPAL TRUST
Benham Arizona Intermediate-Term Municipal Fund January 15, 1998
Benham Florida Municipal Money Market Fund January 15, 1998
Benham Florida Intermediate-Term Municipal Fund January 15, 1998
Benham Tax-Free Money Market Fund January 15, 1998
Benham Intermediate-Term Tax-Free Fund January 15, 1998
Benham Long-Term Tax-Free Fund January 15, 1998
Benham Limited-Term Tax-Free Fund January 15, 1998
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund(2) January 15, 1998
Benham Cash Reserve Fund(2) January 15, 1998
Twentieth Century Growth Fund(2) January 15, 1998
Twentieth Century Heritage Fund(2) January 15, 1998
Benham Intermediate-Term Bond Fund(2) January 15, 1998
Benham Limited-Term Bond Fund(2) January 15, 1998
Benham Bond Fund(2) January 15, 1998
Twentieth Century Select Fund(2) January 15, 1998
Benham Intermediate-Term Government Fund(2) January 15, 1998
Benham Short-Term Government Fund(2) January 15, 1998
Twentieth Century Ultra Fund(2) January 15, 1998
Twentieth Century Vista Fund(2) January 15, 1998
Twentieth Century Giftrust(1) January 15, 1998
Twentieth Century New Opportunities Fund(1) January 15, 1998
AMERICAN CENTURY PREMIUM RESERVES, INC.
Benham Premium Government Reserve Fund(1) January 15, 1998
Benham Premium Capital Reserve Fund(1) January 15, 1998
Benham Premium Bond Fund(1) January 15, 1998
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
American Century Equity Growth Fund January 15, 1998
American Century Income & Growth Fund January 15, 1998
American Century Global Gold Fund January 15, 1998
American Century Global Natural Resources Fund January 15, 1998
American Century Utilities Fund January 15, 1998
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Allocation: Aggressive(2) January 15, 1998
American Century Strategic Allocation: Conservative(2) January 15, 1998
American Century Strategic Allocation: Moderate(2) January 15, 1998
AMERICAN CENTURY TARGET MATURITIES TRUST
Benham Target Maturities Trust: 2000 January 15, 1998
Benham Target Maturities Trust: 2005 January 15, 1998
Benham Target Maturities Trust: 2010 January 15, 1998
Benham Target Maturities Trust: 2015 January 15, 1998
Benham Target Maturities Trust: 2020 January 15, 1998
Benham Target Maturities Trust: 2025 January 15, 1998
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century VP Advantage(2) January 15, 1998
American Century VP Balanced(1) January 15, 1998
American Century VP Capital Appreciation(1) January 15, 1998
American Century VP International(1) January 15, 1998
American Century VP Income & Growth January 15, 1998
American Century VP Value(1) January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund(2) January 15, 1998
Twentieth Century International Growth Fund(2) January 15, 1998
Twentieth Century International Discovery Fund(2) January 15, 1998
- --------
1 Multiple Classes of Shares
2 Single Class of Shares
<PAGE>
SCHEDULE C
Institutional Class Funds
FUND DATE OF AGREEMENT
- --------------------------------------------------------------------------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund January 15, 1998
American Century Real Estate Fund January 15, 1998
American Century Value Fund January 15, 1998
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund January 15, 1998
Twentieth Century Growth Fund January 15, 1998
Twentieth Century Heritage Fund January 15, 1998
Twentieth Century Select Fund January 15, 1998
Twentieth Century Ultra Fund January 15, 1998
Twentieth Century Vista Fund January 15, 1998
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
American Century Equity Growth Fund January 15, 1998
American Century Income & Growth Fund January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund January 15, 1998
Twentieth Century International Growth Fund January 15, 1998
Twentieth Century International Discovery Fund January 15, 1998
<PAGE>
SCHEDULE D
Service Class Funds
FUND DATE OF AGREEMENT
- --------------------------------------------------------------------------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund January 15, 1998
American Century Real Estate Fund January 15, 1998
American Century Value Fund January 15, 1998
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund January 15, 1998
Benham Cash Reserve Fund January 15, 1998
Twentieth Century Growth Fund January 15, 1998
Twentieth Century Heritage Fund January 15, 1998
Benham Intermediate-Term Bond Fund January 15, 1998
Benham Limited-Term Bond Fund January 15, 1998
Benham Bond Fund January 15, 1998
Twentieth Century Select Fund January 15, 1998
Benham Intermediate-Term Government Fund January 15, 1998
Benham Short-Term Government Fund January 15, 1998
Twentieth Century Ultra Fund January 15, 1998
Twentieth Century Vista Fund January 15, 1998
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Allocation: Aggressive January 15, 1998
American Century Strategic Allocation: Conservative January 15, 1998
American Century Strategic Allocation: Moderate January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund January 15, 1998
Twentieth Century International Growth Fund January 15, 1998
Twentieth Century International Discovery Fund January 15, 1998
<PAGE>
SCHEDULE E
Advisor Class Funds
FUND DATE OF AGREEMENT
- --------------------------------------------------------------------------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
American Century Equity Income Fund January 15, 1998
American Century Value Fund January 15, 1998
AMERICAN CENTURY GOVERNMENT INCOME TRUST
Benham Short-Term Treasury Fund January 15, 1998
Benham Intermediate-Term Treasury Fund January 15, 1998
Benham Long-Term Treasury Fund January 15, 1998
Benham Government Agency Money Market Fund January 15, 1998
Benham Short-Term Government Fund January 15, 1998
Benham GNMA Fund January 15, 1998
Benham Inflation-Adjusted Treasury Fund January 15, 1998
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
Benham International Bond Fund January 15, 1998
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Balanced Fund January 15, 1998
Benham Cash Reserve Fund January 15, 1998
Twentieth Century Growth Fund January 15, 1998
Twentieth Century Heritage Fund January 15, 1998
Benham Intermediate-Term Bond Fund January 15, 1998
Benham Limited-Term Bond Fund January 15, 1998
Benham Bond Fund January 15, 1998
Twentieth Century Select Fund January 15, 1998
Benham Intermediate-Term Government Fund January 15, 1998
Benham Short-Term Government Fund January 15, 1998
Twentieth Century Ultra Fund January 15, 1998
Twentieth Century Vista Fund January 15, 1998
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
American Century Equity Growth Fund January 15, 1998
American Century Income & Growth Fund January 15, 1998
American Century Global Gold Fund January 15, 1998
American Century Global Natural Resources Fund January 15, 1998
American Century Utilities Fund January 15, 1998
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Allocation: Aggressive January 15, 1998
American CenturyStrategic Allocation: Conservative January 15, 1998
American Century Strategic Allocation: Moderate January 15, 1998
AMERICAN CENTURY TARGET MATURITIES TRUST
Benham Target Maturities Trust: 2000 January 15, 1998
Benham Target Maturities Trust: 2005 January 15, 1998
Benham Target Maturities Trust: 2010 January 15, 1998
Benham Target Maturities Trust: 2015 January 15, 1998
Benham Target Maturities Trust: 2020 January 15, 1998
Benham Target Maturities Trust: 2025 January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
Twentieth Century Emerging Markets Fund January 15, 1998
Twentieth Century International Growth Fund January 15, 1998
Twentieth Century International Discovery Fund January 15, 1998
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
American Century Target Maturities Trust:
We consent to the inclusion in American Century Target Maturities Trust's
Post-Effective Amendment No. 28 to the Registration Statement No. 2-94608 on
Form N-1A under the Securities Act of 1933 and Amendment No. 30 to the
Registration Statement No. 811-4165 filed on Form N-1A under the Investment
Company Act of 1940 of our reports dated November 3, 1997 on the financial
statements and financial highlights of the American Century-Benham Target
Maturities Trust: 2000, American Century-Benham Target Maturities Trust: 2005,
American Century-Benham Target Maturities Trust: 2010, American Century-Benham
Target Maturities Trust: 2015, American Century-Benham Target Maturities Trust:
2020 and American Century-Benham Target Maturities Trust: 2025 for the periods
indicated therein, which reports have been incorporated by reference into the
Statement of Additional Information of American Century Target Maturities Trust.
We also consent to the reference to our firm under the heading "Financial
Highlights" in the Prospectus and under the heading "About the Trust" in the
Statement of Additional Information which is incorporated by reference into the
Prospectus.
/s/KPMG Peat Marwick LLP
Kansas City, Missouri
January 27, 1998
AMERICAN CENTURY-BENHAM TARGET 2000 FUND
YIELD CALCULATION
9/30/97
Formula: YIELD = 2[(A-B/C*D+1)^6-1]
A = Investment income earned during the period
B = Expenses accrued for the period (net of reimbursements)
C = The average daily number of shares outstanding during the
period that were entitled to receive dividends
D = The per share price on the last day of the period
A = $1,280,762.06
B = $124,033.18
C = 2,963,313.402
D = $86.06
Yield = 5.51%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2000 FUND
AVERAGE ANNUAL TOTAL RETURN
9/30/97
Formula: T=(ERV/P)^1/N -1
P = A hypothetical initial payment of $1,000
ERV = Ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the period
N = Number of years
T = Average annual total return
P ERV N T
-----------------------------------------------------------
One Year $1,000.00 $1,076.40 1.000000 7.64%
Five Year $1,000.00 $1,384.50 5.000000 6.72%
Ten Year $1,000.00 $2,952.30 10.000000 11.43%
Inception * $1,000.00 $4,411.10 12.518482 12.59%
TR = Total return for period TR=(ERV/P)-1 341.11%
*Date of Inception: 3/25/85
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2005 FUND
YIELD CALCULATION
9/30/97
Formula: YIELD = 2[(A-B/C*D+1)^6-1]
A = Investment income earned during the period
B = Expenses accrued for the period (net of reimbursements)
C = The average daily number of shares outstanding during the
period that were entitled to receive dividends
D = The per share price on the last day of the period
A = $1,479,049.20
B = $135,376.81
C = 4,346,164.323
D = $64.54
Yield = 5.82%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2005 FUND
AVERAGE ANNUAL TOTAL RETURN
9/30/97
Formula: T=(ERV/P)^1/N -1
P = A hypothetical initial payment of $1,000
ERV = Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period
N = Number of years
T = Average annual total return
P ERV N T
------------------------------------------------------------
One Year $1,000.00 $1,116.00 1.000000 11.60%
Five Year $1,000.00 $1,567.30 5.000000 9.40%
Ten Year $1,000.00 $3,599.60 10.000000 13.66%
Inception * $1,000.00 $5,432.70 12.518482 14.48%
TR = Total return for period TR=(ERV/P)-1 443.27%
*Date of Inception: 3/25/85
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2010 FUND
YIELD CALCULATION
9/30/97
Formula: YIELD = 2[(A-B/C*D+1)^6-1]
A = Investment income earned during the period
B = Expenses accrued for the period (net of reimbursements)
C = The average daily number of shares outstanding during the
period that were entitled to receive dividends
D = The per share price on the last day of the period
A = $677,863.50
B = $59,935.55
C = 2,536,444.478
D = $49.16
Yield = 6.02%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2010 FUND
AVERAGE ANNUAL TOTAL RETURN
9/30/97
Formula: T=(ERV/P)^1/N -1
P = A hypothetical initial payment of $1,000
ERV = Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period
N = Number of years
T = Average annual total return
P ERV N T
----------------------------------------------------------
One Year $1,000.00 $1,157.50 1.000000 15.75%
Five Year $1,000.00 $1,723.10 5.000000 11.50%
Ten Year $1,000.00 $4,079.70 10.000000 15.10%
Inception * $1,000.00 $6,270.40 12.518482 15.79%
TR = Total return for period TR=(ERV/P)-1 527.04%
*Date of Inception: 3/25/85
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2015 FUND
YIELD CALCULATION
9/30/97
Formula: YIELD = 2[(A-B/C*D+1)^6-1]
A = Investment income earned during the period
B = Expenses accrued for the period (net of reimbursements)
C = The average daily number of shares outstanding during the
period that were entitled to receive dividends
D = The per share price on the last day of the period
A = $629,459.32
B = $54,609.12
C = 2,979,342.554
D = $38.34
Yield = 6.12%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2015 FUND
AVERAGE ANNUAL TOTAL RETURN
9/30/97
Formula: T=(ERV/P)^1/N -1
P = A hypothetical initial payment of $1,000
ERV = Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period
N = Number of years
T = Average annual total return
P ERV N T
------------------------------------------------------
One Year $1,000.00 $1,199.60 1.000000 19.96%
Five Year $1,000.00 $1,880.30 5.000000 13.46%
Ten Year $1,000.00 $4,245.80 10.000000 15.56%
Inception * $1,000.00 $3,047.70 11.066393 10.59%
TR = Total return for period TR=(ERV/P)-1 204.77%
*Date of Inception: 9/1/86
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2020 FUND
YIELD CALCULATION
9/30/97
Formula: YIELD = 2[(A-B/C*D+1)^6-1]
A = Investment income earned during the period
B = Expenses accrued for the period (net of reimbursements)
C = The average daily number of shares outstanding during the
period that were entitled to receive dividends
D = The per share price on the last day of the period
A = $3,165,199.86
B = $270,874.64
C = 20,922,218.317
D = $27.17
Yield = 6.19%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2020 FUND
AVERAGE ANNUAL TOTAL RETURN
9/30/97
Formula: T=(ERV/P)^1/N -1
P = A hypothetical initial payment of $1,000
ERV = Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period
N = Number of years
T = Average annual total return
P ERV N T
-----------------------------------------------------------
One Year $1,000.00 $1,235.00 1.000000 23.50%
Five Year $1,000.00 $1,993.40 5.000000 14.79%
Ten Year
Inception * $1,000.00 $2,264.20 7.753593 11.12%
TR = Total return for period TR=(ERV/P)-1 126.42%
*Date of Inception: 12/29/89
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2025 FUND
YIELD CALCULATION
9/30/97
Formula: YIELD = 2[(A-B/C*D+1)^6-1]
A = Investment income earned during the period
B = Expenses accrued for the period (net of reimbursements)
C = The average daily number of shares outstanding during the
period that were entitled to receive dividends
D = The per share price on the last day of the period
A = $382,931.19
B = $33,786.29
C = 3,176,031.201
D = $22.27
Yield = 6.00%
<PAGE>
AMERICAN CENTURY-BENHAM TARGET 2025 FUND
AVERAGE ANNUAL TOTAL RETURN
9/30/97
Formula: T=(ERV/P)^1/N -1
P = A hypothetical initial payment of $1,000
ERV = Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period
N = Number of years
T = Average annual total return
P ERV N T
---------------------------------------------------------
One Year $1,000.00 $1,243.40 1.000000 24.34%
Five Year
Ten Year
Inception * $1,000.00 $1,121.90 1.622435 7.35%
TR = Total return for period TR=(ERV/P)-1 12.19%
*Date of Inception: 2/15/96
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 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 15th day of January, 1998.
AMERICAN CENTURY TARGET MATURITIES TRUST
(A Massachusetts Business Trust)
By:/*/Richard W. Ingram
Richard W. Ingram, President
SIGNATURE AND TITLE
/*/James E. Stowers, III /*/Isaac Stein
James E. Stowers, III Isaac Stein
Chairman Director
/*/Albert A. Eisenstat /*/Jeanne D. Wohlers
Albert A. Eisenstat Jeanne D. Wohlers
Director Director
/*/Ronald J. Gilson /*/William M. Lyons
Ronald J. Gilson William M. Lyons
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
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATE). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> BENHAM TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 1
<NAME> BENHAM TARGET MATURITIES TRUST: 2000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997 <F1>
<INVESTMENTS-AT-COST> 241,245,778
<INVESTMENTS-AT-VALUE> 248,790,140
<RECEIVABLES> 0
<ASSETS-OTHER> 73,630
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 248,863,770
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 486,636
<TOTAL-LIABILITIES> 486,636
<SENIOR-EQUITY> 2,886,261
<PAID-IN-CAPITAL-COMMON> 229,292,928
<SHARES-COMMON-STOCK> 2,886,261
<SHARES-COMMON-PRIOR> 3,349,052
<ACCUMULATED-NII-CURRENT> 12,055,714
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,402,131)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,544,362
<NET-ASSETS> 248,377,134
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17,633,883
<OTHER-INCOME> 0
<EXPENSES-NET> 1,464,338
<NET-INVESTMENT-INCOME> 16,169,545
<REALIZED-GAINS-CURRENT> 1,190,560
<APPREC-INCREASE-CURRENT> 2,108,565
<NET-CHANGE-FROM-OPS> 19,468,670
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17,081,069
<DISTRIBUTIONS-OF-GAINS> 0 <F2>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 833,120
<NUMBER-OF-SHARES-REDEEMED> 1,291,432
<SHARES-REINVESTED> 217,238 <F2>
<NET-CHANGE-IN-ASSETS> (19,379,454)
<ACCUMULATED-NII-PRIOR> 12,967,238
<ACCUMULATED-GAINS-PRIOR> (4,592,691)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 902,194
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,464,338
<AVERAGE-NET-ASSETS> 263,549,743
<PER-SHARE-NAV-BEGIN> 79.95 <F2>
<PER-SHARE-NII> 5.10
<PER-SHARE-GAIN-APPREC> 1.00
<PER-SHARE-DIVIDEND> 5.20
<PER-SHARE-DISTRIBUTIONS> 0.00 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 86.05 <F2>
<EXPENSE-RATIO> 0.56 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATE). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> BENHAM TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 2
<NAME> BENHAM TARGET MATURITIES TRUST:2005
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997 <F1>
<INVESTMENTS-AT-COST> 257,998,629
<INVESTMENTS-AT-VALUE> 276,763,314
<RECEIVABLES> 4,609,305
<ASSETS-OTHER> 686,977
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 282,059,596
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 382,455
<TOTAL-LIABILITIES> 382,455
<SENIOR-EQUITY> 4,364,423
<PAID-IN-CAPITAL-COMMON> 245,940,240
<SHARES-COMMON-STOCK> 4,364,423
<SHARES-COMMON-PRIOR> 4,130,406
<ACCUMULATED-NII-CURRENT> 11,708,093
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 899,700
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,764,685
<NET-ASSETS> 281,677,141
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,881,275
<OTHER-INCOME> 0
<EXPENSES-NET> 1,430,252
<NET-INVESTMENT-INCOME> 15,451,023
<REALIZED-GAINS-CURRENT> 1,348,958
<APPREC-INCREASE-CURRENT> 11,653,361
<NET-CHANGE-FROM-OPS> 28,453,342
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,549,884
<DISTRIBUTIONS-OF-GAINS> 1,764,760 <F2>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,988,109
<NUMBER-OF-SHARES-REDEEMED> 1,748,806
<SHARES-REINVESTED> 282,750 <F2>
<NET-CHANGE-IN-ASSETS> 42,813,213
<ACCUMULATED-NII-PRIOR> 10,806,954
<ACCUMULATED-GAINS-PRIOR> 1,315,502
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 875,825
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,430,252
<AVERAGE-NET-ASSETS> 251,335,237
<PER-SHARE-NAV-BEGIN> 57.83 <F2>
<PER-SHARE-NII> 3.74
<PER-SHARE-GAIN-APPREC> 2.97
<PER-SHARE-DIVIDEND> 3.61
<PER-SHARE-DISTRIBUTIONS> 0.44 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 64.54 <F2>
<EXPENSE-RATIO> 0.57 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATE). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> BENHAM TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 3
<NAME> BENHAM TARGET MATURITIES TRUST:2010
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997 <F1>
<INVESTMENTS-AT-COST> 112,470,517
<INVESTMENTS-AT-VALUE> 123,786,073
<RECEIVABLES> 0
<ASSETS-OTHER> 1,201,213
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 124,987,286
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 175,457
<TOTAL-LIABILITIES> 175,457
<SENIOR-EQUITY> 2,539,122
<PAID-IN-CAPITAL-COMMON> 105,093,546
<SHARES-COMMON-STOCK> 2,539,122
<SHARES-COMMON-PRIOR> 2,616,128
<ACCUMULATED-NII-CURRENT> 5,099,718
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 763,887
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,315,556
<NET-ASSETS> 124,811,829
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,530,792
<OTHER-INCOME> 0
<EXPENSES-NET> 685,086
<NET-INVESTMENT-INCOME> 6,845,706
<REALIZED-GAINS-CURRENT> 1,066,854
<APPREC-INCREASE-CURRENT> 9,112,041
<NET-CHANGE-FROM-OPS> 17,024,601
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,941,406
<DISTRIBUTIONS-OF-GAINS> 2,886,953 <F2>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,383,983
<NUMBER-OF-SHARES-REDEEMED> 1,456,337
<SHARES-REINVESTED> 233,038 <F2>
<NET-CHANGE-IN-ASSETS> 13,694,638
<ACCUMULATED-NII-PRIOR> 5,195,418
<ACCUMULATED-GAINS-PRIOR> 2,583,986
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 386,859
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 691,879
<AVERAGE-NET-ASSETS> 111,298,120
<PER-SHARE-NAV-BEGIN> 42.47 <F2>
<PER-SHARE-NII> 2.79
<PER-SHARE-GAIN-APPREC> 3.90
<PER-SHARE-DIVIDEND> 2.82
<PER-SHARE-DISTRIBUTIONS> 1.17 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 49.16 <F2>
<EXPENSE-RATIO> 0.62 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATE). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> BENHAM TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 4
<NAME> BENHAM TARGET MATURITIES TRUST:2015
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997 <F1>
<INVESTMENTS-AT-COST> 84,422,308
<INVESTMENTS-AT-VALUE> 114,680,001
<RECEIVABLES> 0
<ASSETS-OTHER> 401,633
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115,081,634
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182,065
<TOTAL-LIABILITIES> 182,065
<SENIOR-EQUITY> 2,996,659
<PAID-IN-CAPITAL-COMMON> 72,477,114
<SHARES-COMMON-STOCK> 2,996,659
<SHARES-COMMON-PRIOR> 3,618,424
<ACCUMULATED-NII-CURRENT> 4,945,063
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,223,040
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 30,257,693
<NET-ASSETS> 114,899,569
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,293,811
<OTHER-INCOME> 0
<EXPENSES-NET> 699,022
<NET-INVESTMENT-INCOME> 6,594,789
<REALIZED-GAINS-CURRENT> 4,715,347
<APPREC-INCREASE-CURRENT> 10,243,018
<NET-CHANGE-FROM-OPS> 21,553,154
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,897,189
<DISTRIBUTIONS-OF-GAINS> 1,134,946 <F2>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,812,323
<NUMBER-OF-SHARES-REDEEMED> 2,427,375
<SHARES-REINVESTED> 241,373 <F2>
<NET-CHANGE-IN-ASSETS> (754,256)
<ACCUMULATED-NII-PRIOR> 5,247,463
<ACCUMULATED-GAINS-PRIOR> 642,639
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 389,958
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 702,342
<AVERAGE-NET-ASSETS> 113,855,918
<PER-SHARE-NAV-BEGIN> 31.96 <F2>
<PER-SHARE-NII> 2.00
<PER-SHARE-GAIN-APPREC> 4.38
<PER-SHARE-DIVIDEND> 2.05
<PER-SHARE-DISTRIBUTIONS> 0.34 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 38.34 <F2>
<EXPENSE-RATIO> 0.61 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATE). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> BENHAM TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 5
<NAME> BENHAM TARGET MATURITIES TRUST:2020
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997 <F1>
<INVESTMENTS-AT-COST> 456,481,868
<INVESTMENTS-AT-VALUE> 555,921,745
<RECEIVABLES> 13,003
<ASSETS-OTHER> 39,602,713
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 595,537,461
<PAYABLE-FOR-SECURITIES> 39,425,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,561,434
<TOTAL-LIABILITIES> 41,986,434
<SENIOR-EQUITY> 20,376,558
<PAID-IN-CAPITAL-COMMON> 357,694,842
<SHARES-COMMON-STOCK> 20,376,558
<SHARES-COMMON-PRIOR> 42,102,669
<ACCUMULATED-NII-CURRENT> 37,235,493
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 38,804,257
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 99,439,877
<NET-ASSETS> 553,551,027
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 55,723,567
<OTHER-INCOME> 442,641
<EXPENSES-NET> 4,397,567
<NET-INVESTMENT-INCOME> 51,768,641
<REALIZED-GAINS-CURRENT> 45,078,260
<APPREC-INCREASE-CURRENT> 85,510,156
<NET-CHANGE-FROM-OPS> 182,357,057
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 54,220,221
<DISTRIBUTIONS-OF-GAINS> 831 <F2>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21,885,096
<NUMBER-OF-SHARES-REDEEMED> 43,514,345
<SHARES-REINVESTED> 2,286,212 <F2>
<NET-CHANGE-IN-ASSETS> (372,768,183)
<ACCUMULATED-NII-PRIOR> 39,687,073
<ACCUMULATED-GAINS-PRIOR> (6,273,172)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,691,970
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,397,567
<AVERAGE-NET-ASSETS> 823,522,277
<PER-SHARE-NAV-BEGIN> 22.00 <F2>
<PER-SHARE-NII> 1.51
<PER-SHARE-GAIN-APPREC> 3.66
<PER-SHARE-DIVIDEND> 1.45
<PER-SHARE-DISTRIBUTIONS> 0.00 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 27.17 <F2>
<EXPENSE-RATIO> 0.53 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATE). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> BENHAM TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 6
<NAME> BENHAM TARGET MATURITIES TRUST:2025
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997 <F1>
<INVESTMENTS-AT-COST> 64,514,424
<INVESTMENTS-AT-VALUE> 73,664,221
<RECEIVABLES> 0
<ASSETS-OTHER> 331,422
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 73,995,643
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 174,328
<TOTAL-LIABILITIES> 174,328
<SENIOR-EQUITY> 3,314,198
<PAID-IN-CAPITAL-COMMON> 58,683,844
<SHARES-COMMON-STOCK> 3,314,198
<SHARES-COMMON-PRIOR> 1,991,656
<ACCUMULATED-NII-CURRENT> 2,872,123
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (198,647)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,149,797
<NET-ASSETS> 73,821,315
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,792,500
<OTHER-INCOME> 34,749
<EXPENSES-NET> 349,230
<NET-INVESTMENT-INCOME> 3,478,019
<REALIZED-GAINS-CURRENT> 302,702
<APPREC-INCREASE-CURRENT> 9,831,539
<NET-CHANGE-FROM-OPS> 13,612,260
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,603,280
<DISTRIBUTIONS-OF-GAINS> 0 <F2>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,508,353
<NUMBER-OF-SHARES-REDEEMED> 6,180,587
<SHARES-REINVESTED> 79,036 <F2>
<NET-CHANGE-IN-ASSETS> 38,160,713
<ACCUMULATED-NII-PRIOR> 997,384
<ACCUMULATED-GAINS-PRIOR> (501,349)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 199,410
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 367,010
<AVERAGE-NET-ASSETS> 56,608,812
<PER-SHARE-NAV-BEGIN> 17.91 <F2>
<PER-SHARE-NII> 1.21
<PER-SHARE-GAIN-APPREC> 3.15
<PER-SHARE-DIVIDEND> 0.72
<PER-SHARE-DISTRIBUTIONS> 0.00 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 22.27 <F2>
<EXPENSE-RATIO> 0.62 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
