SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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. 29 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
File No. 811-4165
Amendment No. 31 [X]
(Check appropriate box or boxes.)
AMERICAN CENTURY TARGET MATURITIES TRUST
_________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
4500 Main Street, Kansas City, MO 64111
_________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (816) 531-5575
William M. Lyons, 4500 Main Street, Kansas City, MO 64111
_________________________________________________________________
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: January 12, 1999
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
[american century logo(reg.sm)]
AMERICAN
CENTURY
Prospectus
February 1, 1999
AMERICAN CENTURY
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
Investor Class
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Anyone who
tells you otherwise is committing a crime.
Distributed by Funds Distributor, Inc.
Dear Investor,
American Century prospectuses have a new personality, highlighted by
easy-to-read and easy-to-understand language. Designed with you, the investor,
in mind, the new prospectus provides comprehensive fund information that doesn't
get lost in lengthy, technical language. As you read through this prospectus,
please take note of the many improvements we've made, especially:
o A less-cluttered, larger-sized booklet
o A new section that discusses a fund's risk and return potential
o A new fund performance section that shows a fund's returns from year to
year
o Charts and tables that help illustrate important information about the
funds
o Key information and definitions highlighted in the margins
The prospectus is your tool to understanding American Century funds. If you have
questions or comments about the prospectus, please give us a call. You can reach
one of our Investor Services Representatives at 1-800-345-2021 weekdays, 7 a.m.
to 7 p.m. Central time.
Sincerely,
Table of Contents
An Overview of the Funds.......................................................2
Fees and Expenses..............................................................3
Detailed Information about the Funds...........................................4
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
Basics of Fixed Income Investing...............................................8
Management....................................................................11
How to Invest in American Century.............................................14
Share Price and Distributions.................................................17
Taxes.........................................................................18
Multiple Class Information....................................................19
Financial Highlights..........................................................20
At Your Service...............................................................27
<TABLE>
<CAPTION>
Fund Reference
Fund Code Ticker Newspaper Listing
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
American Century Target Maturities Trust: 2000 ................. 963 BTMTX Tg2000
American Century Target Maturities Trust: 2005 ................. 964 BTFIX Tg2005
American Century Target Maturities Trust: 2010 ................. 965 BTTNX Tg2010
American Century Target Maturities Trust: 2015 ................. 966 BTFTX Tg2015
American Century Target Maturities Trust: 2020 ................. 967 BTTTX Tg2020
American Century Target Maturities Trust: 2025 ................. 968 BTTRX Tg2025
</TABLE>
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Throughout this book you'll find definitions to key investment terms and
phrases. When you see a word printed in green italics, look for its definition
in the left margin.
* This symbol highlights special information and helpful tips.
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An Overview of the Funds
What are the funds' investment goals?
These funds seek the highest return consistent with investment in U.S. Treasury
securities.
What are the funds' primary investments and risks?
The funds invest in zero-coupon U.S. Treasury securities. Each of the funds
invests in different types of these municipal debt securities and involves
different risks. The chart below shows the primary differences among the funds.
Additional important information about the funds' investment strategies and
risks begins on page 1.
Fund Primary Investments Primary Risks
- ------------- -------------------------------------- ---------------------------
Target 2000 Zero-coupon U.S. Treasury securities Lowest interest rate risk
Target 2005 Zero-coupon U.S. Treasury securities Low interest rate risk
Target 2010 Zero-coupon U.S. Treasury securities Interest rate risk
Target 2015 Zero-coupon U.S. Treasury securities High interest rate risk
Target 2020 Zero-coupon U.S. Treasury securities Higher interest rate risk
Target 2025 Zero-coupon U.S. Treasury securities Highest interest rate risk
Who may want to invest in the funds?
The funds may be a good investment if you
o are investing through an IRA or other tax-advantaged retirement plan
o have long-term financial goals that correspond to the year in the name of a
particular fund
o are comfortable with fluctuating share prices, which increase as the fund's
maturity year increases
o are comfortable with the funds' other investment risks
Who may not want to invest in the funds?
The funds may not be a good investment if you are
o seeking current tax-free income
o a short-term investor
o investing for long-term capital appreciation
o looking for the added security of FDIC insurance
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An investment in the funds is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
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3
Fees and Expenses
There are no sales loads or fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares
o to exchange into the Investor Class shares of other American Century funds.
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the funds.
Annual Operating Expenses (expenses that are deducted from fund assets)
Management Fee1 Distribution and Other Total Annual Fund
Service (12b-1) Fees Expenses2 Operating Expenses
- ------------- --------------- --------------------- --------- ------------------
Target 2000 0.59% None 0.01% 0.60%
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
1 Based upon fund assets at October 31, 1998. The funds have a stepped fee
schedule, as a result, the funds' management fees generally decrease as fund
assets increase. Please consult the Statement of Additional Information for
more details about the funds' management fees.
Examples of Hypothetical Fund Costs
The examples in the table below are intended to help you compare the costs of
investing in a fund with those of other mutual funds. Assuming you
o invest $10,000 in the fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year and
o incur the same operating expenses shown above,
your cost of investing in the fund would be:
1 Year 3 Years 5 Years 10 Years
- ------------- ------------- ------------- -------------- --------------
- ------------- ------------- ------------- -------------- --------------
Target 2000 $61 $192 $335 $750
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
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* Use this example to compare the costs of investing in other funds. Of
course, your actual costs may be higher or lower.
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Detailed Information about the Funds
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
What are the funds' investment objectives?
These funds seek the highest return consistent with investment in U.S. Treasury
securities. This is a fundamental policy and cannot be changed without
shareholder approval.
How do the funds implement their investment objectives?
Each fund invests primarily in zero-coupon U.S. Treasury securities. Each fund
is designed to provide an investment experience that is similar to a direct
investment in a zero coupon investment.
What are the differences between the funds?
Each fund is managed to mature in the year identified in its name; therefore,
the funds' weighted average maturities are different. Funds with longer weighted
average maturities have the most volatile share prices. For example, Target 2000
has the shortest weighted average maturity, and its share price will fluctuate
the least.
What are zero coupon Treasury securities?
U.S. Treasury bonds have a traditional design: interest is paid periodically
until maturity, when the principal is repaid. Zero coupon Treasury securities,
however, do not make any periodic interest payments. Instead, all of the
interest and principal is paid when the securities mature.
Zero coupon Treasury securities are created by separating a traditional Treasury
bond's interest and principal parts. Each part can be used to create zero coupon
Treasury securities. Zero coupon Treasury securities are created by financial
institutions (like a dealer), the U.S. Treasury and other agencies of the
federal government. The important characteristic is that the final maturity
value of a zero coupon Treasury security is supported by Treasury securities.
Zero coupon Treasury securities are beneficial for investors who wish to invest
for a fixed period of time at a selected rate. When an investor purchases a
traditional bond, it is paid periodic interest at a predetermined rate. This
interest payment must be reinvested elsewhere. However, the investor may not be
able to reinvest this interest payment in an investment that has a similar
return as the bond. This is called reinvestment risk. Since zero coupon
securities do not pay interest periodically, there is no reinvestment risk.
How is an investment in the funds like an investment in zero coupon U.S.
Treasury securities?
If you invest in a fund, reinvest all distributions and hold your shares until
the fund is liquidated, your investment experience will be similar to that of an
investment in a zero coupon U.S. Treasury that matures at the end of the fund's
maturity year. Each fund is managed to provide an investment return 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 advisor calculates each fund's AGR and AVM on each business day. While many
factors can influence each fund's daily AGR and AVM, the AGR and AVM tend to
fluctuate within narrow ranges. The following table shows how each fund's AVM
has fluctuated in the last five years.
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* Weighted average maturity is a measure of a fund's interest rate
sensitivity. It is discussed on page 12.
* Because all of the interest and principal is paid when the securities
mature, zero coupon securities are bought and sold at prices below their
face value.
The anticipated value at maturity is the calculated value of a fund's investment
portfolio. It is based on the maturity values of the fund's zero coupon Treasury
securities.
A fund's anticipated growth rate is a calculation of the annualized rate of
growth that an investor may expect from the purchase date to the fund's target
maturity date.
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Anticipated Values at Maturity
9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
- ------------- ---------- ---------- ---------- ---------- -----------
Target 2000 $100.86 $100.99 $101.10 $101.13 $XXX.XX
Target 2005 100.58 100.32 100.71 100.85 XXX.XX
Target 2010 101.38 101.02 102.53 103.40 XXX.XX
Target 2015 107.95 109.62 110.11 110.52 XXX.XX
Target 2020 102.11 102.31 103.60 104.84 XXX.XX
Target 2025 N/A N/A 109.24 110.88 XXX.XX
What happens when a fund reaches its maturity year?
o The advisor may begin to buy traditional Treasury securities consistent
with the fund's investment objective and pending maturity.
o As the fund's zero coupon Treasury securities mature, the proceeds will be
invested in Treasury bills.
o In January of the year following maturity, the fund will be liquidated.
What are the primary risks of investing in the funds?
The funds are very sensitive to changes in interest rates. When interest rates
rise, the funds' share prices will rise more sharply than traditional Treasury
funds with similar maturities. This share price volatility is most pronounced in
the funds with longer weighted average maturities. If you sell your shares when
their value is less than the price you paid, you will lose money.
While we recommend that shareholders hold their investment in the funds, we do
not restrict your (or any other shareholders') ability to redeem shares. When a
fund's shareholders redeem their shares before the target maturity year,
unanticipated capital gains or losses may result. The fund will distribute these
capital gains and losses to all shareholders.
The funds are designed to provide an investment that is similar to investing in
a zero coupon U.S. Treasury security that matures in the year identified in its
name. The advisor adheres to investment policies that are designed to ensure
that this happens. However, a precise forecast of the fund's final maturity
value and yield to maturity are not possible.
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* This table is designed to show the narrow ranges in which each fund's AVMs
vary. There is no guarantee that the funds' AVMs will fluctuate as little
in the future.
* The investment performance the funds is designed to be similar to an
investment in an equivalent zero coupon U.S. Treasury security. However, an
investment in the funds involves different risks.
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Fund Performance History
The performance information on this page is designed to help you how fund
returns can vary. Keep in mind that past performance does not predict how the
funds will perform in the future.
Annual Total Returns
The following bar chart shows the performance of the funds' Investor Class
shares for each of the last 10 calendar years (or for each full year in the life
of the fund if less than 10 years). It indicates the volatility of the funds'
historical returns from year to year.
BAR CHART: Annual total returns for Target 2000, Target 2005, Target 2010,
Target 2015, Target 2020 and Target 2025. [Data currently unavailable]
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The funds' total returns for the period from January 1, 1998 to September 30,
1998 are:
Target 2000 X.XX%
Target 2005 X.XX%
Target 2010 X.XX%
Target 2015 X.XX%
Target 2020 X.XX%
Target 2025 X.XX%
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Highest and Lowest Quarterly Returns
The highest and lowest returns of the funds' Investor Class shares for a
calendar quarter during the last 10 calendar years (or during the life of the
fund if less than 10 years) are provided below to indicate the funds' historical
short-term volatility.
BAR CHART: Highest and Lowest Quarterly Returns for Target 2000, Target 2005,
Target 2010, Target 2015, Target 2020 and Target 2025. [Data currently
unavailable]
Average Annual Returns
The following table shows the average annual returns of the funds' Investor
Class shares for the periods indicated during the last 10 calendar years. A
benchmark is included for performance comparison. The benchmark is an unmanaged
index that has no operating costs.
1 year 5 years 10 years Life of Fund*
- --------------------------------------------------------------------------------
Target 2000 ?.??% ?.??% ?.??% ?.??%
11/15/2000 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2005 ?.??% ?.??% ?.??% ?.??%
11/15/2005 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2010 ?.??% ?.??% ?.??% ?.??%
11/15/2010 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2015 ?.??% ?.??% ?.??% ?.??%
11/15/2015 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2020 ?.??% ?.??% ?.??% ?.??%
11/15/2020 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2025 ?.??% ?.??% ?.??% ?.??%
11/15/2025 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
* The inception dates for the funds are: Target 2000, Target 2005 and Target
2010: March 25, 1985; Target 2015: September 1, 1986; Target 2020: December
29, 1989; and Target 2025: February 16, 1996.
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[Chart Legend]
Target 2025
Target 2020
Target 2015
Target 2010
Target 2005
Target 2000
[Chart Legend]
Highest Return
Lowest Return
* For current performance information, including yields, please call us at
1-800-345-2021 or visit American Century's Web site at
www.americancentury.com.
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Basics of Fixed Income Investing
Debt Securities
When a fund buys a debt security, which is also called a fixed income security,
it is essentially lending money to the issuer of the security. Debt securities
also are referred to as fixed income securities. Notes, bonds, commercial paper
and Treasury bills are examples of debt securities. After the issuer first sells
the debt security, it may be bought and sold by other investors. The price of
the security may rise or fall based on many factors, including changes in
interest rates, inflation and liquidity.
The advisor decides which debt securities to buy and sell by
o determining which securities help a fund meet its maturity requirements
o eliminating securities that do not satisfy a fund's credit quality
standards
o evaluating the current economic conditions and assessing the risk of
inflation
o evaluating special features of the securities that may make them more or
less attractive
Weighted Average Maturity
Like most loans, debt securities eventually must be repaid (or refinanced) at
some date. This date is called the maturity date. The number of days left to a
debt security's maturity date is called the remaining maturity. The longer a
debt security's remaining maturity, the more sensitive it is to changes in
interest rates.
Because a bond fund will own many debt securities, the advisor calculates the
average of the remaining maturities of all of the debt securities the fund owns
to evaluate the interest rate sensitivity of the entire portfolio. This average
is weighted according to the size of the fund's individual holdings and is
called weighted average maturity. The following chart shows how an advisor would
calculate the weighted average maturity for a fund that owned only two debt
securities.
<TABLE>
Amount of Security Owned Percent of Portfolio Remaining Maturity Weighted Maturity
- ---------------------- ------------------------------ ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Debt Security A $100,000 25% 1,000 days 250 days
Debt Security B $300,000 75% 10,000 days 7500 days
Weighted Average
Maturity 7750 days
</TABLE>
Types of Risk
The basic types of risk that the funds face are described below.
Interest Rate Risk
Generally, interest rates and the prices of debt securities move in opposite
directions. So when interest rates fall, the prices of most debt securities
rise; when interest rates rise, prices fall. Because the funds invest primarily
in debt securities, changes in interest rates will affect the funds'
performance.
The degree to which interest rate changes affect the funds' performance varies
and is related to the weighted average maturity of the fund. For example, when
interest rates rise, you can expect the share value of a long-term bond fund to
fall more than that of a short-term bond fund. When rates fall, the opposite is
true. This sensitivity to interest rate changes is called interest rate risk.
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* Weighted average maturity is a tool that the advisor uses to approximate
the remaining maturity of a fund's investment portfolio.
* The longer a fund's weighted average maturity, the more sensitive it is to
changes in interest rates.
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When interest rates change, longer maturity bonds experience a greater change in
price. The following table shows the effect of a 1% increase in interest rates
on the price of 7% coupon bonds of differing maturities:
Remaining Maturity Current Price Price after 1% increase Change in price
- ---------------------- -------------- ------------------------ ----------------
1 year $100.00 $99.06 -0.94%
3 years 100.00 97.38 -2.62%
10 years 100.00 93.20 -6.80%
30 years 100.00 88.69 -11.31%
Credit Risk
Credit risk is the risk that an obligation won't be paid and a loss will result.
A high credit rating indicates a high degree of confidence that the issuer will
be able to make interest and principal payments on time.
It's not as simple as buying the highest rated debt securities, though. Higher
credit ratings usually mean lower interest rates, so investors often purchase
securities that aren't the highest-rated to increase return. If a fund purchases
lower-rated securities, it has assumed additional credit risk.
Liquidity Risk
Debt securities can become difficult to sell for a variety of reasons, such as
lack of an active trading market. When a fund's investments become difficult to
sell, it is said to have a problem with liquidity. The chance that a fund will
have liquidity issues is called liquidity risk.
Inflation Risk
The safest investments usually have the lowest potential income and performance.
There is a risk, then, that the investment may fail to significantly outpace
inflation. Even if the value of your investment has not gone down, your money
will not be worth as much as if there had been no inflation. Your
after-inflation return may be quite small. This risk is called inflation risk.
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* Credit quality may be reduced when
o the issuer has a less reliable cash flow
o the issuer's finances are more sensitive to adverse economic conditions or
changing circumstances
o the securities may be repaid after the issuer's other (more senior) debt.
o the issuer has a shorter financial history
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A Comparison of Basic Risk Factors
The following chart depicts the basic risks of investing in the funds. It is
designed to help you compare these funds with each other; it shouldn't be used
to compare these funds with other mutual funds.
Interest Rate Credit Risk Liquidity Risk Inflation Risk
Risk
- -------------- --------------- -------------- ----------------- --------------
Target 2000 Lowest Lowest Lowest
Target 2005 Low Lowest Lowest
Target 2010 Medium Lowest Lowest
Target 2015 Medium Lowest Lowest
Target 2020 High Lowest Lowest
Target 2025 Highest Lowest Lowest
The funds engage in a variety of investment techniques as they pursue their
investment objectives. Each technique has its own characteristics, and may pose
some level of risk to the funds. If you would like to learn more about these
techniques, you should review the Statement of Additional Information before
making an investment.
Management
Who manages the funds?
The Board of Trustees, investment advisor and portfolio management team play key
roles in the management of the funds.
The Board of Trustees
The Board of Trustees oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Trustees does not manage the funds, it has hired an investment advisor to do so.
More than half of the Trustees are independent of the funds' advisor, that is,
they are not employed by and have no financial interest in the advisor.
The Investment Advisor
The funds' investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since it was founded in 1958.
American Century is headquartered at 4500 Main Street, Kansas City, Missouri
64111.
The advisor manages the investment portfolios of the funds and directs the
purchase and sale of their investment securities. The advisor also arranges for
transfer agency, custody and all other services necessary for the funds to
operate.
For the services it provides to the funds, the advisor receives a unified
management fee based on a percentage of the average net assets of each fund. The
rate of the management fee for a fund is determined monthly using a two-step
formula that takes into account the fund's strategy (money market, bond or
equity) and the total amount of mutual fund assets the advisor manages. The
Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor pays all
expenses of managing and operating the fund except brokerage expenses, taxes,
interest, fees and expenses of the independent Trustees (including counsel fees)
and extraordinary expenses.
Fees Paid by the Funds to the Advisor in Most Recent Fiscal Year
- -----------------------------------------------------------------------------
Target 2000 X.XX%
Target 2005 X.XX%
Target 2010 X.XX%
Target 2015 X.XX%
Target 2020 X.XX%
Target 2025 X.XX%
The Portfolio Management Team
The advisor uses teams of portfolio managers, assistant portfolio managers and
analysts to manage the funds. Teams meet regularly to review portfolio holdings
and to discuss purchase and sale activity. Team members buy and sell securities
for a fund as they see fit, guided by the fund's investment objective and
strategy.
Portfolio manager members of the investment team include:
David Schroeder
Mr. Schroeder, Vice President, joined the advisor in 1990 and has been primarily
responsible for the day-to-day operations of the Target funds since July 1990.
Jeremy Fletcher
Mr. Fletcher, Associate Portfolio Manager, joined the advisor in 1991 and has
been a member of the team that manages the Target funds since August 1997.
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* Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests
of fund shareholders come before the interests of the people who manage the
funds. Among other provisions, the Code of Ethics prohibits portfolio
managers and other investment personnel from buying securities in an
initial public offering or from profiting from the purchase and sale of the
same security within 60 calendar days. In addition, the Code of Ethics
requires portfolio managers and other employees with access to information
about the purchase or sale of securities by the funds to obtain approval
before executing permitted personal trades.
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Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the funds may not be changed
without a shareholder vote. The Board of Trustees may change any other policies
and investment strategies.
Year 2000 Issues
Many of the world's computer systems currently cannot properly recognize or
process date-sensitive information relating to the Year 2000 and beyond. Because
this may impact the computer systems of various American Century-affiliated and
external service providers for the funds, American Century formally initiated a
Year 2000 readiness project in July 1997. It involves a team of information
technology professionals assisted by outside consultants and guided by a
senior-level steering committee. The team's goal is to assess the impact of the
Year 2000 on American Century's systems, renovate or replace noncompliant
critical systems and test those systems. In addition, the team has been working
to gather information about the Year 2000 efforts of the funds' other major
service providers. Although American Century believes its critical systems will
function properly in the Year 2000, this is not guaranteed. If the efforts of
American Century or its external service providers are not successful, the
funds' business, particularly the provision of shareholder services, may be
hampered.
In addition, the issuers of securities the funds own could have Year 2000
computer problems. These problems could negatively affect the value of their
securities, which, in turn, could impact the funds' performance. The advisor has
established a process to gather publicly available information about the Year
2000 readiness of these issuers. However, this process may not uncover all
relevant information, and the information gathered may not be complete and
accurate. Moreover, an issuer's Year 2000 readiness is only one of many factors
the advisor may consider when making investment decisions, and other factors may
receive greater weight.
How to Invest in American Century
Services Automatically Available to You
You automatically will have access to the services listed below when you open
your account. If you do not want these services, see "Conducting Business in
Writing" below.
Conducting Business in Writing
If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose to do business in writing only, you must
provide written instructions to invest, exchange and redeem. All account owners
must sign transaction instructions (with signatures guaranteed for redemptions
in excess of $100,000). If you want to add services later, you can complete an
Investor Service Options form.
<TABLE>
Ways to Manage Your Account
- ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
<S> <C> <C>
By telephone Open an account Make additional investments
1800 345-2021 If you are a current investor, you can Call us or use our Automated Information Line
7 a.m. to 7 p.m. open an account by exchanging shares if you have authorized us to withdraw from
Central time from another American Century account. your bank account.
(This service is not available if you
Automated \information Line have chosen to do business in writing Sell shares
1-800-345-8765 only.) Call an Investor Services Representative.
24 hours
Exchange shares
Call us or use our Automated
Information Line if you have authorized us to
accept telephone instructions.
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
By mail or fax Open an account Make additional investments
PO Box 419200 Send a signed and completed application Send us your check or money order for at
Kansas City, MO 64141-6200 and check or money order payable to least $50 with an investment slip or $250
Fax 816 340-7962 American Century Investments. without an investment slip. If you don't have
an investment slip, include your name,
Exchange shares address, and account number on your check or
Send us written instructions to money order.
exchange your shares from one American
Century account to another. Sell shares
Send us written instructions to sell shares
or send us a redemption form. Call an
Investor Services Representative to request a
form.
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
Online Open an account Make additional investments
www.americancentury.com If you are a current investor, you can Follow the wire instructions provided in the
open an account by exchanging shares Open an account section
from another American Century account.
(This service is not available if you Sell shares
have chosen to do business in writing Not available.
only.)
Exchange shares
Exchange shares from another American Century
account.
</TABLE>
A Note About Mailings to Shareholders
To reduce expenses and demonstrate respect for our environment, we will deliver
most financial reports, prospectuses and account statements to households in a
single envelope, even if the accounts are registered under different names. If
you would like additional copies of financial reports and prospectuses or
separate mailing of account statements, please call us.
Your Guide to Services and Policies
When you open an account, you will receive an Investor Services Guide, which
explains the services available to you and the policies of the fund and the
transfer agent.
<TABLE>
<S> <C> <C>
By wire Open an account Make additional investments
Commerce Bank N.A. Call us to set up your account or mail Follow the wire instructions provided in the
Routing No. 101000019 a completed application to the address Open an account section
ACMF Account No. 2804918 provided above and give your bank:
Sell shares
o The fund name You can receive redemption proceeds by
o Your American Century account number wire or electronic transfer. (This
* Please remember that o Name of the investor service is not available if you have
if you request o The contribution year (for IRAs only) chosen to do business in writing only.)
redemptions by wire, $10
will be deducted from the Exchange shares
amount wired. Your bank Not available.
also may charge a fee.
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
Automatically Open an account Make additional investments
Not available. Select "Establish Automatic Investments" on
your application to make automatic purchases
Exchange shares of shares on a regular basis. You must invest
Send us written instructions to at least $600 per year per account.
exchange your shares from one American
Century account to another. Sell shares
If you have at least $10,000 in your
account, sell shares automatically
by Check-a-Month, or by Automatic Redemption.
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------------------------------------------------------
In Person If you prefer to handle your transactions in person, visit one of
our Investor Centers and a representative can help you open an
account, make additional investments, sell or exchange shares.
Here are the Investor Centers you can visit
4500 Main Street 4917 Town Center Dr.
Kansas City, Missouri Leawood, Kansas
1665 Charleston Road 2000 S. Colorado Blvd.
Mountain View, California Denver, Colorado
</TABLE>
Minimum Initial Investment Amounts
To open an account the minimum investment is as follows Other funds
- --------------------------------------------------------------------------------
Individual or Joint $5,000
Traditional IRA $1,000
Roth IRA $1,000
Education IRA $500
UGMA/UTMA $1,000
403(b) No minimum
Redemption of shares in low-balance accounts
If your account falls below the minimum balance we will notify you and give you
90 days to meet the minimum or, for most types of equity accounts, to establish
an automatic monthly investment. If you do not meet the deadline, American
Century will redeem the shares in the account and send the proceeds to your
address of record.
Investing Through Financial Intermediaries
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
o minimum investment requirements
o exchange policies
o fund choices
o cut-off time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the funds' annual reports, semiannual
reports and Statements of Additional Information are available from your
intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although transactions in fund shares may be made directly with American Century
at no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the funds.
American Century has contracts with certain financial intermediaries in which
they represent that they will track the time investment orders are received. The
funds have authorized those intermediaries to accept orders on each funds'
behalf up to the time net asset value is determined. Such orders will be priced
at the net asset value next determined after acceptance of the order on a fund's
behalf.
********************LEFT MARGIN CALLOUTS************************
* Financial intermediaries include bankers, broker-dealers, insurance companies
and investment advisors.
********************END LEFT MARGIN CALLOUTS****************
Share Price and Distributions
Share Price
We determine the net asset value of the funds as of one hour before the close of
regular trading on the New York Stock Exchange (usually 3 p.m. Eastern time) on
each day the Exchange is open. On days when the Exchange is not open, we do not
calculate the net asset value. The net asset value of a fund share is the
current value of the fund's investments, minus any liabilities, divided by the
number of fund shares outstanding.
If current prices of securities owned by a fund are not readily available from
an independent pricing service, the advisor may determine their fair value in
accordance with procedures adopted by the fund's Board of Trustees. Trading of
securities in foreign markets may not take place on every day the Exchange is
open. Also, trading in some foreign markets may take place on weekends or
holidays when a fund's net asset value is not calculated. So, the value of a
fund's portfolio may be affected on days when you can't purchase or redeem
shares of the fund.
We will price your purchase, exchange or redemption at the net asset value next
determined after we receive your transaction request in good order.
Distributions
Federal tax laws require each fund to make distributions to its shareholders.
The distributions generally consist of dividends and interest received by a
fund, as well as capital gains realized on the sale of investment securities.
Each fund pays distributions from net income quarterly. Each fund generally pays
distributions of capital gains, if any, once a year. A fund may make more
frequent distributions if necessary to avoid taxes.
You will begin to participate in fund distributions the day after your purchase
is effective. If you redeem shares, you will receive the distribution declared
for the day you redeem. If you redeem all shares, we will include the
distribution on the redeemed with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
our Investor Services Guide for further information regarding distributions and
your distribution options.
********************LEFT MARGIN CALLOUTS************************
The net asset value of a fund is the price of the fund's shares.
********************END LEFT MARGIN CALLOUTS****************
Taxes
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as a qualified
employer-sponsored retirement or savings plan, income and capital gains
distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis.
Complex tax rules govern employer-sponsored retirement and savings. If you elect
to participate in your employer's plan, consult your plan administrator, your
summary plan description or a professional tax advisor regarding the tax
consequences of participation in, contributions to, and withdrawals or
distributions from the plan.
Taxable Accounts
Fund distributions are taxable to most investors. The taxability of
distributions is not affected by how long you have been in the fund or whether
you reinvest your distributions or take them in cash. In general, distributions
are taxable as follows:
<TABLE>
Type of distribution Tax rate for 15% bracket Tax rate for 28% bracket or above
- ------------------------ ---------------------------- --------------------------------------
<S> <C> <C>
Income Ordinary income rate Ordinary income rate
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
</TABLE>
American Century will detail the tax status of fund distributions for each
calendar year in an annual tax statement from the fund.
Distributions may also be subject to state and local taxes. Because everyone's
tax situation is unique, always consult your tax professional about federal,
state and local tax consequences.
Taxes on transactions. Your redemptions -- including exchanges to other American
Century funds -- are subject to capital gains tax. A capital gain or loss is the
difference between the cost of your shares and the price you receive when you
sell them.
The table above can provide a general guide for your potential tax liability
when selling or exchanging fund shares. "Short-term capital gains," are gains on
fund shares held less than or equal to 12 months. "Long-term capital gains," are
gains on fund shares held for more than 12 months.
********************LEFT MARGIN CALLOUTS************************
* Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution
is sometimes known as "buying a dividend." In taxable accounts, you must
pay income taxes on the distribution whether you take the distribution in
cash or reinvest it. In addition, you will have to pay taxes on the
distribution whether the value of your investment decreased, increased or
remained the same after you bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up
taxable gains throughout the period covered by a distribution, as
securities are sold at a profit. We distribute those gains to your, after
subtracting any losses, even if you did not own the shares when the gains
occurred.
Thus if you buy a divided, you incur the full tax liability of the
distribution period, but you may not enjoy the full benefit of the gains
realized in the fund's portfolio.
********************END LEFT MARGIN CALLOUTS****************
Multiple Class Information
American Century may offer up to three classes of the funds: Investor Class,
Institutional Class and Advisor Class. The shares offered by this Prospectus are
Investor Class shares and have no up-front or deferred charges, commissions, or
12b-1 fees.
American Century offers the other classes of shares primarily to institutional
investors, through institutional distribution channels, such as
employer-sponsored retirement plans, or through banks, broker-dealers and
insurance companies. The other classes have different fees, expenses, and/or
minimum investment requirements than the Investor Class. The difference in the
fee structures among the classes is the result of their separate arrangements
for shareholder and distribution services and not the result of any difference
in amounts charged by the advisor for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class.
Different fees and expenses will affect performance. For additional information
concerning the other classes of shares not offered by this Prospectus, call us
at 1-800-345-3533 or contact a sales representative or financial intermediary
who offers those classes of shares.
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, (d) each class may
have different exchange privileges, and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
Financial Highlights
Understanding the Financial Highlights
This table itemizes what contributed to the changes in share price during the
period, and compares this to changes over the last five fiscal years (or less,
if the share class is not five years old).
On a per-share basis, it includes:
o share price at the beginning of the period
o investment income and capital gains or losses
o distributions of income and capital gains paid to shareholders
o share price at the end of the period
It also includes some key statistics for the period:
o total return--the overall percentage of return of the fund, assuming the
reinvestment of all distributions
o expense ratio--operating expenses as a percentage of average net assets
o net income ratio--net investment income as a percentage of average net
assets
o portfolio turnover--the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by PricewaterhouseCoopers, LLP,
independent auditors. Their report is in the funds' annual report, which is
incorporated by reference into the Statement of Additional Information, and is
available upon request. Prior years' information was audited by other
independent auditors.
Target 2000
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year
-------- ------- ------- ------ ------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized
Gain (Loss) on Investment Transactions
-------- ------- ------- ------ ------
Total From Investment Operations
-------- ------- ------- ------ ------
Less Distributions
From Net Investment Income
(dividends)
From Net Realized Gains on
Investment Transactions
-------- ------- ------- ------ ------
-------- ------- ------- ------ ------
Total Distributions
-------- ------- ------- ------ ------
Net Asset Value, End of Year
-------- ------- ------- ------ ------
Total Return(1)
Ratio of Operating Expenses to
Average Net Assets
Ratio of Net Investment Income
to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year
(in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2005
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year
-------- ------- ------- ------ ------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized
Gain (Loss) on Investment Transactions
-------- ------- ------- ------ ------
Total From Investment Operations
-------- ------- ------- ------ ------
Less Distributions
From Net Investment Income
(dividends)
From Net Realized Gains on
Investment Transactions
-------- ------- ------- ------ ------
-------- ------- ------- ------ ------
Total Distributions
-------- ------- ------- ------ ------
Net Asset Value, End of Year
-------- ------- ------- ------ ------
Total Return(1)
Ratio of Operating Expenses to
Average Net Assets
Ratio of Net Investment Income
to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year
(in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2010
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year
-------- ------- ------- ------ ------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized
Gain (Loss) on Investment Transactions
-------- ------- ------- ------ ------
Total From Investment Operations
-------- ------- ------- ------ ------
Less Distributions
From Net Investment Income
(dividends)
From Net Realized Gains on
Investment Transactions
-------- ------- ------- ------ ------
-------- ------- ------- ------ ------
Total Distributions
-------- ------- ------- ------ ------
Net Asset Value, End of Year
-------- ------- ------- ------ ------
Total Return(1)
Ratio of Operating Expenses to
Average Net Assets
Ratio of Net Investment Income
to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year
(in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2015
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year
-------- ------- ------- ------ ------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized
Gain (Loss) on Investment Transactions
-------- ------- ------- ------ ------
Total From Investment Operations
-------- ------- ------- ------ ------
Less Distributions
From Net Investment Income
(dividends)
From Net Realized Gains on
Investment Transactions
-------- ------- ------- ------ ------
-------- ------- ------- ------ ------
Total Distributions
-------- ------- ------- ------ ------
Net Asset Value, End of Year
-------- ------- ------- ------ ------
Total Return(1)
Ratio of Operating Expenses to
Average Net Assets
Ratio of Net Investment Income
to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year
(in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2020
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year
-------- ------- ------- ------ ------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized
Gain (Loss) on Investment Transactions
-------- ------- ------- ------ ------
Total From Investment Operations
-------- ------- ------- ------ ------
Less Distributions
From Net Investment Income
(dividends)
From Net Realized Gains on
Investment Transactions
-------- ------- ------- ------ ------
-------- ------- ------- ------ ------
Total Distributions
-------- ------- ------- ------ ------
Net Asset Value, End of Year
-------- ------- ------- ------ ------
Total Return(1)
Ratio of Operating Expenses to
Average Net Assets
Ratio of Net Investment Income
to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year
(in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2025
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year
-------- ------- ------- ------ ------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized
Gain (Loss) on Investment Transactions
-------- ------- ------- ------ ------
Total From Investment Operations
-------- ------- ------- ------ ------
Less Distributions
From Net Investment Income
(dividends)
From Net Realized Gains on
Investment Transactions
-------- ------- ------- ------ ------
-------- ------- ------- ------ ------
Total Distributions
-------- ------- ------- ------ ------
Net Asset Value, End of Year
-------- ------- ------- ------ ------
Total Return(1)
Ratio of Operating Expenses to
Average Net Assets
Ratio of Net Investment Income
to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year
(in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
At Your Service
Make virtually any transaction online
The next time you're surfing the Net, stop by American Century's Web site
(www.americancentury.com), which can make managing your American Century
portfolio easier. Current shareholders can open new accounts by exchanging
shares (provided the account registration does not change). In addition, you can
view transactions and check your account balances . You can also sign up to
receive annual updates to your prospectuses and financial reports via the Net
instead of the through the mail.
Expand your investment options with American Century Brokerage
If you're looking for a wide range of investment options--from trading
individual securities to purchasing mutual funds offered by hundreds of
companies--look to American Century Brokerage. With this new investment service,
you can take advantage of 24-hour trading on our Web site or TeleSelect
automated telephone service. Or, if you prefer, you can do business directly
with a Brokerage Associate. With service features including a Gold MasterCard(R)
ATM/Debit Card, unlimited CheckWriting and cost basis reporting (all available
with the American Century Brokerage Access Account sm), our brokerage service
can simplify your life now while you prepare financially for the years to come.
For information about opening a brokerage account, please call an American
Century Brokerage Associate at 1-888-345-2071.
Send your distributions straight to the bank
If you opt to have your dividend and capital gain distributions paid to you in
cash rather than reinvesting them into your account, consider an electronic
transfer to your bank account. It will save you time and a trip to the bank.
Call an Investor Services Representative for more information.
Check out our library
Are you looking for additional information on bond basics? Or, are you trying to
decide if municipal bonds have a place in your portfolio? Perhaps you would like
to test your knowledge of bonds and how they work. These are subjects covered in
our Financial FYI library that are available to you. Financial FYI, a growing
library of one-page resources, clearly and quickly explains various financial
subjects to help you make informed decisions. To request one of these articles,
call an Investor Services Representative.
More information about the funds is contained in these documents:
Annual and Semiannual Reports. Contain more information about about the funds
investments and the market conditions and investment strategies that
significantly affected the fund's performance during the most recent six-month
fiscal period.
Statement of Additional Information. Contains a more detailed, legal description
of the funds' operations, investment restrictions, policies and practices. The
SAI is incorporated by reference into this Prospectus. This means that it is
legally part of this Prospectus, even if you don't request a copy.
You can also get information (including the the fund's SAI) from the SEC.
* In person. Go to the SEC's Public Reference Room in Washington, D.C. Call
1-800-SEC-0330 for information about location and hours of operation.
* On the internet. Go to www.sec.gov.
* By mail. Write to Public Reference Section of the Securities and Exchange
Commission, Washington, D.C. 20549-6009. The SEC will charge a fee for
copying the documents you request.
- --------------------------------------------------------------------------------
[american century logo(reg.sm)]
American Century
American Century Investments Fax
P.O. Box 419200 816-340-7962
Kansas City, Missouri 64141-6200
Telecommunications Device for the Deaf
Investor Services 1-800-634-4113 or 816-444-3485
1-800-345-2021 or 816-531-5575
Institutional, Corporate, Keogh,
Automated Information Line SEP/SARSEP, SIMPLE and 403(b) Services
1-800-345-8765 1-800-345-3533
www.americancentury.com
Investment Company Act File Number 811-XXXX Funds Distributor, Inc.
<PAGE>
[american century logo(reg.sm)]
AMERICAN
CENTURY
Prospectus
February 1, 1999
AMERICAN CENTURY
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
Advisor Class
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Anyone who
tells you otherwise is committing a crime.
Distributed by Funds Distributor, Inc.
Dear Investor,
American Century prospectuses have a new personality, highlighted by
easy-to-read and easy-to-understand language. Designed with you, the investor,
in mind, the new prospectus provides comprehensive fund information that doesn't
get lost in lengthy, technical language. As you read through this prospectus,
please take note of the many improvements we've made, especially:
o A less-cluttered, larger-sized booklet
o A new section that discusses a fund's risk and return potential
o A new fund performance section that shows a fund's returns from year to
year
o Charts and tables that help illustrate important information about the
funds
o Key information and definitions highlighted in the margins
The prospectus is your tool to understanding American Century funds. If you have
questions or comments about the prospectus, please give us a call. You can reach
one of our Investor Services Representatives at 1-800-345-2021 weekdays, 7 a.m.
to 7 p.m. Central time.
Sincerely,
Table of Contents
An Overview of the Funds..............................................2
Fees and Expenses.....................................................3
Detailed Information about the Funds..................................4
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
Basics of Fixed Income Investing......................................8
Management...........................................................11
How to Invest in American Century....................................14
Share Price and Distributions........................................17
Taxes................................................................18
Multiple Class Information...........................................19
Financial Highlights.................................................20
At Your Service......................................................27
Fund Reference
Fund Code Ticker Newspaper
Listing
- --------------------------------------------------------------------------------
American Century Target Maturities Trust: 2000 963 BTMTX Tg2000
American Century Target Maturities Trust: 2005 964 BTFIX Tg2005
American Century Target Maturities Trust: 2010 965 BTTNX Tg2010
American Century Target Maturities Trust: 2015 966 BTFTX Tg2015
American Century Target Maturities Trust: 2020 967 BTTTX Tg2020
American Century Target Maturities Trust: 2025 968 BTTRX Tg2025
********************LEFT MARGIN CALLOUTS************************
Throughout this book you'll find definitions to key investment terms and
phrases. When you see a word printed in green italics, look for its definition
in the left margin.
* This symbol highlights special information and helpful tips.
********************END LEFT MARGIN CALLOUTS****************
An Overview of the Funds
What are the funds' investment goals?
These funds seek the highest return consistent with investment in U.S. Treasury
securities.
What are the funds' primary investments and risks?
The funds invest in zero-coupon U.S. Treasury securities. Each of the funds
invests in different types of these municipal debt securities and involves
different risks. The chart below shows the primary differences among the funds.
Additional important information about the funds' investment strategies and
risks begins on page 1.
Fund Primary Investments Primary Risks
- -------------- -------------------------------------- --------------------------
Target 2000 Zero-coupon U.S. Treasury securities Lowest interest rate risk
Target 2005 Zero-coupon U.S. Treasury securities Low interest rate risk
Target 2010 Zero-coupon U.S. Treasury securities Interest rate risk
Target 2015 Zero-coupon U.S. Treasury securities High interest rate risk
Target 2020 Zero-coupon U.S. Treasury securities Higher interest rate risk
Target 2025 Zero-coupon U.S. Treasury securities Highest interest rate risk
Who may want to invest in the funds?
The funds may be a good investment if you
* are investing through an IRA or other tax-advantaged retirement plan
* have long-term financial goals that correspond to the year in the name of a
particular fund
* are comfortable with fluctuating share prices, which increase as the fund's
maturity year increases
* are comfortable with the funds' other investment risks
Who may not want to invest in the funds?
The funds may not be a good investment if you are
* seeking current tax-free income
* a short-term investor
* investing for long-term capital appreciation
* looking for the added security of FDIC insurance
********************LEFT MARGIN CALLOUTS************************
An investment in the funds is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
********************END LEFT MARGIN CALLOUTS****************
Fees and Expenses
There are no sales loads or fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares
o to exchange into the Advisor Class shares of other American Century funds.
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the funds.
Annual Operating Expenses (expenses that are deducted from fund assets)
Management Fee1 Distribution and Other Total Annual Fund
Service (12b-1) Fees Expenses2 Operating Expenses
- ------------- --------------- -------------------- --------- ------------------
Target 2000 0.59% None 0.01% 0.60%
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
1 Based upon fund assets at October 31, 1998. The funds have a stepped fee
schedule, as a result, the funds' management fees generally decrease as fund
assets increase. Please consult the Statement of Additional Information for
more details about the funds' management fees.
Examples of Hypothetical Fund Costs
The examples in the table below are intended to help you compare the costs of
investing in a fund with those of other mutual funds. Assuming you
o invest $10,000 in the fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year and
o incur the same operating expenses shown above,
your cost of investing in the fund would be:
1 Year 3 Years 5 Years 10 Years
- ------------- --------------- ---------------- ---------------- ----------------
- ------------- --------------- ---------------- ---------------- ----------------
Target 2000 $61 $192 $335 $750
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
********************LEFT MARGIN CALLOUTS************************
* Use this example to compare the costs of investing in other funds. Of
course, your actual costs may be higher or lower.
********************END LEFT MARGIN CALLOUTS****************
Detailed Information about the Funds
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
What are the funds' investment objectives?
These funds seek the highest return consistent with investment in U.S. Treasury
securities. This is a fundamental policy and cannot be changed without
shareholder approval.
How do the funds implement their investment objectives?
Each fund invests primarily in zero-coupon U.S. Treasury securities. Each fund
is designed to provide an investment experience that is similar to a direct
investment in a zero coupon investment.
What are the differences between the funds?
Each fund is managed to mature in the year identified in its name; therefore,
the funds' weighted average maturities are different. Funds with longer weighted
average maturities have the most volatile share prices. For example, Target 2000
has the shortest weighted average maturity, and its share price will fluctuate
the least.
What are zero coupon Treasury securities?
U.S. Treasury bonds have a traditional design: interest is paid periodically
until maturity, when the principal is repaid. Zero coupon Treasury securities,
however, do not make any periodic interest payments. Instead, all of the
interest and principal is paid when the securities mature.
Zero coupon Treasury securities are created by separating a traditional Treasury
bond's interest and principal parts. Each part can be used to create zero coupon
Treasury securities. Zero coupon Treasury securities are created by financial
institutions (like a dealer), the U.S. Treasury and other agencies of the
federal government. The important characteristic is that the final maturity
value of a zero coupon Treasury security is supported by Treasury securities.
Zero coupon Treasury securities are beneficial for investors who wish to invest
for a fixed period of time at a selected rate. When an investor purchases a
traditional bond, it is paid periodic interest at a predetermined rate. This
interest payment must be reinvested elsewhere. However, the investor may not be
able to reinvest this interest payment in an investment that has a similar
return as the bond. This is called reinvestment risk. Since zero coupon
securities do not pay interest periodically, there is no reinvestment risk.
How is an investment in the funds like an investment in zero coupon U.S.
Treasury securities?
If you invest in a fund, reinvest all distributions and hold your shares until
the fund is liquidated, your investment experience will be similar to that of an
investment in a zero coupon U.S. Treasury that matures at the end of the fund's
maturity year. Each fund is managed to provide an investment return 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 advisor calculates each fund's AGR and AVM on each business day. While many
factors can influence each fund's daily AGR and AVM, the AGR and AVM tend to
fluctuate within narrow ranges. The following table shows how each fund's AVM
has fluctuated in the last five years.
********************LEFT MARGIN CALLOUTS************************
* Weighted average maturity is a measure of a fund's interest rate sensitivity.
It is discussed on page 1.
* Because all of the interest and principal is paid when the securities
mature, zero coupon securities are bought and sold at prices below their
face value.
The anticipated value at maturity is the calculated value of a fund's investment
portfolio. It is based on the maturity values of the fund's zero coupon Treasury
securities.
A fund's anticipated growth rate is a calculation of the annualized rate of
growth that an investor may expect from the purchase date to the fund's target
maturity date.
********************END LEFT MARGIN CALLOUTS****************
Anticipated Values at Maturity
9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
- -------------- ------------- ------------- ------------- ------------ ----------
Target 2000 $100.86 $100.99 $101.10 $101.13 $XXX.XX
Target 2005 100.58 100.32 100.71 100.85 XXX.XX
Target 2010 101.38 101.02 102.53 103.40 XXX.XX
Target 2015 107.95 109.62 110.11 110.52 XXX.XX
Target 2020 102.11 102.31 103.60 104.84 XXX.XX
Target 2025 N/A N/A 109.24 110.88 XXX.XX
What happens when a fund reaches its maturity year?
o The advisor may begin to buy traditional Treasury securities consistent
with the fund's investment objective and pending maturity.
o As the fund's zero coupon Treasury securities mature, the proceeds will be
invested in Treasury bills.
o In January of the year following maturity, the fund will be liquidated.
What are the primary risks of investing in the funds?
The funds are very sensitive to changes in interest rates. When interest rates
rise, the funds' share prices will rise more sharply than traditional Treasury
funds with similar maturities. This share price volatility is most pronounced in
the funds with longer weighted average maturities. If you sell your shares when
their value is less than the price you paid, you will lose money.
While we recommend that shareholders hold their investment in the funds, we do
not restrict your (or any other shareholders') ability to redeem shares. When a
fund's shareholders redeem their shares before the target maturity year,
unanticipated capital gains or losses may result. The fund will distribute these
capital gains and losses to all shareholders.
The funds are designed to provide an investment that is similar to investing in
a zero coupon U.S. Treasury security that matures in the year identified in its
name. The advisor adheres to investment policies that are designed to ensure
that this happens. However, a precise forecast of the fund's final maturity
value and yield to maturity are not possible.
********************LEFT MARGIN CALLOUTS************************
* This table is designed to show the narrow ranges in which each fund's AVMs
vary. There is no guarantee that the funds' AVMs will fluctuate as little
in the future.
* The investment performance the funds is designed to be similar to an
investment in an equivalent zero coupon U.S. Treasury security. However, an
investment in the funds involves different risks.
********************END LEFT MARGIN CALLOUTS****************
Fund Performance History
The performance information on this page is designed to help you how fund
returns can vary. Keep in mind that past performance does not predict how the
funds will perform in the future.
Annual Total Returns
The following bar chart shows the performance of the funds' Advisor Class shares
for the last calendar year. As the funds grow in age, this chart will indicate
the volatility of the funds' historical returns from year to year.
BAR CHART: Annual total returns for Target 2000, Target 2005, Target 2010,
Target 2015, Target 2020 and Target 2025. [Data currently unavailable]
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The funds' total returns for the period from January 1, 1998 to September 30,
1998 are:
Target 2000 X.XX%
Target 2005 X.XX%
Target 2010 X.XX%
Target 2015 X.XX%
Target 2020 X.XX%
Target 2025 X.XX%
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Highest and Lowest Quarterly Returns
The highest and lowest returns of the funds' Advisor Class shares for a calendar
quarter during the life of the Advisor Class of each fund are provided below to
indicate the funds' historical short-term volatility.
BAR CHART: Highest and Lowest Quarterly Returns for Target 2000, Target 2005,
Target 2010, Target 2015, Target 2020 and Target 2025. [Data currently
unavailable]
Average Annual Returns
The following table shows the average annual returns of the funds' Advisor Class
shares for the periods indicated during the life of the Advisor Class of each
fund. A benchmark is included for performance comparison. The benchmark is an
unmanaged index that has no operating costs.
1 year 5 years 10 years Life of Fund*
- --------------------------------------------------------------------------------
Target 2000 ?.??% ?.??% ?.??% ?.??%
11/15/2000 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2005 ?.??% ?.??% ?.??% ?.??%
11/15/2005 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2010 ?.??% ?.??% ?.??% ?.??%
11/15/2010 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2015 ?.??% ?.??% ?.??% ?.??%
11/15/2015 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2020 ?.??% ?.??% ?.??% ?.??%
11/15/2020 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
- --------------------------------------------------------------------------------
Target 2025 ?.??% ?.??% ?.??% ?.??%
11/15/2025 Maturity STRIPS Issue ?.??% ?.??% ?.??% ?.??%
* The inception date for the Advisor Class of the funds is September 2, 1997.
********************LEFT MARGIN CALLOUTS************************
[Chart Legend]
Target 2025
Target 2020
Target 2015
Target 2010
Target 2005
Target 2000
[Chart Legend]
Highest Return
Lowest Return
* For current performance information, including yields, please call us at
1-800-345-2021 or visit American Century's Web site at
www.americancentury.com.
********************END LEFT MARGIN CALLOUTS****************
Basics of Fixed Income Investing
Debt Securities
When a fund buys a debt security, which is also called a fixed income security,
it is essentially lending money to the issuer of the security. Debt securities
also are referred to as fixed income securities. Notes, bonds, commercial paper
and Treasury bills are examples of debt securities. After the issuer first sells
the debt security, it may be bought and sold by other investors. The price of
the security may rise or fall based on many factors, including changes in
interest rates, inflation and liquidity.
The advisor decides which debt securities to buy and sell by
* determining which securities help a fund meet its maturity requirements
* eliminating securities that do not satisfy a fund's credit quality
standards
* evaluating the current economic conditions and assessing the risk of
inflation
* evaluating special features of the securities that may make them more or
less attractive
Weighted Average Maturity
Like most loans, debt securities eventually must be repaid (or refinanced) at
some date. This date is called the maturity date. The number of days left to a
debt security's maturity date is called the remaining maturity. The longer a
debt security's remaining maturity, the more sensitive it is to changes in
interest rates.
Because a bond fund will own many debt securities, the advisor calculates the
average of the remaining maturities of all of the debt securities the fund owns
to evaluate the interest rate sensitivity of the entire portfolio. This average
is weighted according to the size of the fund's individual holdings and is
called weighted average maturity. The following chart shows how an advisor would
calculate the weighted average maturity for a fund that owned only two debt
securities.
<TABLE>
Amount of Security Owned Percent of Portfolio Remaining Maturity Weighted Maturity
- ------------------- ------------------------- ---------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Debt Security A $100,000 25% 1,000 days 250 days
Debt Security B $300,000 75% 10,000 days 7500 days
Weighted Average
Maturity 7750 days
</TABLE>
Types of Risk
The basic types of risk that the funds face are described below.
Interest Rate Risk
Generally, interest rates and the prices of debt securities move in opposite
directions. So when interest rates fall, the prices of most debt securities
rise; when interest rates rise, prices fall. Because the funds invest primarily
in debt securities, changes in interest rates will affect the funds'
performance.
The degree to which interest rate changes affect the funds' performance varies
and is related to the weighted average maturity of the fund. For example, when
interest rates rise, you can expect the share value of a long-term bond fund to
fall more than that of a short-term bond fund. When rates fall, the opposite is
true. This sensitivity to interest rate changes is called interest rate risk.
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* Weighted average maturity is a tool that the advisor uses to approximate
the remaining maturity of a fund's investment portfolio.
F The longer a fund's weighted average maturity, the more sensitive it is to
changes in interest rates.
********************END LEFT MARGIN CALLOUTS****************
When interest rates change, longer maturity bonds experience a greater change in
price. The following table shows the effect of a 1% increase in interest rates
on the price of 7% coupon bonds of differing maturities:
Remaining Maturity Current Price Price after 1% increase Change in price
- -------------------- --------------- ------------------------ -----------------
1 year $100.00 $99.06 -0.94%
3 years 100.00 97.38 -2.62%
10 years 100.00 93.20 -6.80%
30 years 100.00 88.69 -11.31%
Credit Risk
Credit risk is the risk that an obligation won't be paid and a loss will result.
A high credit rating indicates a high degree of confidence that the issuer will
be able to make interest and principal payments on time.
It's not as simple as buying the highest rated debt securities, though. Higher
credit ratings usually mean lower interest rates, so investors often purchase
securities that aren't the highest-rated to increase return. If a fund purchases
lower-rated securities, it has assumed additional credit risk.
Liquidity Risk
Debt securities can become difficult to sell for a variety of reasons, such as
lack of an active trading market. When a fund's investments become difficult to
sell, it is said to have a problem with liquidity. The chance that a fund will
have liquidity issues is called liquidity risk.
Inflation Risk
The safest investments usually have the lowest potential income and performance.
There is a risk, then, that the investment may fail to significantly outpace
inflation. Even if the value of your investment has not gone down, your money
will not be worth as much as if there had been no inflation. Your
after-inflation return may be quite small. This risk is called inflation risk.
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* Credit quality may be reduced when
o the issuer has a less reliable cash flow
o the issuer's finances are more sensitive to adverse economic conditions or
changing circumstances o the securities may be repaid after the issuer's
other (more senior) debt.
o the issuer has a shorter financial history
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A Comparison of Basic Risk Factors
The following chart depicts the basic risks of investing in the funds. It is
designed to help you compare these funds with each other; it shouldn't be used
to compare these funds with other mutual funds.
Interest Rate Credit Risk Liquidity Risk Inflation Risk
Risk
- --------------- -------------- ------------- ----------------- -----------------
Target 2000 Lowest Lowest Lowest
Target 2005 Low Lowest Lowest
Target 2010 Medium Lowest Lowest
Target 2015 Medium Lowest Lowest
Target 2020 High Lowest Lowest
Target 2025 Highest Lowest Lowest
The funds engage in a variety of investment techniques as they pursue their
investment objectives. Each technique has its own characteristics, and may pose
some level of risk to the funds. If you would like to learn more about these
techniques, you should review the Statement of Additional Information before
making an investment.
Management
Who manages the funds?
The Board of Trustees, investment advisor and portfolio management team play key
roles in the management of the funds.
The Board of Trustees
The Board of Trustees oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Trustees does not manage the funds, it has hired an investment advisor to do so.
More than half of the Trustees are independent of the funds' advisor, that is,
they are not employed by and have no financial interest in the advisor.
The Investment Advisor
The funds' investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since it was founded in 1958.
American Century is headquartered at 4500 Main Street, Kansas City, Missouri
64111.
The advisor manages the investment portfolios of the funds and directs the
purchase and sale of their investment securities. The advisor also arranges for
transfer agency, custody and all other services necessary for the funds to
operate.
For the services it provides to the funds, the advisor receives a unified
management fee based on a percentage of the average net assets of each fund. The
rate of the management fee for a fund is determined monthly using a two-step
formula that takes into account the fund's strategy (money market, bond or
equity) and the total amount of mutual fund assets the advisor manages. The
Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor pays all
expenses of managing and operating the fund except brokerage expenses, taxes,
interest, fees and expenses of the independent Trustees (including counsel fees)
and extraordinary expenses.
Fees Paid by the Funds to the Advisor in Most Recent Fiscal Year
- --------------------------------------------------------------------------------
Target 2000 X.XX%
Target 2005 X.XX%
Target 2010 X.XX%
Target 2015 X.XX%
Target 2020 X.XX%
Target 2025 X.XX%
The Portfolio Management Team
The advisor uses teams of portfolio managers, assistant portfolio managers and
analysts to manage the funds. Teams meet regularly to review portfolio holdings
and to discuss purchase and sale activity. Team members buy and sell securities
for a fund as they see fit, guided by the fund's investment objective and
strategy.
Portfolio manager members of the investment team include:
David Schroeder
Mr. Schroeder, Vice President, joined the advisor in 1990 and has been primarily
responsible for the day-to-day operations of the Target funds since July 1990.
Jeremy Fletcher
Mr. Fletcher, Associate Portfolio Manager, joined the advisor in 1991 and has
been a member of the team that manages the Target funds since August 1997.
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* Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests
of fund shareholders come before the interests of the people who manage the
funds. Among other provisions, the Code of Ethics prohibits portfolio
managers and other investment personnel from buying securities in an
initial public offering or from profiting from the purchase and sale of the
same security within 60 calendar days. In addition, the Code of Ethics
requires portfolio managers and other employees with access to information
about the purchase or sale of securities by the funds to obtain approval
before executing permitted personal trades.
********************END LEFT MARGIN CALLOUTS****************
Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the funds may not be changed
without a shareholder vote. The Board of Trustees may change any other policies
and investment strategies.
Service and Distribution Fees
Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay out of fund assets certain expenses associated with the distribution of
their shares. The funds' Advisor Class shares have a 12b-1 Plan. Under the Plan,
the fund pays an annual fee of 0.50% of fund assets, half for certain
shareholder and administrative services and half for distribution services. The
advisor, as paying agent for the funds, pays all or a portion of such fees to
the banks, broker-dealers and insurance companies that make such shares
available. Because these fees are paid out of the fund's assets on an on-going
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges. For additional
information about the Plan and its terms, see "Multiple Class Structure - Master
Distribution and Shareholder Services Plan" in the Statement of Additional
Information.
Year 2000 Issues
Many of the world's computer systems currently cannot properly recognize or
process date-sensitive information relating to the Year 2000 and beyond. Because
this may impact the computer systems of various American Century-affiliated and
external service providers for the funds, American Century formally initiated a
Year 2000 readiness project in July 1997. It involves a team of information
technology professionals assisted by outside consultants and guided by a
senior-level steering committee. The team's goal is to assess the impact of the
Year 2000 on American Century's systems, renovate or replace noncompliant
critical systems and test those systems. In addition, the team has been working
to gather information about the Year 2000 efforts of the funds' other major
service providers. Although American Century believes its critical systems will
function properly in the Year 2000, this is not guaranteed. If the efforts of
American Century or its external service providers are not successful, the
funds' business, particularly the provision of shareholder services, may be
hampered.
In addition, the issuers of securities the funds own could have Year 2000
computer problems. These problems could negatively affect the value of their
securities, which, in turn, could impact the funds' performance. The advisor has
established a process to gather publicly available information about the Year
2000 readiness of these issuers. However, this process may not uncover all
relevant information, and the information gathered may not be complete and
accurate. Moreover, an issuer's Year 2000 readiness is only one of many factors
the advisor may consider when making investment decisions, and other factors may
receive greater weight.
How to Invest in American Century
Investing Through Financial Intermediaries
Because the funds are offered through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
o minimum investment requirements
o exchange policies
o fund choices
o cut-off time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the funds' annual reports, semiannual
reports and Statements of Additional Information are available from your
intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although transactions in fund shares may be made directly with American Century
at no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the funds.
American Century has contracts with certain financial intermediaries in which
they represent that they will track the time investment orders are received. The
funds have authorized those intermediaries to accept orders on each funds'
behalf up to the time net asset value is determined. Such orders will be priced
at the net asset value next determined after acceptance of the order on a fund's
behalf.
A Note About Mailings to Shareholders
To reduce expenses and demonstrate respect for our environment, we will deliver
most financial reports, prospectuses and account statements to households in a
single envelope, even if the accounts are registered under different names. If
you would like additional copies of financial reports and prospectuses or
separate mailing of account statements, please call us.
********************LEFT MARGIN CALLOUTS************************
* Financial intermediaries include bankers, broker-dealers, insurance companies
and investment advisors.
********************END LEFT MARGIN CALLOUTS****************
Share Price and Distributions
Share Price
We determine the net asset value of the funds as of one hour before the close of
regular trading on the New York Stock Exchange (usually 3 p.m. Eastern time) on
each day the Exchange is open. On days when the Exchange is not open, we do not
calculate the net asset value. The net asset value of a fund share is the
current value of the fund's investments, minus any liabilities, divided by the
number of fund shares outstanding.
If current prices of securities owned by a fund are not readily available from
an independent pricing service, the advisor may determine their fair value in
accordance with procedures adopted by the fund's Board of Trustees. Trading of
securities in foreign markets may not take place on every day the Exchange is
open. Also, trading in some foreign markets may take place on weekends or
holidays when a fund's net asset value is not calculated. So, the value of a
fund's portfolio may be affected on days when you can't purchase or redeem
shares of the fund.
We will price your purchase, exchange or redemption at the net asset value next
determined after we receive your transaction request in good order.
Distributions
Federal tax laws require each fund to make distributions to its shareholders.
The distributions generally consist of dividends and interest received by a
fund, as well as capital gains realized on the sale of investment securities.
Each fund pays distributions from net income quarterly. Each fund generally pays
distributions of capital gains, if any, once a year. A fund may make more
frequent distributions if necessary to avoid taxes.
You will begin to participate in fund distributions the day after your purchase
is effective. If you redeem shares, you will receive the distribution declared
for the day you redeem. If you redeem all shares, we will include the
distribution on the redeemed with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
our Investor Services Guide for further information regarding distributions and
your distribution options.
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The net asset value of a fund is the price of the fund's shares.
********************END LEFT MARGIN CALLOUTS****************
Taxes
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as a qualified
employer-sponsored retirement or savings plan, income and capital gains
distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis.
Complex tax rules govern employer-sponsored retirement and savings. If you elect
to participate in your employer's plan, consult your plan administrator, your
summary plan description or a professional tax advisor regarding the tax
consequences of participation in, contributions to, and withdrawals or
distributions from the plan.
Taxable Accounts
Fund distributions are taxable to most investors. The taxability of
distributions is not affected by how long you have been in the fund or whether
you reinvest your distributions or take them in cash. In general, distributions
are taxable as follows:
<TABLE>
Type of distribution Tax rate for 15% bracket Tax rate for 28% bracket or above
- ------------------------ ------------------------ ---------------------------------
<S> <C> <C>
Income Ordinary income rate Ordinary income rate
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
</TABLE>
American Century will detail the tax status of fund distributions for each
calendar year in an annual tax statement from the fund.
Distributions may also be subject to state and local taxes. Because everyone's
tax situation is unique, always consult your tax professional about federal,
state and local tax consequences.
Taxes on transactions. Your redemptions -- including exchanges to other American
Century funds -- are subject to capital gains tax. A capital gain or loss is the
difference between the cost of your shares and the price you receive when you
sell them.
The table above can provide a general guide for your potential tax liability
when selling or exchanging fund shares. "Short-term capital gains," are gains on
fund shares held less than or equal to 12 months. "Long-term capital gains," are
gains on fund shares held for more than 12 months.
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* Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution
is sometimes known as "buying a dividend." In taxable accounts, you must
pay income taxes on the distribution whether you take the distribution in
cash or reinvest it. In addition, you will have to pay taxes on the
distribution whether the value of your investment decreased, increased or
remained the same after you bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up
taxable gains throughout the period covered by a distribution, as
securities are sold at a profit. We distribute those gains to your, after
subtracting any losses, even if you did not own the shares when the gains
occurred.
Thus if you buy a divided, you incur the full tax liability of the
distribution period, but you may not enjoy the full benefit of the gains
realized in the fund's portfolio.
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Multiple Class Information
American Century may offer up to three classes of the funds: Investor Class,
Institutional Class and Advisor Class. The shares offered by this Prospectus are
Advisor Class shares and are offered primarily to institutional investors,
through institutional distribution channels, such as employer-sponsored
retirement plans, or through banks, broker-dealers and insurance companies.
American Century offers another class of shares that has has no up-front or
deferred charges, commissions, or 12b-1 fees. The funds may offer a different
class of shares primarily to institutional investors, through institutional
distribution channels, such as employer-sponsored retirement plans, or through
banks, broker-dealers and insurance companies. The other classes have 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 advisor for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. Different fees and expenses will affect performance. For
additional information concerning the other classes of shares not offered by
this Prospectus, call us at 1-800-345-3533 or contact a sales representative or
financial intermediary who offers those classes of shares.
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, (d) each class may
have different exchange privileges, and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
Target 2000
1998 1997
PER-SHARE DATA
Net Asset Value, Beginning of Year
--------- --------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized Gain (Loss) on Investment
Transactions
--------- --------
Total From Investment Operations
--------- --------
Less Distributions
From Net Investment Income (dividends)
From Net Realized Gains on Investment Transactions
--------- --------
--------- --------
Total Distributions
--------- --------
Net Asset Value, End of Year
--------- --------
Total Return(1)
Ratio of Operating Expenses to Average Net Assets
Ratio of Net Investment Income to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year (in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2005
1998 1997
PER-SHARE DATA
Net Asset Value, Beginning of Year
--------- --------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized Gain (Loss) on Investment
Transactions
--------- --------
Total From Investment Operations
--------- --------
Less Distributions
From Net Investment Income (dividends)
From Net Realized Gains on Investment Transactions
--------- --------
--------- --------
Total Distributions
--------- --------
Net Asset Value, End of Year
--------- --------
Total Return(1)
Ratio of Operating Expenses to Average Net Assets
Ratio of Net Investment Income to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year (in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2010
1998 1997
PER-SHARE DATA
Net Asset Value, Beginning of Year
--------- --------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized Gain (Loss) on Investment
Transactions
--------- --------
Total From Investment Operations
--------- --------
Less Distributions
From Net Investment Income (dividends)
From Net Realized Gains on Investment Transactions
--------- --------
--------- --------
Total Distributions
--------- --------
Net Asset Value, End of Year
--------- --------
Total Return(1)
Ratio of Operating Expenses to Average Net Assets
Ratio of Net Investment Income to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year (in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2015
1998 1997
PER-SHARE DATA
Net Asset Value, Beginning of Year
--------- --------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized Gain (Loss) on Investment
Transactions
--------- --------
Total From Investment Operations
--------- --------
Less Distributions
From Net Investment Income (dividends)
From Net Realized Gains on Investment Transactions
--------- --------
--------- --------
Total Distributions
--------- --------
Net Asset Value, End of Year
--------- --------
Total Return(1)
Ratio of Operating Expenses to Average Net Assets
Ratio of Net Investment Income to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year (in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2020
1998 1997
PER-SHARE DATA
Net Asset Value, Beginning of Year
--------- --------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized Gain (Loss) on Investment
Transactions
--------- --------
Total From Investment Operations
--------- --------
Less Distributions
From Net Investment Income (dividends)
From Net Realized Gains on Investment Transactions
--------- --------
--------- --------
Total Distributions
--------- --------
Net Asset Value, End of Year
--------- --------
Total Return(1)
Ratio of Operating Expenses to Average Net Assets
Ratio of Net Investment Income to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year (in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2025
1998 1997
PER-SHARE DATA
Net Asset Value, Beginning of Year
--------- --------
Income from Investment Operations
Net Investment Income (dividends)
Net Realized and Unrealized Gain (Loss) on Investment
Transactions
--------- --------
Total From Investment Operations
--------- --------
Less Distributions
From Net Investment Income (dividends)
From Net Realized Gains on Investment Transactions
--------- --------
--------- --------
Total Distributions
--------- --------
Net Asset Value, End of Year
--------- --------
Total Return(1)
Ratio of Operating Expenses to Average Net Assets
Ratio of Net Investment Income to Average Net Assets
Portfolio Turnover Rate
Net Assets, End of Year (in thousands)
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Performance Information of the Other Class
The Advisor Class of the funds was established September 2, 1997. As a result,
the following financial information is provided to show the performance of the
funds' Investor Class of shares. This Class has a total expense ratio that is
0.25% lower than the Advisor Class. If the Advisor Class existed during the
periods presented, its performance would have been lower because of the
additional expense.
This table itemizes what contributed to the changes in share price during the
period, and compares this to changes over the last five fiscal years (or less,
if the share class is not five years old).
On a per-share basis, it includes:
o share price at the beginning of the period
o investment income and capital gains or losses
o distributions of income and capital gains paid to shareholders
o share price at the end of the period
It also includes some key statistics for the period:
o total return--the overall percentage of return of the fund, assuming the
reinvestment of all distributions
o expense ratio--operating expenses as a percentage of average net assets
o net income ratio--net investment income as a percentage of average net
assets
o portfolio turnover--the percentage of the fund's buying and selling
activity
The following Financial Highlights have been audited by PricewaterhouseCoopers,
LLP, independent auditors. Their report is in the funds' annual report, which is
incorporated by reference into the Statement of Additional Information, and is
available upon request. Prior years' information was audited by other
independent auditors.
Target 2000
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year......
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income (dividends)....
Net Realized and Unrealized Gain
(Loss) on Investment Transactions....
------ ------ ------ ------ ------
Total From Investment Operations.....
------ ------ ------ ------ ------
Less Distributions
From Net Investment Income
(dividends)..........................
From Net Realized Gains on
Investment Transactions..............
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Distributions..................
------ ------ ------ ------ ------
Net Asset Value, End of Year............
------ ------ ------ ------ ------
Total Return(1).........................
Ratio of Operating Expenses to Average
Net Assets..............................
Ratio of Net Investment Income to
Average Net Assets......................
Portfolio Turnover Rate.................
Net Assets, End of Year (in thousands)..
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2005
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year......
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income (dividends)....
Net Realized and Unrealized Gain
(Loss) on Investment Transactions....
------ ------ ------ ------ ------
Total From Investment Operations.....
------ ------ ------ ------ ------
Less Distributions
From Net Investment Income
(dividends)..........................
From Net Realized Gains on
Investment Transactions..............
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Distributions..................
------ ------ ------ ------ ------
Net Asset Value, End of Year............
------ ------ ------ ------ ------
Total Return(1).........................
Ratio of Operating Expenses to Average
Net Assets..............................
Ratio of Net Investment Income to
Average Net Assets......................
Portfolio Turnover Rate.................
Net Assets, End of Year (in thousands)..
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2010
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year......
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income (dividends)....
Net Realized and Unrealized Gain
(Loss) on Investment Transactions....
------ ------ ------ ------ ------
Total From Investment Operations.....
------ ------ ------ ------ ------
Less Distributions
From Net Investment Income
(dividends)..........................
From Net Realized Gains on
Investment Transactions..............
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Distributions..................
------ ------ ------ ------ ------
Net Asset Value, End of Year............
------ ------ ------ ------ ------
Total Return(1).........................
Ratio of Operating Expenses to Average
Net Assets..............................
Ratio of Net Investment Income to
Average Net Assets......................
Portfolio Turnover Rate.................
Net Assets, End of Year (in thousands)..
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2015
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year......
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income (dividends)....
Net Realized and Unrealized Gain
(Loss) on Investment Transactions....
------ ------ ------ ------ ------
Total From Investment Operations.....
------ ------ ------ ------ ------
Less Distributions
From Net Investment Income
(dividends)..........................
From Net Realized Gains on
Investment Transactions..............
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Distributions..................
------ ------ ------ ------ ------
Net Asset Value, End of Year............
------ ------ ------ ------ ------
Total Return(1).........................
Ratio of Operating Expenses to Average
Net Assets..............................
Ratio of Net Investment Income to
Average Net Assets......................
Portfolio Turnover Rate.................
Net Assets, End of Year (in thousands)..
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2020
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year......
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income (dividends)....
Net Realized and Unrealized Gain
(Loss) on Investment Transactions....
------ ------ ------ ------ ------
Total From Investment Operations.....
------ ------ ------ ------ ------
Less Distributions
From Net Investment Income
(dividends)..........................
From Net Realized Gains on
Investment Transactions..............
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Distributions..................
------ ------ ------ ------ ------
Net Asset Value, End of Year............
------ ------ ------ ------ ------
Total Return(1).........................
Ratio of Operating Expenses to Average
Net Assets..............................
Ratio of Net Investment Income to
Average Net Assets......................
Portfolio Turnover Rate.................
Net Assets, End of Year (in thousands)..
(1) Total return assumes reinvestment of dividends and capital gains, if any.
Target 2025
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value, Beginning of Year......
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income (dividends)....
Net Realized and Unrealized Gain
(Loss) on Investment Transactions....
------ ------ ------ ------ ------
Total From Investment Operations.....
------ ------ ------ ------ ------
Less Distributions
From Net Investment Income
(dividends)..........................
From Net Realized Gains on
Investment Transactions..............
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Distributions..................
------ ------ ------ ------ ------
Net Asset Value, End of Year............
------ ------ ------ ------ ------
Total Return(1).........................
Ratio of Operating Expenses to Average
Net Assets..............................
Ratio of Net Investment Income to
Average Net Assets......................
Portfolio Turnover Rate.................
Net Assets, End of Year (in thousands)..
(1) Total return assumes reinvestment of dividends and capital gains, if any.
More information about the funds is contained in these documents:
Annual and Semiannual Reports. Contain more information about about the funds
investments and the market conditions and investment strategies that
significantly affected the fund's performance during the most recent six-month
fiscal period.
Statement of Additional Information. Contains a more detailed, legal description
of the funds' operations, investment restrictions, policies and practices. The
SAI is incorporated by reference into this Prospectus. This means that it is
legally part of this Prospectus, even if you don't request a copy.
You can also get information (including the the fund's SAI) from the SEC.
* In person. Go to the SEC's Public Reference Room in Washington, D.C. Call
1-800-SEC-0330 for information about location and hours of operation.
* On the internet. Go to www.sec.gov.
* By mail. Write to Public Reference Section of the Securities and Exchange
Commission, Washington, D.C. 20549-6009. The SEC will charge a fee for
copying the documents you request.
- --------------------------------------------------------------------------------
[american century logo(reg.sm)]
AMERICAN
CENTURY
American Century Investments Telecommunications Device for the Deaf
P.O. Box 419385 1-800-345-1833 or 816-444-3038
Kansas City, Missouri 64141-6385
Fax: 816-340-4655
Institutional Services
1-800-345-3533 or 816-531-5575 www.americancentury.com
Investment Company Act File Number 811-XXXX Funds Distributor, Inc.
<PAGE>
Statement of Additional Information
- --------------------------------------------------------------------------------
February 1, 1999
AMERICAN CENTURY
TARGET MATURITIES TRUST
Target 2000
Target 2005
Target 2010
Target 2015
Target 2020
Target 2025
This Statement of Additional Information adds to the discussion in the funds'
Prospectus, dated February 1, 1999, but is not a prospectus. If you would like a
copy of the Prospectus, please contact us at one of the addresses or phone
numbers listed on the back cover or visit American Century's Web site at
www.americancentury.com.
This Statement of Additional Information incorporates by reference certain
information that appears in the funds' annual and semiannual reports, which are
delivered to all shareholders. You may obtain a free copy of the funds' annual
or semiannual report by calling 1-800-345-2021.
Distributed by Funds Distributor, Inc.
[american century logo(reg.sm)]
American
Century
Table of Contents
The Funds'History.......................................................1
Fund Investment Outlines................................................1
Detailed Information About the Funds....................................1
Investment Strategies and Risks......................................1
Investment Policies..................................................4
Temporary Defensive Measures.........................................5
Portfolio Turnover...................................................6
Management..............................................................6
The Board of Trustees................................................6
Officers.............................................................8
The Funds'Biggest Shareholders..........................................9
Service Providers.......................................................9
Investment Advisor...................................................9
Distributor..........................................................11
Transfer Agent and Administrator.....................................12
Other Service Providers..............................................12
Brokerage Allocation....................................................12
Information About Fund Shares...........................................13
Generally............................................................13
Fund Liquidations....................................................13
Multiple Class Structure.............................................13
Rule 12b-1...........................................................14
Master Distribution and Shareholder Services Plan....................14
Valuation of Portfolio Securities.......................................15
Taxes...................................................................15
How Fund Performance Information is Calculated..........................17
Multiple Class Performance Advertising...............................18
Financial Statements....................................................18
Explanation of Fixed Income Securities Ratings..........................18
Bond Ratings.........................................................18
Commercial Paper Ratings.............................................19
Note Ratings.........................................................19
The Funds' History
American Century Target Maturities Trust (the "Trust") is a registered open-end
management investment company that was organized as a Massachusetts business
trust on March 25, 1985. The Trust was known as "Benham Target Maturities Trust"
until January 1997.
Each fund is a separate series of the Trust and operates for many purposes as if
it were an independent company. Each fund has its own tax identification and
stock registration number. The funds may have different inception dates.
- ------------------------------------------------- -------------- ---------------
Inception Date Inception Date
Fund-Class (Ticker Symbol) (Investor (Advisor Class)
Class)
- ------------------------------------------------- -------------- ---------------
American Century Target Maturities Trust: 2000 () 03/25/1985 09/02/1997
American Century Target Maturities Trust: 2005 () 03/25/1985 09/02/1997
American Century Target Maturities Trust: 2010 () 03/25/1985 09/02/1997
American Century Target Maturities Trust: 2015 () 09/01/1986 09/02/1997
American Century Target Maturities Trust: 2020 () 12/29/1989 09/02/1997
American Century Target Maturities Trust: 2025 () 02/16/1996 09/02/1997
- ------------------------------------------------- -------------- ---------------
Fund Investment Outlines
This section explains the extent to which American Century Investment
Management, Inc. (the "advisor") can use various investment vehicles and
strategies in managing a fund's assets. Descriptions of the investment
techniques and risks associated with each appear in the section, "Investment
Strategies and Risks," which begins on page 1. In the case of the funds'
principal investment strategies, these descriptions elaborate upon discussion
contained in the Prospectus.
Each fund is a diversified open-end investment company as defined in the
Investment Company Act of 1940 (the Investment Company Act). "Diversified" means
that, with respect to 75% of its total assets, each fund will not invest more
than 5% of its total assets in the securities of a single issuer.
To meet federal tax requirements for qualification as a regulated investment
company, each fund must limit its investments so that at the close of each
quarter of its taxable year (1) no more than 25% of its total assets are
invested in the securities of a single issuer (other than the U.S government or
a regulated investment company), and (2) with respect to at least 50% of its
total assets, no more than 5% of its total assets are invested in the securities
of a single issuer.
Detailed Information About the Funds
Investment Strategies and Risks
This section describes each of the investment vehicles and strategies that the
advisor can use in managing a fund's assets. It also details the risks
associated with each, because each technique contributes to a fund's overall
risk profile.
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."
Managing to the Target Year
* 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 composition that remain constant for the life of the Fund. Because
Fund expenses and composition do not remain constant, however, the Manager
calculates AVM for each Fund each day the Trust is open for business.
In addition to the measures described above, which the Manager believes are
adequate to assure close correspondence between the price behavior of each Fund
and the price behavior of directly held zero-coupon bonds with comparable
maturities, the Trust has made an undertaking to the staff of the Securities and
Exchange Commission (SEC) that each Fund will invest at least 90% of its net
assets in zero-coupon bonds until it is within four years of its target maturity
year and at least 80% of its net assets in zero-coupon securities while the Fund
is within two to four years of its target maturity year. This undertaking may be
revoked if the market supply of zero-coupon securities diminishes unexpectedly,
although it will not be revoked without prior consultation with the SEC staff.
In addition, the Manager has undertaken that any coupon-bearing bond purchased
on behalf of a Fund will have a duration that falls within the Fund's target
maturity year.
* Anticipated Growth Rate
The Manager also calculates an anticipated growth rate (AGR) for each Fund each
day the Trust is open for business. AGR is a calculation of the annualized rate
of growth an investor may expect from his or her purchase date to the Fund's
target maturity date. As is the case with calculations of AVM, the AGR
calculation assumes that the investor will reinvest all dividends and capital
gain distributions (if any) and that the Fund's expense ratio and portfolio
composition will remain constant. Each Fund's AGR changes from day to day
primarily because of changes in interest rates and, to a lesser extent, to
changes in portfolio composition and other factors that affect the value of the
Fund's investments.
The Manager expects that shareholders who hold their shares until a Fund's
weighted average maturity date and who reinvest all dividends and capital gain
distributions (if any), will realize an investment return and maturity value
that do not differ substantially from the AGR and AVM calculated on the day his
or her shares were purchased.
The following table illustrates investor experience with Target 1990, a series
of the Trust that was first offered on March 25, 1985, and that was liquidated
on January 25, 1991. This table is not indicative of the future performance of
the existing Funds.
Weighted Average
Date Share Price (P) AGR Maturity (T) AVM (in $)
(in $)
- ----------- ----------------- -------------- ----------------- ----------------
April 1985 56.03 10.58 5.64 100.25
- ----------- ----------------- -------------- ----------------- ----------------
June 60.62 9.68 5.42 101.17
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
September 62.72 9.44 5.08 100.23
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
December 67.75 8.26 4.95 101.15
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
March 1986 73.60 6.86 4.69 100.98
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
June 74.80 6.83 4.38 100.38
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
September 76.82 6.59 4.16 100.63
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
December 79.01 6.27 3.86 100.26
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
March 1987 79.88 6.34 3.59 99.93
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
June 79.01 7.21 3.27 99.63
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
September 77.28 8.57 3.14 100.62
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
December 81.02 7.52 2.7 99.33
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
March 1988 83.61 6.98 2.51 99.33
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
June 83.97 6.55 2.62 99.42
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
September 84.96 6.97 2.09 98.04
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
December 85.70 8.39 1.68 98.38
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
March 1989 86.76 9.18 1.50 99.25
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
June 90.47 7.57 1.23 99.16
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
September 91.91 7.81 0.98 99.08
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
December 94.00 7.38 0.74 99.17
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
March 1990 95.62 7.68 0.52 99.44
- ----------- ----------------- -------------- ----------------- ----------------
- ----------- ----------------- -------------- ----------------- ----------------
June 97.48 7.44 0.32 99.82
- ----------- ----------------- -------------- ----------------- ----------------
September 99.32 6.73 0.15 100.31
- ----------- ----------------- -------------- ----------------- ----------------
December 101.13 4.33 0.07 101.43
Calculations in the table above may not reconcile precisely due to rounding of
share price, AGR, and weighted average maturity to two decimal points.
Note that the Target 1990's share price on December 31, 1990, was not the same
as its AVM on that date because the Fund had not yet been liquidated and still
held short-term Treasury securities with a 25-day maturity. The Fund was
liquidated on January 25, 1991, at a final share price of $101.46.
As a further demonstration of how the Funds have behaved over time, the
following tables show each Fund's AGR and AVM as of September 30 for each of the
past five years.
9/30/93 AGR 9/30/94 AGR 9/30/95 AGR 9/30/96 AGR 9/30/97 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 AVM 9/30/94 AVM 9/30/95 AVM 9/30/96 AVM 9/30/97 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.
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.
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 Policies
Unless otherwise indicated, with the exception of the percentage limitations on
borrowing, the restrictions apply at the time transactions are entered into.
Accordingly, any later increase or decrease beyond the specified limitation
resulting from a change in a fund's net assets will not be considered in
determining whether it has complied with its investment restrictions.
Fundamental Investment Policies
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 votes of shareholders of a fund, as determined in
accordance with the Investment Company Act.
<TABLE>
- ------------------------ ----------------------------------------------------------------------------------------
Subject Policies
- ------------------------ ----------------------------------------------------------------------------------------
<S> <C>
Senior Securities A fund may not issue senior securities, except as permitted under the Investment
Company Act.
Borrowing A fund may not borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not exceeding
33-1/3% of the fund's total assets (including the amount borrowed) less liabilities
(other than borrowings).
Lending A fund may not lend any security or make any other loan if, as a result, more than
33-1/3% of the fund's total assets would be lent to other parties, except, (i) through
the purchase of debt securities in accordance with its investment objective, policies
and limitations or (ii) by engaging in repurchase agreements with respect to portfolio
securities.
Real Estate A fund may not purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments. This policy shall not prevent the fund from
investment in securities or other instruments backed by real estate or securities of
companies that deal in real estate or are engaged in the real estate business.
Concentration A fund may not concentrate its investments in securities of issuers in a particular
industry (other than securities issued or guaranteed by the U.S. government or any of
its agencies or instrumentalities).
Underwriting A fund may not act as an underwriter of securities issued by others, except to the
extent that the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities.
Commodities A fund may not purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; provided that this limitation shall not
prohibit the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities.
Control A fund may not invest for purposes of exercising control over management.
- ------------------------ ----------------------------------------------------------------------------------------
</TABLE>
For purposes of the investment restriction relating to concentration, a fund
shall not purchase any securities that 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.
Nonfundamental Investment Policies
In addition, the funds are subject to the following additional investment
restrictions that are not fundamental and may be changed by the Board of
Trustees.
- ----------------- --------------------------------------------------------------
Subject Policies
- ----------------- --------------------------------------------------------------
Diversification A fund may not purchase additional investment securities at
any time during which outstanding borrowings exceed 5% of the
total assets of the fund.
Liquidity A fund may 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 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.
Short Sales A fund may 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
transactions in futures contracts and options are not deemed
to constitute selling securities short.
Margin A fund may 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.
- ----------------- --------------------------------------------------------------
Temporary Defensive Measures
For temporary defensive purposes, a fund may invest in securities that may not
fit its investment objective or its stated market. During a temporary defensive
period, a fund may direct its assets to the following investment vehicles:
0 interest-bearing bank accounts or Certificates of Deposit
0 U.S. government securities and repurchase agreements collateralized by U.S.
government securities
0 money market funds
Portfolio Turnover
Under normal conditions, the funds' annual portfolio turnover rates are not
expected to exceed 100%. Because a higher turnover rate increases transaction
costs and may increase taxable capital gains, the advisor carefully weighs the
potential benefits of short-term investing against these considerations. The
funds' portfolio turnover rates are listed in the Financial Highlights table in
the Prospectus.
Management
The Board of Trustees
The Board of Trustees oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Trustees does not manage the funds, it has hired the advisor to do so. More than
half of the trustees are "independent" of the funds' the advisor, that is, they
are not employed by and have no financial interest in the advisor.
The individuals listed in the table below whose names are marked by an asterisk
(*) are interested persons of the funds (as defined in the Investment Company
Act) by virtue of, among other considerations, their affiliation with either the
funds; the advisor, American Century Investment Management, Inc.; the funds'
agent for transfer and administrative services, American Century Services
Corporation (ACSC); the funds' distribution agent and co-administrator, Funds
Distributor, Inc. (FDI); the parent corporation, American Century Companies,
Inc. (ACC) or ACC's subsidiaries; or other funds advised by the advisor. Each
trustee listed below serves as a trustee or director of seven registered
investment companies in the American Century family of funds, which are also
advised by the advisor.
<TABLE>
- --------------------------- ---------- --------------------------------------------------------------------------
Position(s)
Name (Age) Held Principal Occupation(s)
Address With Fund During Past 5 Years
- --------------------------- ---------- --------------------------------------------------------------------------
<S> <C> <C>
Albert A. Eisenstat (68) trustee Independent Director, Commercial Metals Co. (1982 to present)
1665 Charleston Road Independent Director, Sungard Data Systems (1991 to present)
Mountain View, CA 94043 Independent Director, Business Objects S/A (software & programming, 1994
to present)
Ronald J. Gilson (52) trustee Charles J. Meyers Professor of Law and Business, Stanford Law School
1665 Charleston Road (since 1979)
Mountain View, CA 94043 Mark and Eva Stern Professor of Law and Business, Columbia University
School of Law (since 1992);
Counsel, Marron, Reid & Sheehy (a San Francisco law firm, since 1984)
William M. Lyons* (42) trustee President, Chief Operating Officer and Assistant Secretary, ACC
4500 Main Street Executive Vice President, Chief Operating Officer and Secretary, ACSC
Kansas City, MO 64111 and ACIS
Myron S. Scholes (57) trustee Principal, Long-Term Capital Management (investment advisor, since 1993)
1665 Charleston Road Frank E. Buck Professor of Finance, Stanford Graduate School of Business
Mountain View, CA 94043 (since 1983)
Director, Dimensional Fund Advisors (investment advisor, since 1982)
Director, Smith Breeden Family of Funds (since 1992)
Managing Director, Salomon Brothers Inc. (securities brokerage, 1991 to
1993)
Kenneth E. Scott (69) trustee Ralph M. Parsons Professor of Law and Business, Stanford Law School
1665 Charleston Road (since 1972)
Mountain View, CA 94043 Director, RCM Capital Funds, Inc. (since 1994)
Isaac Stein (51) trustee Director, Raychem Corporation (electrical equipment, since 1993)
1665 Charleston Road President, Waverley Associates, Inc. (private investment firm, since
Mountain View, CA 94043 1983) Director, ALZA Corporation (pharmaceuticals, since 1987).
trustee, Stanford University (since 1994) Chairman, Stanford Health
Services (since 1994)
James E. Stowers III* (39) trustee, Chief Executive Officer and Director, ACC
4500 Main Street Chairman President, Chief Executive Officer and Director, ACSC and ACIS
Kansas City, MO 64111 of the
Board
Jeanne D. Wohlers (53) trustee Private Investor
1665 Charleston Road Director and Partner, Windy Hill Productions, LP
Mountain View, CA 94043 Vice President and Chief Financial Officer, Sybase, Inc. (software
company, 1988 to 1992)
- --------------------------- ---------- --------------------------------------------------------------------------
Committees
The Board has three committees to oversee specific functions of the Trust's
operations. Only independent trustees serve on these committees. Information
about these committees appears in the table below:
- ------------------ ------------------- --------------------------------------------------------------------------
Committee Members Function of Committee
- ------------------ ------------------- --------------------------------------------------------------------------
Audit Albert A. The Audit Committee selects and oversees the activities of the Trust's
Eisenstat independent auditor. The Committee receives reports from the advisor's
Kenneth E. Scott Internal Audit Department, which is accountable solely to the Committee.
Jeanne D. Wohlers The Committee also receives reporting about compliance matters affecting
the Trust.
Nominating Albert A. The Nominating Committee primarily considers and recommends individuals
Eisenstat for nomination as trustees. The names of potential trustee candidates
Ronald J. Gilson are drawn from a number of sources, including recommendations from
Myron S. Scholes members of the Board, management and shareholders. This committee also
Kenneth E. Scott reviews and makes recommendations to the Board with respect to the
Isaac Stein composition of Board committees and other Board-related matters,
Jeanne D. Wohlers including its organization, size, composition, responsibilities,
functions and compensation.
Portfolio Ronald J. Gilson The Portfolio Committee reviews quarterly the investment activities and
Myron S. Scholes strategies used to manage fund assets. The Committee regularly receives
Isaac Stein reports from portfolio managers, credit analysts and other investment
personnel concerning the funds' investments.
Quality of Ronald J. Gilson The Quality of Service Committee reviews the level and quality of
Service Myron S. Scholes transfer agent and administrative services provided to the funds and
Isaac Stein their shareholders. It receives and reviews reports comparing those
services to fund competitors and seeks to improve such services where
feasible and appropriate.
- ------------------ ------------------- --------------------------------------------------------------------------
Compensation of Trustees
The trustees also serve as trustees for six (6) American Century investment
companies other than American Century Target Maturities Trust. Each trustee who
is not an "interested person" as defined in the Investment Company Act receives
compensation for service as a member of the Board of all seven such companies
based on a schedule that is based on the number of meetings held and the assets
of the funds for which the meetings are held. These fees and expenses are
divided among the seven investment companies based, in part, upon their relative
net assets. Under the terms of the management agreement with the advisor, the
funds are responsible for paying such fees and expenses.
The table presented shows the aggregate compensation paid for the periods
indicated by the Trust and by the American Century family of funds as a whole to
each trustee who is not an "interested person" as defined in the Investment
Company Act.
Aggregate Trustee Compensation for Fiscal Year Ended August 31, 1998
- ---------------------------- ---------------------- ------------------- ------------------ ---------------------
Total Compensation
Pension or Estimated Annual from the
Total Compensation Retirement Benefits Upon American Century
Name of Trustee from Benefits Accrued Retirement Family of Funds
the Funds as Part of Fund
Expenses
- ---------------------------- ---------------------- ------------------- ------------------ ---------------------
Albert A. Eisenstat $ N/A N/A $
Ronald J. Gilson $ N/A N/A $
Myron S. Scholes $ N/A N/A $
Kenneth E. Scott $ N/A N/A $
Isaac Stein $ N/A N/A $
Jeanne D. Wohlers $ N/A N/A $
- ---------------------------- ---------------------- ------------------- ------------------ ---------------------
</TABLE>
The Trust has adopted the American Century Deferred Compensation Plan for
Non-Interested Directors and trustees. Under the plan, the independent trustees
may defer receipt of all or any part of the fees to be paid to them for serving
as trustees.
Under the plan, all deferred fees are credited to an account established in the
name of the trustees. The amounts credited to the account then increase or
decrease, as the case may be, in accordance with the performance of one or more
of the American Century funds that are selected by the trustee. The account
balance continues to fluctuate in accordance with the performance of the
selected fund or funds until final payment of all amounts credited to the
account. Trustees are allowed to change their designation of mutual funds from
time to time.
No deferred fees are payable until such time as a trustee resigns, retires or
otherwise ceases to be a member of the Board of Trustees. Trustees may receive
deferred fee account balances either in a lump sum payment or in substantially
equal installment payments to be made over a period not to exceed 10 years. Upon
the death of a trustee, all remaining deferred fee account balances are paid to
the trustee's beneficiary or, if none, to the trustee's estate.
The plan is an unfunded plan and, accordingly, the Trust has no obligation to
segregate assets to secure or fund the deferred fees. The rights of trustees to
receive their deferred fee account balances are the same as the rights of a
general unsecured creditor of the Trust. The plan may be terminated at any time
by the administrative committee of the plan. If terminated, all deferred fee
account balances will be paid in a lump sum.
No deferred fees were paid to any trustee under the plan during the fiscal year
ended August 31, 1998.
Officers
Background for the officers of the Trust is provided below. All persons named as
officers of the Trust also serve in similar capacities for the 12 other
investment companies advised by American Century. Not all officers of the Trust
are listed; only those officers with policy-making functions for the Trust are
listed. No officer is compensated for his or her service as an officer of the
Trust. The individuals listed in the table below are interested persons of the
funds (as defined in the Investment Company Act) by virtue of, among other
considerations, their affiliation with either the funds; the advisor, ACSC, FDI,
ACC or ACC's subsidiaries, as specified in the table.
<TABLE>
- --------------------------- ------------------- ------------------------------------------------------------------
Position(s) Held
Name (Age) With Fund Principal Occupation(s)
Address During Past 5 Years
- --------------------------- ------------------- ------------------------------------------------------------------
<S> <C> <C>
George A. Rio (43) President Executive Vice President and Director of Client Services, FDI
4500 Main Street (March 1998 to present).
Kansas City, Missouri Senior Vice President and Senior Key Account Manager, Putnam
64111 Mutual Funds (June 1995 to March 1998)
Director Business Development, First Data Corporation (May 1994
to June 1995)
Senior Vice President and Manager of Client Services and
Director of Internal Audit, The Boston Company, Inc. (September
1983 to May 1994)
Mary A. Nelson (33) Vice President Vice President and Manager of Treasury Services and
4500 Main Street Administration, FDI, (1994 to present)
Kansas City, Missouri Assistant Vice President and Client Manager, The Boston Company,
64111 Inc. (1989 to 1994)
Maryanne Roepke, CPA (42) Vice President Vice President, Treasurer and Principal Accounting Officer, ACSC
4500 Main Street and Treasurer
Kansas City, Missouri
64111
Patrick A. Looby (39) Vice President Vice President and Assistant General Counsel, ACSC
4500 Main Street
Kansas City, MO 64111
Christopher J. Kelley (33) Vice President Vice President and Associate General Counsel, FDI (since July
4500 Main Street 1996)
Kansas City, MO 64111 Assistant Counsel, Forum Financial Group (April 1994 to July
1996)
Compliance Officer, Putnam Investments (1992 to April 1994)
Douglas A. Paul (51) Secretary and Vice President and Associate General Counsel, ACSC
1665 Charleston Road Vice President
Mountain View, CA 94043
C. Jean Wade (34) Controller Controller-Fund Accounting, ACSC
4500 Main Street
Kansas City, MO 64111
- --------------------------- ------------------- ------------------------------------------------------------------
</TABLE>
The Funds' Biggest Shareholders
As of December 28, 1998, the following companies were the record owners of more
than 5% of a fund's outstanding shares:
- ----------------- ------------------------------ ---------------- -----------
% of
Shares
Fund Shareholder # of Shares Out-standing
Held
- ----------------- ------------------------------ ---------------- -----------
Target 2000 Charles Schwab & Co. 2,169,419 17.2%
101 Montgomery Street
San Francisco, CA 94101
Bank of America 1,328,888 10.5%
P.O. Box 513577
Los Angeles, CA 90051
Target 2020 Charles Schwab & Co. 5,739,593 14.9%
101 Montgomery Street
San Francisco, CA 94101
Target 2025 Charles Schwab & Co. 2,995,086 13.7%
101 Montgomery Street
San Francisco, CA 94101
- ----------------- ------------------------------ ---------------- -----------
The funds are unaware of any other shareholders, beneficial or of record, who
own more than 5% of a fund's outstanding shares. As of December 28, 1998, the
officers and trustees of the funds, as a group, own less than 1% of any fund's
outstanding shares.
Service Providers
The funds have no employees. To conduct its day-to-day activities, the Trust has
hired a number of service providers. Each service provider has a specific
function to fill on behalf of the Trust and is described below.
The advisor and ACSC are both wholly owned by ACC. James E. Stowers Jr.,
Chairman of ACC, controls ACC by virtue of his ownership of a majority of its
common stock.
Investment Advisor
Each fund has an investment management agreement with the advisor, American
Century Investment Management, Inc., dated August 1, 1997. This agreement was
approved by the shareholders of each of the funds on July 30, 1997.
A description of the responsibilities of the advisor appears in the Prospectus
under the caption "Management."
For the services provided to the funds, the advisor 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 funds of its investment
category managed by the advisor (the "Investment Category Fee"). For example,
when calculating the fee for a money market fund, all of the assets of the money
market funds managed by the advisor are aggregated. The three investment
categories are money market funds, bond funds and equity funds. Second, a
separate fee rate schedule is applied to the assets of all of the funds managed
by the advisor (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 advisor.
The schedules by which the Investment Category Fees are determined are as
follows:
--------------------- ---------------
Investment Category Fee Schedule for Category Assets Fee Rate
--------------------- ---------------
0 Target 2000 First $1 billion 0.3600%
0 Target 2005 Next $1 billion 0.3080%
0 Target 2010 Next $3 billion 0.2780%
0 Target 2015 Next $5 billion 0.2580%
0 Target 2020 Next $15 billion 0.2450%
0 Target 2025 Next $25 billion 0.2430%
Thereafter 0.2425%
--------------------- ---------------
The Complex Fee is determined according to the schedule on the right.
Complex Fee Schedule
- ---------------------- ---------------
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%
- ---------------------- ---------------
On the first business day of each month, the funds pay a management fee to the
advisor for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of a fund's net assets during the previous
month by a fraction, the numerator of which is the number of days in the
previous month and the denominator of which is 365 (366 in leap years).
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by (1) the funds'
Board of Trustees, or by the vote of a majority of outstanding votes (as defined
in the Investment Company Act) and (2) by the vote of a majority of the trustees
of the funds who are not parties to the agreement or interested persons of the
advisor, 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 outstanding votes, on 60 days' written notice to the advisor, and
that it shall be automatically terminated if it is assigned.
The management agreement provides that the advisor 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 advisor 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 advisor. 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 fund, or in different amounts and
at different times for more than one but less than all clients or fund. In
addition, purchases or sales of the same security may be made for two or more
clients or fund on the same date. Such transactions will be allocated among
clients in a manner believed by the advisor 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 advisor may aggregate purchase and sale orders of the funds with purchase
and sale orders of its other clients when the advisor believes that such
aggregation provides the best execution for the funds. The funds' Board of
Trustees has approved the policy of the advisor 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
advisor 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 advisor
receives no additional compensation or remuneration as a result of such
aggregation.
***********CALLOUT BOX*******************************
Other Advisory Relationships
In addition to managing the funds, the advisor also acts as an investment
advisor to 12 institutional accounts and to the following registered investment
companies:
0 American Century Mutual Funds, Inc.
0 American Century World Mutual Funds, Inc.
0 American Century Premium Reserves, Inc.
0 American Century Variable Portfolios, Inc.
0 American Century Capital Portfolios, Inc.
0 American Century Strategic Asset Allocations, Inc.
0 American Century Municipal Trust
0 American Century Government Income Trust
0 American Century Investment Trust
0 American Century California Tax-Free and Municipal Funds
0 American Century Quantitative Equity Funds
0 American Century International Bond Funds.
***********END CALLOUT BOX*******************************
Prior to August 1, 1997, Benham Management Corporation served as the investment
advisor to the funds. Benham Management Corporation was merged into the advisor
in late 1997.
Investment management fees paid by each fund for the fiscal periods ended August
31, 1998, 1997 and 1996, are indicated in the following table. Fee amounts are
net of amounts reimbursed or recouped under the funds' previous investment
advisory agreement with Benham Management Corporation.
Unified Management Fees
- --------------------------- --------------------- ---------------------
Fund 1998 1997
- --------------------------- --------------------- ---------------------
Target 2000 $1,309,574
Target 2005 654,212
Target 2010 346,562
Target 2015 1,340,435
Target 2020 920,960
Target 2025 527,834
- --------------------------- --------------------- ---------------------
Investment Advisory Fees
- -----------------------------------------------------------------------
Fund 1996
- -----------------------------------------------------------------------
Target 2000 $1,240,288
Target 2005 563,912
Target 2010 294,665
Target 2015 1,249,491
Target 2020 833,863
Target 2025 379,805
- -----------------------------------------------------------------------
Distributor
The funds' shares are distributed by Funds Distributors, Inc., a registered
broker-dealer. The distributor is a wholly owned indirect subsidiary of Boston
Institutional Group, Inc. The distributor's principal business address is 60
State Street, Suite 1300, Boston, Massachusetts 02109.
The distributor is the principal underwriter of the funds' shares. The
distributor makes a continuous, best efforts underwriting of the funds' shares.
This means that the distributor has no liability for unsold shares.
Transfer Agent and Administrator
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, computer hardware and software and personnel, for
the day-to-day administration of the funds and of the advisor. The advisor 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 August 31, 1997 and 1996, are indicated in the table below. Fee
amounts are net of expense limitations.
Administrative Fees
- --------------------------------- ------------------ -----------------
Fund Fiscal 1997 Fiscal 1996
- --------------------------------- ------------------ -----------------
Target 2000 $368,680 $409,257
Target 2005 160,175 186,076
Target 2010 94,859 97,232
Target 2015 373,977 412,298
Target 2020 256,250 275,154
Target 2025 163,254 179,812
Transfer Agent Fees
- --------------------------------- ------------------ -----------------
Fund Fiscal 1997 Fiscal 1996
- --------------------------------- ------------------ -----------------
Target 2000 $190,056 $229,922
Target 2005 112,925 145,450
Target 2010 39,157 47,787
Target 2015 164,081 188,108
Target 2020 108,533 119,915
Target 2025 78,485 91,516
Other Service Providers
Custodian Banks
Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New York 10003-9598,
and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, each serves
as custodian of the assets of the funds. The custodians take no part in
determining the investment policies of the funds or in deciding which securities
are purchased or sold by the funds. The funds, however, may invest in certain
obligations of the custodians and may purchase or sell certain securities from
or to the custodians.
Independent Auditors
PricewaterhouseCoopers LLP is the independent auditor of the funds. The address
of PricewaterhouseCoopers LLP is City Center Square, 1100 Main Street, Suite
900, Kansas City, Missouri 64105-2140. As the independent auditor of the funds,
PricewaterhouseCoopers provides services including (1) audit of the annual
financial statements, (2) assistance and consultation in connection with SEC
filings and (3) review of the annual federal income tax return filed for each
fund.
Brokerage Allocation
Under the management agreement between the funds and the advisor, the advisor
has the responsibility of selecting brokers and dealers to execute portfolio
transactions. In many transactions, the selection of the broker or dealer is
determined by the availability of the desired security and its offering price.
In other transactions, the selection of broker or dealer is a function of the
selection of market and the negotiation of price, as well as the broker's
general execution and operational and financial capabilities in the type of
transaction involved. The advisor will seek to obtain prompt execution of orders
at the most favorable prices or yields. The advisor may choose to purchase and
sell portfolio securities to and from dealers who provide services or research,
statistical and other information to the funds and to the advisor. Such
information or services will be in addition to and not in lieu of the services
required to be performed by the advisor, and the expenses of the advisor will
not necessarily be reduced as a result of the receipt of such supplemental
information.
Information About Fund Shares
Generally
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.
Each fund votes separately on matters affecting that fund exclusively. Voting
rights are not cumulative, so that investors holding more than 50% of the
Trust's (i.e., all funds') outstanding shares may be able to elect a Board of
Trustees. The Trust 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 fund
voted in favor of a particular nominee or all nominees as a group.
Each shareholder has rights to dividends and distributions declared by the fund
he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.
Shares of each fund have equal voting rights, although each fund votes
separately on matters affecting that fund exclusively.
Shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable for its obligations. However, the
Declaration of Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust. The Declaration of Trust also provides for
indemnification and reimbursement of expenses of any shareholder held personally
liable for obligations of the Trust. The Declaration of Trust provides that the
Trust will, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. The Declaration of Trust further provides that the Trust may maintain
appropriate insurance (for example, fidelity, bonding and errors and omissions
insurance) for the protection of the Trust, its shareholders, trustees,
officers, employees and agents to cover possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss 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.
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 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.
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 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.
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 at
2 p.m. Central time each day the Exchange is open for business. The Exchange has
designated the following holiday closings for 1999: 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.
The advisor typically completes its trading on behalf of each fund in various
markets before the Exchange closes for the day. Each fund's share price is
calculated by adding the value of all portfolio securities and other assets,
deducting liabilities and dividing the result by the number of shares
outstanding. Expenses and interest earned on portfolio securities are accrued
daily.
Securities held by the funds normally are priced by an independent pricing
service, provided that such prices are believed by the advisor to reflect the
fair market value of portfolio securities.
Because there are hundreds of thousands of municipal issues outstanding, and the
majority of them do not trade daily, the prices provided by pricing services are
generally determined without regard to bid or last sale prices. In valuing
securities, the pricing services generally take into account institutional
trading activity, 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 advisor under the general
supervision of the Board of Trustees. There are a number of pricing services
available, and the advisor, 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 not priced by a pricing service are valued at the mean between the
most recently quoted bid and ask prices provided by broker-dealers. The
municipal bond market is typically a "dealer market"; that is, dealers buy and
sell bonds for their own accounts rather than for customers. As a result, the
spread, or difference between bid and asked prices, for certain municipal bonds
may differ substantially among dealers.
Securities maturing within 60 days of the valuation date may be valued at 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.
Taxes
Federal Income Tax
Each fund intends to qualify annually as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
so qualifying, a fund will be exempt from federal income taxes to the extent
that it distributes substantially all of its net investment income and net
realized capital gains (if any) to shareholders. If a fund fails to qualify as a
regulated investment company, it will be liable for taxes, significantly
reducing its distributions to shareholders and eliminating shareholders' ability
to treat distributions of the funds in the manner they were realized by the
funds.
Certain of the bonds purchased by the funds may be treated as bonds that were
originally issued at a discount. Original issue discount represents interest for
federal income tax purposes and can generally be defined as the difference
between the price at which a security was issued and its stated redemption price
at maturity. Original issue discount, although no cash is actually received by a
fund until the maturity of the bond, is treated for federal income tax purposes
as income earned by a fund over the term of the bond, and therefore is subject
to the distribution requirements of the Code. The annual amount of income earned
on such a bond by a fund generally is determined on the basis of a constant
yield to maturity that takes into account the semiannual compounding of accrued
interest. Original issue discount on an obligation with interest exempt from
federal income tax will constitute tax-exempt interest income to the fund.
In addition, some of the bonds may be purchased by a fund at a discount that
exceeds the original issue discount on such bonds, if any. This additional
discount represents market discount for federal income tax purposes. The gain
realized on the disposition of any bond having market discount generally will be
treated as taxable ordinary income to the extent it does not exceed the accrued
market discount on such bond (unless a fund elects to include market discount in
income in tax years to which it is attributable or if the amount is considered
de minimis). Generally, if the fund elects to include the discount in income,
market discount accrues on a daily basis for each day the bond is held by a fund
on a constant yield to maturity basis. In the case of any debt security having a
fixed maturity date of not more than one year from date of issue, the gain
realized on disposition generally will be treated as short-term capital gain. In
general, gain realized on disposition of a security held less than one year is
treated as short-term capital gain.
It is intended that each fund's assets will be sufficiently invested in
municipal securities so that each fund will be eligible to pay exempt-interest
dividends (as defined in the Code) to shareholders. A fund's dividends payable
from net tax-exempt interest earned from municipal securities will qualify to be
designated as exempt-interest dividends if, at the close of each quarter of the
fund's taxable year, at least 50% of the value of the fund's total assets
consists of municipal securities. Exempt-interest dividends distributed to
shareholders are not included in shareholders' gross income for regular federal
income tax purposes. The percentage of income that is tax-exempt is applied
uniformly to all income distributions made during each calendar year. This
percentage may differ from the actual percentage of tax-exempt income received
during any particular month.
Distributions of net investment income received by a fund from investment in
debt securities other than municipal securities, of ordinary income realized
upon the disposition of tax-exempt market discount bonds, and any net realized
short-term capital gains distributed by the fund will be taxable to shareholders
as ordinary income. Because the funds' investment income is derived from
interest rather than dividends, no portion of such distributions is eligible for
the dividends-received deduction available to corporations.
Under the Code, any distribution of a fund's net realized long-term capital
gains designated by the fund as a capital gain dividend is taxable to
shareholders as long-term capital gains, regardless of the length of time shares
are held. If a capital gain dividend is paid with respect to any shares of a
fund sold at a loss after being held for six months or less, the loss will be
treated as a long-term capital loss for tax purposes. The Code also provides
that if a shareholder holds shares of a fund for six months or less, the
deduction of any loss on the sale or exchange of those shares is disallowed to
the extent that the shareholder received exempt-interest dividends with respect
to those shares.
When a fund has a capital loss carryover, it does not make capital gain
distributions until the loss has been offset or expired.
Interest on certain types of industrial development bonds (small issues and
obligations issued to finance certain exempt facilities that may be leased to or
used by persons other than the issuer) is not exempt from federal income tax
when received by "substantial users" or persons related to substantial users as
defined in the Code. The term "substantial user" includes any "non-exempt
person" who regularly uses in trade or business part of a facility financed from
the proceeds of industrial development bonds. The funds may invest periodically
in industrial development bonds and, therefore, may not be appropriate
investments for entities that are substantial users of facilities financed by
industrial development bonds or "related persons" of substantial users.
Generally, an individual will not be a related person of a substantial user
under the Code unless he or his immediate family (spouse, brothers, sisters,
ancestors and lineal descendants) owns directly or indirectly in aggregate more
than 50% in the equity value of the substantial user.
From time to time, proposals have been introduced in Congress for the purpose of
restricting or eliminating the federal income tax exemption for interest on
municipal securities, and similar proposals may be introduced in the future. If
such a proposal were enacted, the availability of municipal securities for
investment by the funds and the funds' NAVs would be adversely affected. Under
these circumstances, the trustees would re-evaluate the funds' investment
objectives and policies and would consider either changes in the structure of
the Trust or its dissolution.
The information above is only a summary of some of the tax considerations
affecting the funds and their shareholders. No attempt has been made to discuss
individual tax consequences. A prospective investor should consult with his or
her tax advisors or state or local tax authorities to determine whether the
funds are suitable investments.
How Fund Performance Information is Calculated
*****************CALLOUT BOX****************************
Fund Yields (30-day period ended September 30, 1998)
- ------------------------------------- -------------
Fund 30-Day Yield
- ------------------------------------- -------------
Target 2000 3.67%
Target 2005 3.97%
Target 2010 4.64%
Target 2015 5.04%
Target 2020 4.55%
Target 2025
- ------------------------------------- -------------
*****************END CALLOUT BOX********************
The funds may quote performance in various ways. Historical performance
information will be used in advertising and sales literature.
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 the 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.
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 (if any) and any change in the fund's NAV during the period.
*****************CALLOUT BOX****************************
Average Annual Total Returns
- ----------------------------- -------- -------- -------- --------
One-Year Five-YearTen-Years Life
Fund of Fund
- ----------------------------- -------- -------- -------- --------
Target 2000(1) 3.17% 2.76% 3.64% 3.86%
Target 2005 (1) 3.15% 2.82% -- 3.12%
Target 2010 (1) 5.42% 4.52% -- 4.74%
Target 2015 (2) 7.39% 6.12% 6.67% 6.95%
Target 2020 (3) 9.70% 7.27% 7.97% 8.48%
Target 2025 (4) 10.61% 7.76% 8.13% 6.70%
(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.
*****************END CALLOUT BOX********************
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 10 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 the 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.
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 also may utilize reprints from
newspapers and magazines furnished by third parties to illustrate historical
performance.
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.
Financial Statements
The financial statements of the funds, including the Statements of Assets and
Liabilities and the Statements of Operations for the fiscal year ended September
30, 1998, and the Statements of Changes in Net Assets for the fiscal years ended
September 30, 1997 and 1998, are included in the Annual Reports to shareholders
for the fiscal year ended September 30, 1998. The report on the financial
highlights for the fiscal years 1993, 1994, 1995 and 1996 are included in the
Annual Reports to shareholders for the fiscal year ended September 30, 1996,
Each such Annual Report is incorporated herein by reference. You may receive
copies of the reports without charge upon request to American Century at the
address and phone number shown on the back cover of this Statement of Additional
Information.
Explanation of Fixed Income Securities Ratings
As described in the Prospectus, the funds may invest in fixed income securities.
Those investments, however, are subject to certain credit quality restrictions,
as noted in the Prospectus. The following is a summary of the rating categories
referenced in the prospectus disclosure.
<TABLE>
<CAPTION>
Bond Ratings
- ---------- ------------ -------------------------------------------------------------------------------------------------
S&P Moody's Description
- ---------- ------------ -------------------------------------------------------------------------------------------------
<S> <C> <C>
AAA Aaa These are the highest ratings assigned by S&P and Moody's to a debt obligation and indicates an
extremely strong capacity to pay interest and repay principal.
AA Aa Debt rated in this category is considered to have a very strong capacity to pay interest and
repay principal and differs from AAA/Aaa issues only in a small degree.
A A Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat
more susceptible to the adverse effects of changes in circumstances and economic conditions
than debt in higher-rated categories.
BBB Baa Debt rated BBB/Baa is regarded as having an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated categories.
BB Ba Debt rated BB/Ba has less near-term vulnerability to default than other speculative issues.
However, it faces major ongoing uncertainties or exposure to adverse business, financial or
economic conditions that could lead to inadequate capacity to meet timely interest and
principal payments. The BB rating category also is used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
B B Debt rated B has a greater vulnerability to default but currently has the capacity to meet
interest payments and principal repayments. Adverse business, financial or economic conditions
will likely impair capacity or willingness to pay interest and repay principal. The B rating
category is also used for debt subordinated to senior debt that is assigned an actual or
implied BB/Ba or BB-/Ba3 rating.
CCC Caa Debt rated CCC/Caa has a currently identifiable vulnerability to default and is dependent upon
favorable business, financial and economic conditions to meet timely payment of interest and
repayment of principal. In the event of adverse business, financial or economic conditions, it
is not likely to have the capacity to pay interest and repay principal. The CCC/Caa rating
category is also used for debt subordinated to senior debt that is assigned an actual or
implied B or B-/B3 rating.
CC Ca The rating CC/Ca typically is applied to debt subordinated to senior debt that is assigned an
actual or implied CCC/Caa rating.
C C The rating C typically is applied to debt subordinated to senior debt, which is assigned an
actual or implied CCC-/Caa3 debt rating. The C rating may be used to cover a situation where a
bankruptcy petition has been filed, but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is being paid.
D D Debt rated D is in payment default. The D rating category is used when interest payments or
principal payments are not made on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
- ---------- ------------ -------------------------------------------------------------------------------------------------
To provide more detailed indications of credit quality, the Standard & Poor's
ratings from AA to CCC may be modified by the addition of a plus or minus sign
to show relative standing within these major rating categories. Similarly,
Moody's adds numerical modifiers (1,2,3) to designate relative standing within
its major bond rating categories. Fitch Investors Service, Inc. also rates bonds
and uses a ratings system that is substantially similar to that used by Standard
& Poor's.
COMMERCIAL PAPER RATINGS
- ---------- ------------ -------------------------------------------------------------------------------------------------
S&P Moody's Description
- ---------- ------------ -------------------------------------------------------------------------------------------------
A-1 Prime-1 This indicates that the degree of safety regarding timely payment is strong. Standard & Poor's
(P-1) rates those issues determined to possess extremely strong safety characteristics as A-1+.
A-2 Prime-2 Capacity for timely payment on commercial paper is satisfactory, but the relative degree of
(P-2) safety is not as high as for issues designated A-1. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while still
appropriated, may be more affected by external conditions. Ample alternate liquidity is
maintained.
A-3 Prime-3 Satisfactory capacity for timely repayment. Issues that carry this rating are somewhat more
(P-3) vulnerable to the adverse changes in circumstances than obligations carrying the higher
designations.
- ---------- ------------ -------------------------------------------------------------------------------------------------
NOTE RATINGS
- ---------- ------------ -------------------------------------------------------------------------------------------------
S&P Moody's Description
- ---------- ------------ -------------------------------------------------------------------------------------------------
SP-1 MIG-1; Notes are of the highest quality enjoying strong protection from established cash flows of
VMIG-1 funds for their servicing or from established and broad-based access to the market for
refinancing, or both.
SP-2 MIG-2; Notes are of high quality, with margins of protection ample, although not so large as in the
VMIG-2 preceding group.
SP-3 MIG-3; Notes are of favorable quality, with all security elements accounted for, but lacking the
VMIG-3 undeniable strength of the preceding grades. Market access for refinancing, in particular, is
likely to be less well established.
SP-4 MIG-4; Notes are of adequate quality, carrying specific risk but having protection and not distinctly
VMIG-4 or predominantly speculative.
- ---------- ------------ -------------------------------------------------------------------------------------------------
</TABLE>
More information about the funds is contained in the funds' annual and
semiannual reports. These contain more information about the funds' investments
and the market conditions and investment strategies that significantly affected
the funds' performance during the most recent six-month fiscal period. The
annual and semiannual reports are incorporated by reference into this SAI. This
means that it is legally part of this SAI.
0 You can get the annual and semiannual reports for free and ask any
questions about the funds by contacting us at one of the addresses or phone
numbers listed below.
- ---------------------------------- ---------------------------------------------
American Century Investments Institutional, Corporate, Keogh, SEP/SARSEP,
P.O. Box 419200 SIMPLE and 403(b) Services
Kansas City, Missouri 64141-6200 1-800-345-3533
www.americancentury.com Telecommunications Device for Deaf
1-800-634-4113 or 816-444-3485
Investor Services
1-800-345-2021 or 816-531-5575 Fax
816-340-7962
Automated Information Line
1-800-345-8765
- ---------------------------------- ---------------------------------------------
0 If you own or are considering purchasing fund shares through
o an employer-sponsored retirement plan
o a bank
o a broker-dealer
o an insurance company
o another financial intermediary
you can get the annual and semiannual reports directly from them.
0 You can also get information about the funds from the SEC.
o In person. Go to the SEC's Public Reference Room in Washington, D.C.
Call 1-800-SEC-0330 for information about location and hours of
operation.
o On the internet. Go to www.sec.gov.
o By mail. Write to Public Reference Section of the Securities and
Exchange Commission, Washington, D.C. 20549-6009. The SEC will charge
a fee for copying the documents you request.
Investment Company Act File No. 811-XXXX
<PAGE>
AMERICAN CENTURY TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 29
1940 Act Amendment No. 31
- --------------------------------------------------------------------------------
PART C OTHER INFORMATION
ITEM 23 EXHIBITS (all exhibits not filed herewith are being incorporated
herein by reference).
(a) (1) Agreement and Declaration of Trust dated May 31, 1995 (filed
electronically as Exhibit 1(b) to Post-Effective Amendment No. 24
to the Registration Statement on November 29, 1995, File No.
2-94608).
(2) Amendment to the Declaration of Trust dated October 21, 1996
(filed electronically as Exhibit 1 to Post-Effective Amendment
No. 27 to the Registration Statement on August 28, 1997, File No.
2-94608).
(3) Amendment to the Declaration of Trust dated August 1, 1997
(filed electronically as Exhibit 1 to Post-Effective Amendment
No. 27 to the Registration Statement on August 28, 1997, File No.
2-94608).
(b) Amended and Restated Bylaws, dated May 17, 1995 (filed
electronically as Exhibit 2 to Post-Effective Amendment No. 24 to
the Registration Statement on November 29, 1995, File No.
2-94608).
(c) Not applicable.
(d) (1) Investor Class Investment Management Agreement between
American Century Target Maturities Trust and American Century
Investment Management, Inc., dated August 1, 1997 (filed
electronically as Exhibit 5 of Post-Effective Amendment No. 33 to
the Registration Statement of American Century Government Income
Trust on July 31, 1997, File No. 2-99222).
(2) 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 (filed electronically as Exhibit 5 of
Post-Effective Amendment No. 27 to the Registration Statement on
August 28, 1997, File No. 2-94608).
(e) (1) Distribution Agreement between American Century Target
Maturities Trust and Funds Distributor, Inc., dated January 15,
1998 (filed electronically as an Exhibit to Post-Effective
Amendment No. 30 to the Registration Statement on January 30,
1998, File No. 2-94608).
(2) Amendment No. 1 to the Distribution Agreement between
American Century Target Maturities Trust and Funds Distributor,
Inc., dated June 1, 1998 (filed electronically as an Exhibit to
Post-Effective Amendment No. 11 to the Registration Statement of
American Century Capital Portfolios, Inc., File No. 33-64872).
(f) Not applicable.
(g) Custodian Agreement between American Century Investments
(including American Century Target Maturities Trust), and The
Chase Manhattan Bank, dated August 9, 1996 (filed electronically
as Exhibit 8 of Post-Effective Amendment No. 31 to the
Registration Statement of American Century Government Income
Trust on February 7, 1997, File No. 2-99222).
(h) Transfer Agency Agreement between American Century Target
Maturities Trust and American Century Services Corporation, dated
August 1, 1997 (filed electronically as Exhibit 9 of
Post-Effective Amendment No. 33 to the Registration Statement of
American Century Government Income Trust on July 31, 1997, File
No. 2-99222).
(i) Opinion and consent of counsel is included herein.
(j) (1) Consent of PricewaterhouseCoopers, LLP, independent auditors,
to be filed by amendment.
(2) Consent of KPMG Peat Marwick, LLP, independent auditors, to
be filed by amendment.
(3) Power of Attorney dated July 9, 1998 is included herein.
(k) Not applicable.
(l) Not applicable.
(m) 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 (filed electronically as Exhibit 15 to Post-Effective
Amendment No. 27 to the Registration Statement filed on August
28, 1997, filed No. 2-94608).
(n) (1) Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2000 is included herein.
(2) Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2005 is included herein.
(3) Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2010 is included herein.
(4) Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2015 is included herein.
(5) Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2020 is included herein.
(6) Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2025 is included herein.
(o) 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 (filed electronically as
Exhibit 18 of Post-Effective Amendment No. 27 to the Registration
Statement on August 28, 1997, File No. 2-94608).
Item 24. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 25. 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 (filed
electronically as Exhibit 2(b) of Post-Effective Amendment No. 24 to the
Registration Statement on November 29, 1995, File No. 2-94608).
Item 26. Business and Other Connections of Investment Advisor.
American Century Investment Management, Inc., the investment advisor, is engaged
in the business of managing investments for registered investment companies,
deferred compensation plans and other institutional investors.
Item 27. Principal Underwriters.
(a) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following investment companies.
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.
BJB Investment Funds
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
Founders Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Kobrick - Cendant Investment Trust
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Orbitex Group of Funds
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
The Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National
Association of Securities Dealers. The Distributor is located at 60
State Street, Suite 1300, Boston, Massachusetts 02109. The Distributor
is an indirect wholly-owned subsidiary of Boston Institutional Group,
Inc., a holding company all of whose outstanding shares are owned by
key employees.
(b) The following is a list of the executive officers, directors and
partners of the Distributor:
<TABLE>
Name and Principal Business Positions and Offices with Positions and Offices with
Address* Underwriter Registrant
<S> <C> <C>
Marie E. Connolly Director, President and Chief None
Executive Officer
George A. Rio Executive Vice President President, Principal Executive
and Principal Financial Officer
Donald R. Roberson Executive Vice President None
William S. Nichols Executive Vice President None
Margaret W. Chambers Senior Vice President, General None
Counsel, Chief Compliance
Officer, Secretary and Clerk
Michael S. Petrucelli Senior Vice President None
Joseph F. Tower, III Director, Senior Vice President, None
Treasurer and Chief Financial
Officer
Paula R. David Senior Vice President None
Allen B. Closser Senior Vice President None
Bernard A. Whalen Senior Vice President None
William J. Nutt Chairman and Director None
- --------------------
* All addresses are 60 State Street, Suite 1300, Boston, Massachusetts 02109
</TABLE>
(c) Not applicable.
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act, and the rules promulgated thereunder, are in the
possession of Registrant, American Century Services Corporation and American
Century Investment Management, Inc., all located at 4500 Main Street, Kansas
City, Missouri 64111.
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it has duly caused this
Post-Effective Amendment No. 29/Amendment No. 31 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Kansas City, and
State of Missouri, on the 13th day of November, 1998.
AMERICAN CENTURY TARGET MATURITIES TRUST
By: /s/Patrick A. Looby
Patrick A. Looby
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 29/Amendment No. 31 has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
Date
<S> <C> <C>
* President, Principal Executive and November 13, 1998
- --------------------------------- Principal Financial Officer
George A. Rio
* Vice President and Treasurer November 13, 1998
- ---------------------------------
Maryanne Roepke
* Chairman of the Board and Trustee November 13, 1998
- ---------------------------------
James E. Stowers III
* Trustee November 13, 1998
- ---------------------------------
William M. Lyons
* Trustee November 13, 1998
- ---------------------------------
Albert A. Eisenstat
* Trustee November 13, 1998
- ---------------------------------
Ronald J. Gilson
* Trustee November 13, 1998
- ---------------------------------
Myron S. Scholes
* Trustee November 13, 1998
- ---------------------------------
Kenneth E. Scott
* Trustee November 13, 1998
- ---------------------------------
Isaac Stein
* Trustee November 13, 1998
- ---------------------------------
Jeanne D. Wohlers
</TABLE>
/s/Patrick A. Looby
*by Patrick A. Looby, Attorney in Fact (pursuant to a Power of Attorney dated
July 9, 1998).
EXHIBIT DESCRIPTION
EX-99.a1 Agreement and Declaration of Trust dated May 31, 1995 (filed as a
part of Post-Effective Amendment No. 24 to the Registration
Statement on Form N-1A of the Registrant, File No. 2-94608, filed on
November 29, 1995 and incorporated herein by reference).
EX-99.a2 Amendment to the Declaration of Trust dated October 21, 1996 (filed
as a part of Post-Effective Amendment No. 27 to the Registration
Statement on Form N-1A of the Registrant, File No. 2-94608, filed on
August 28, 1997 and incorporated herein by reference).
EX-99.a3 Amendment to the Declaration of Trust dated August 1, 1997 (filed as
a part of Post-Effective Amendment No. 27 to the Registration
Statement on Form N-1A of the Registrant, File No. 2-94608, filed on
August 28, 1997 and incorporated herein by reference).
EX-99.b Amended and Restated Bylaws, dated May 17, 1995 (filed as a part of
Post-Effective Amendment No. 24 to the Registration Statement on
Form N-1A of the Registrant, File No. 2-94608, filed on November 29,
1995 and incorporated herein by reference).
EX-99.d1 Investor Class Investment Management Agreement between American
Century Target Maturities Trust and American Century Investment
Management, Inc., dated August 1, 1997 (filed as a part of
Post-Effective Amendment No. 33 to the Registration Statement on
Form N-1A of American Century Government Income Trust, File No.
2-99222, filed July 31, 1997 and incorporated herein by reference).
EX-99.d2 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 (filed as a
part of Post-Effective Amendment No. 27 to the Registration
Statement on Form N-1A of the Registrant, File No. 2-94608, filed on
August 28, 1997 and incorporated herein by reference).
EX-99.e1 Distribution Agreement between American Century Target Maturities
Trust and Funds Distributor, Inc., dated January 15, 1998 (filed as
a part of Post-Effective Amendment No. 28 to the Registration
Statement on Form N-1A of the Registrant, File No. 2-94608, filed on
January 30, 1998 and incorporated herein by reference).
EX-99.e2 Amendment No. 1 to the Distribution Agreement between American
Century Target Maturities Trust and Funds Distributor, Inc., dated
June 1, 1998 (filed as a part of Post-Effective Amendment No. 11 to
the Registration Statement on Form N-1A of American Century Capital
Portfolios, Inc., File No. 33-64872, filed on June 26, 1998 and
incorporated herein by reference).
EX-99.g Custodian Agreement between American Century Investments (including
American Century Target Maturities Trust), and The Chase Manhattan
Bank, dated August 9, 1996 (filed as a part of Post-Effective
Amendment No. 31 to the Registration Statement on Form N-1A of
American Century Government Income Trust, File No. 2-99222, filed
February 7, 1997 and incorporated herein by reference).
EX-99.h Transfer Agency Agreement between American Century Target Maturities
Trust and American Century Services Corporation, dated August 1,
1997 (filed as a part of Post-Effective Amendment No. 33 to the
Registration Statement on Form N-1A of American Century Government
Income Trust, File No. 2-99222, filed on July 31, 1997 and
incorporated herein by reference).
EX-99.i Opinion and consent of counsel.
EX-99.j1 Consent of PricewaterhouseCoopers, LLP, independent auditors, to be
filed by amendment.
EX-99.j2 Consent of KPMG Peat Marwick, LLP, independent auditors, to be filed
by amendment.
EX-99.j3 Power of Attorney dated July 9, 1998.
EX-99.m 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
(filed as a part of Post-Effective Amendment No. 27 to the
Registration Statement on Form N-1A of the Registrant, File No.
2-94608, filed on August 28, 1997 and incorporated herein by
reference).
EX-99.o 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 (filed as a part of Post-Effective Amendment No. 27 of the
Registration Statement on Form N-1A of the Registrant, File No.
2-94608, filed on August 28, 1997 and incorporated herein by
reference).
EX-27.5.1 Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2000
EX-27.5.2 Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2005
EX-27.5.3 Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2010
EX-27.5.4 Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2015
EX-27.5.5 Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2020
EX-27.5.6 Financial Data Schedule for American Century - Benham Target
Maturities Trust: 2025
CHARLES C.S. PARK
ATTORNEY AT LAW
1665 CHARLESTON ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
TELEPHONE (650)965-8300
TELECOPIER (650)964-9591
November 13, 1998
American Century Target Maturities Trust
American Century Tower
4500 Main Street
Kansas City, Missouri 64111
Ladies and Gentlemen:
As counsel to American Century Target Maturities Trust (the "Trust"), I am
generally familiar with its affairs. Based upon this familiarity, and upon the
examination of such documents as I deemed relevant, it is my opinion that the
shares of the Trust described in 1933 Act Post-Effective Amendment No. 29 and
1940 Act Amendment No. 31 to its Registration Statement on Form N-1A, to be
filed with the Securities and Exchange Commission on November 13, 1998, will,
when issued, be validly issued, fully paid and nonassessable.
For the record, it should be stated that I am an employee of American
Century Services Corporation, an affiliated corporation of American Century
Investment Management, Inc., the investment advisor of the Corporation.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 29 and Amendment No. 31, referenced above.
Very truly yours,
/s/Charles C.S. Park
Charles C.S. Park
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 George A. Rio,
Douglas A. Paul, Patrick A. Looby, Charles A. Etherington, and Charles C.S.
Park, and each of them individually, their true and lawful attorneys and agents
to take any and all action and execute any and all instruments which said
attorneys and agents may deem necessary or advisable to enable the Trust to
comply with the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and any rules, regulations, orders, or other requirements of
the United States Securities and Exchange Commission thereunder, in connection
with the registration under the Securities Act of 1933 and/or the Investment
Company Act of 1940, as amended, including specifically, but without limitation
of the foregoing, power and authority to sign the name of the Trust in its
behalf and to affix its seal, and to sign the names of each of such trustees and
officers in their capacities as indicated, to any amendment or supplement to the
Registration Statement filed with the Securities and Exchange Commission under
the Securities Act of 1933 and/or the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed as a part of
or in connection with such Registration Statement; and each of the undersigned
hereby ratifies and confirms all that said attorneys and agents shall do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused this Power to be executed by
its duly authorized officers on this the 9th day of July, 1998.
AMERICAN CENTURY TARGET MATURITIES TRUST
By: /s/ George A. Rio
George A. Rio, President
SIGNATURE AND TITLE
/s/ George A. Rio /s/ Ronald J. Gilson
George A. Rio Ronald J. Gilson
President, Principal Executive and Director
Principal Financial Officer
/s/ Maryanne Roepke /s/ Myron S. Scholes
Maryanne Roepke Myron S. Scholes
Vice President and Treasurer Director
/s/ James E. Stowers, III /s/ Kenneth E. Scott
James E. Stowers, III Kenneth E. Scott
Director Director
/s/ William M. Lyons /s/ Isaac Stein
William M. Lyons Isaac Stein
Director Director
/s/ Albert A. Eisenstat /s/ Jeanne D. Wohlers
Albert A. Eisenstat Jeanne D. Wohlers
Director Director
Attest:
By: /s/ Douglas A. Paul
Douglas A. Paul, Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY TARGET MATURITIES TRUST 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 DATA).
IN THOSE CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> AMERICAN CENTURY TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 2
<NAME> BENHAM TARGET MATURITIES - 2000 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998 <F1>
<INVESTMENTS-AT-COST> 230,516,406
<INVESTMENTS-AT-VALUE> 238,739,903
<RECEIVABLES> 0
<ASSETS-OTHER> 584,484
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 239,324,387
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,735,889
<TOTAL-LIABILITIES> 1,735,889
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 216,542,478
<SHARES-COMMON-STOCK> 2,533,390
<SHARES-COMMON-PRIOR> 3,349,052
<ACCUMULATED-NII-CURRENT> 10,075,324
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,747,199
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,223,497
<NET-ASSETS> 237,588,498
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15,205,216
<OTHER-INCOME> 0
<EXPENSES-NET> 1,420,550
<NET-INVESTMENT-INCOME> 13,784,666
<REALIZED-GAINS-CURRENT> 6,149,330
<APPREC-INCREASE-CURRENT> 679,135
<NET-CHANGE-FROM-OPS> 20,613,131
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,765,056
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 645,063
<NUMBER-OF-SHARES-REDEEMED> 1,189,038
<SHARES-REINVESTED> 191,104
<NET-CHANGE-IN-ASSETS> (10,788,636)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,592,691)
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 1,410,866
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,420,550
<AVERAGE-NET-ASSETS> 239,827,115
<PER-SHARE-NAV-BEGIN> 86.05 <F2>
<PER-SHARE-NII> 5.13 <F2>
<PER-SHARE-GAIN-APPREC> 2.60 <F2>
<PER-SHARE-DIVIDEND> 5.64 <F2>
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 93.78 <F2>
<EXPENSE-RATIO> 0.59 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1> SCHEDULE REFLECTS 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 TARGET MATURITIES TRUST 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 DATA).
IN THOSE CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> AMERICAN CENTURY TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 3
<NAME> BENHAM TARGET MATURITIES - 2005 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998 <F1>
<INVESTMENTS-AT-COST> 461,237,944
<INVESTMENTS-AT-VALUE> 522,621,174
<RECEIVABLES> 0
<ASSETS-OTHER> 12,567,939
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 535,189,113
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,103,003
<TOTAL-LIABILITIES> 1,103,003
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 534,086,110
<SHARES-COMMON-STOCK> 6,961,639
<SHARES-COMMON-PRIOR> 4,130,406
<ACCUMULATED-NII-CURRENT> 16,898,403
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,127,099
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,383,230
<NET-ASSETS> 534,086,110
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 23,436,080
<OTHER-INCOME> 0
<EXPENSES-NET> 2,258,272
<NET-INVESTMENT-INCOME> 21,177,808
<REALIZED-GAINS-CURRENT> 5,444,663
<APPREC-INCREASE-CURRENT> 42,618,545
<NET-CHANGE-FROM-OPS> 69,241,016
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,987,498
<DISTRIBUTIONS-OF-GAINS> 1,217,264
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,722,020
<NUMBER-OF-SHARES-REDEEMED> 2,395,346
<SHARES-REINVESTED> 270,807
<NET-CHANGE-IN-ASSETS> 252,408,969
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,258,272
<AVERAGE-NET-ASSETS> 382,708,125
<PER-SHARE-NAV-BEGIN> 64.54 <F2>
<PER-SHARE-NII> 3.84 <F2>
<PER-SHARE-GAIN-APPREC> 8.34 <F2>
<PER-SHARE-DIVIDEND> 3.61 <F2>
<PER-SHARE-DISTRIBUTIONS> 0.27 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 76.72 <F2>
<EXPENSE-RATIO> 0.59 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1> SCHEDULE REFLECTS 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 TARGET MATURITIES TRUST 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 DATA).
IN THOSE CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> AMERICAN CENTURY TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 4
<NAME> BENHAM TARGET MATURITIES - 2010 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 235,163,514
<INVESTMENTS-AT-VALUE> 281,100,203
<RECEIVABLES> 0
<ASSETS-OTHER> 5,814,617
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 286,914,820
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,086,476
<TOTAL-LIABILITIES> 3,086,476
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 227,800,198
<SHARES-COMMON-STOCK> 4,579,373
<SHARES-COMMON-PRIOR> 2,616,128
<ACCUMULATED-NII-CURRENT> 8,023,524
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,067,933
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 45,936,689
<NET-ASSETS> 283,828,344
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,127,377
<OTHER-INCOME> 0
<EXPENSES-NET> 1,101,180
<NET-INVESTMENT-INCOME> 10,026,197
<REALIZED-GAINS-CURRENT> 2,154,470
<APPREC-INCREASE-CURRENT> 34,621,133
<NET-CHANGE-FROM-OPS> 46,801,800
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,102,391
<DISTRIBUTIONS-OF-GAINS> 850,424
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,025,597
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<SHARES-REINVESTED> 159,789
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,092,458
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,101,180
<AVERAGE-NET-ASSETS> 186,094,779
<PER-SHARE-NAV-BEGIN> 49.16
<PER-SHARE-NII> 2.94
<PER-SHARE-GAIN-APPREC> 9.88
<PER-SHARE-DIVIDEND> 2.46
<PER-SHARE-DISTRIBUTIONS> 0.29
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<PER-SHARE-NAV-END> 61.98
<EXPENSE-RATIO> 0.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1> SCHEDULE REFLECTS 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 TARGET MATURITIES TRUST 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 DATA).
IN THOSE CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> AMERICAN CENTURY TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 5
<NAME> BENHAM TARGET MATURITIES - 2015 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 109,651,361
<INVESTMENTS-AT-VALUE> 169,450,389
<RECEIVABLES> 0
<ASSETS-OTHER> 1,312,614
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 170,763,003
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 681,756
<TOTAL-LIABILITIES> 681,756
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104,510,486
<SHARES-COMMON-STOCK> 3,410,207
<SHARES-COMMON-PRIOR> 3,618,424
<ACCUMULATED-NII-CURRENT> 5,500,951
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 270,782
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 59,799,028
<NET-ASSETS> 170,081,247
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,985,961
<OTHER-INCOME> 0
<EXPENSES-NET> 853,280
<NET-INVESTMENT-INCOME> 7,132,681
<REALIZED-GAINS-CURRENT> 298,681
<APPREC-INCREASE-CURRENT> 29,541,335
<NET-CHANGE-FROM-OPS> 36,972,697
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,501,208
<DISTRIBUTIONS-OF-GAINS> 4,326,524
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<NUMBER-OF-SHARES-SOLD> 2,651,059
<NUMBER-OF-SHARES-REDEEMED> 2,519,163
<SHARES-REINVESTED> 281,652
<NET-CHANGE-IN-ASSETS> 55,181,678
<ACCUMULATED-NII-PRIOR> 5,247,463
<ACCUMULATED-GAINS-PRIOR> 642,639
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 845,121
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 853,280
<AVERAGE-NET-ASSETS> 143,892,968
<PER-SHARE-NAV-BEGIN> 38.34
<PER-SHARE-NII> 2.17
<PER-SHARE-GAIN-APPREC> 9.36
<PER-SHARE-DIVIDEND> 2.11
<PER-SHARE-DISTRIBUTIONS> 1.40
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 49.87
<EXPENSE-RATIO> 0.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1> SCHEDULE REFLECTS 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 TARGET MATURITIES TRUST 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 DATA).
IN THOSE CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> AMERICAN CENTURY TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 6
<NAME> BENHAM TARGET MATURITIES - 2020 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 301,124,307
<INVESTMENTS-AT-VALUE> 487,013,557
<RECEIVABLES> 0
<ASSETS-OTHER> 2,351,356
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 489,364,923
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,313,152
<TOTAL-LIABILITIES> 3,313,152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 228,403,297
<SHARES-COMMON-STOCK> 13,152,689
<SHARES-COMMON-PRIOR> 42,102,669
<ACCUMULATED-NII-CURRENT> 19,544,059
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 52,215,155
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 185,889,260
<NET-ASSETS> 486,051,771
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 30,415,786
<OTHER-INCOME> 105,570
<EXPENSES-NET> 3,324,484
<NET-INVESTMENT-INCOME> 27,196,872
<REALIZED-GAINS-CURRENT> 55,277,618
<APPREC-INCREASE-CURRENT> 86,449,383
<NET-CHANGE-FROM-OPS> 168,923,873
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 44,888,306
<DISTRIBUTIONS-OF-GAINS> 41,866,720
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,812,474
<NUMBER-OF-SHARES-REDEEMED> 21,343,946
<SHARES-REINVESTED> 3,356,693
<NET-CHANGE-IN-ASSETS> (67,499,256)
<ACCUMULATED-NII-PRIOR> 39,687,073
<ACCUMULATED-GAINS-PRIOR> (6,273,172)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,309,715
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,324,484
<AVERAGE-NET-ASSETS> 563,167,475
<PER-SHARE-NAV-BEGIN> 27.17 <F2>
<PER-SHARE-NII> 1.53 <F2>
<PER-SHARE-GAIN-APPREC> 8.25 <F2>
<PER-SHARE-DIVIDEND> 2.35 <F2>
<PER-SHARE-DISTRIBUTIONS> 2.19 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 36.95 <F2>
<EXPENSE-RATIO> 0.59 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1> SCHEDULE REFLECTS 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 TARGET MATURITIES TRUST 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 DATA).
IN THOSE CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<CIK> 0000757928
<NAME> AMERICAN CENTURY TARGET MATURITIES TRUST
<SERIES>
<NUMBER> 7
<NAME> BENHAM TARGET MATURITIES - 2025 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 284,665,108
<INVESTMENTS-AT-VALUE> 354,568,140
<RECEIVABLES> 14,607
<ASSETS-OTHER> 4,512,005
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 359,094,752
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,883,204
<TOTAL-LIABILITIES> 2,883,204
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 276,368,990
<SHARES-COMMON-STOCK> 11,248,635
<SHARES-COMMON-PRIOR> 1,991,656
<ACCUMULATED-NII-CURRENT> 8,762,384
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,177,142
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 69,903,032
<NET-ASSETS> 356,211,548
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,622,041
<OTHER-INCOME> 66,911
<EXPENSES-NET> 1,249,537
<NET-INVESTMENT-INCOME> 10,439,415
<REALIZED-GAINS-CURRENT> 1,681,458
<APPREC-INCREASE-CURRENT> 60,753,235
<NET-CHANGE-FROM-OPS> 72,874,108
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,549,154
<DISTRIBUTIONS-OF-GAINS> 305,669
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24,090,981
<NUMBER-OF-SHARES-REDEEMED> 16,359,125
<SHARES-REINVESTED> 199,765
<NET-CHANGE-IN-ASSETS> 282,390,233
<ACCUMULATED-NII-PRIOR> 997,384
<ACCUMULATED-GAINS-PRIOR> (501,349)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,240,147
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,249,537
<AVERAGE-NET-ASSETS> 211,310,907
<PER-SHARE-NAV-BEGIN> 22.27 <F2>
<PER-SHARE-NII> 1.33 <F2>
<PER-SHARE-GAIN-APPREC> 8.07 <F2>
<PER-SHARE-DIVIDEND> 0.70 <F2>
<PER-SHARE-DISTRIBUTIONS> 0.05 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 31.67 <F2>
<EXPENSE-RATIO> 0.59 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1> SCHEDULE REFLECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2> INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
