[front cover]
MARCH 31, 1999
SEMIANNUAL REPORT
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AMERICAN CENTURY
[graphic of stairs]
AMERICAN CENTURY
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TARGET MATURITIES TRUST: 2000
TARGET MATURITIES TRUST: 2005
TARGET MATURITIES TRUST: 2010
TARGET MATURITIES TRUST: 2015
TARGET MATURITIES TRUST: 2020
TARGET MATURITIES TRUST: 2025
[american century logo(reg.sm)]
American
Century
[inside front cover]
AMERICAN CENTURY KEEPS WITH TRADITION
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FOLLOWING BENHAM'S FOOTSTEPS
On March 1, we made it easier for you to do business with us. We simplified our
organizational structure by eliminating the venerable Benham and Twentieth
Century names, and putting all our funds under American Century. The name change
will not affect your funds' investment management--the proven Benham investment
philosophy, experienced portfolio management teams, and legacy of innovation and
high-quality performance remain.
CONSISTENT, SOLID PERFORMANCE--We'll continue to adhere to the investment
practices that have helped our fixed-income funds perform so well over the
years. In 1998, two-thirds of American Century bond funds beat their peer group
average, according to Lipper, Inc.
CONSISTENT INVESTMENT PHILOSOPHY--American Century fixed-income funds will
continue to offer a "pure play" on their sector of the market, as they did under
Benham.
CONTINUITY OF THE MANAGEMENT TEAM--The investment process is not all that
remains the same; we've retained our core team of experienced fixed-income
portfolio managers.
* Experience--The more than 35 fixed-income investment professionals at
American Century have an average of nine years of investment management
experience.
* Bigger and better--Since American Century was formed, we've doubled the
size of the original Benham management team in our Mountain View,
California office.
TRADITION OF INNOVATION--Like Benham before it, American Century is a leader in
fixed-income fund innovation. For example, we introduced a total of four new
fixed-income funds in the last three years, including the first no-load
inflation-adjusted bond fund.
We continue to run our fixed-income operation from our offices in Mountain View,
California, which is also home to our walk-in Investor Center.
We look forward to continuing to meet your fixed-income investment needs in the
Benham tradition.
WHAT'S NEW . . .
We now classify our funds in easy-to-remember categories based on objective
and risk. The four objective categories are: CAPITAL PRESERVATION, INCOME,
GROWTH AND INCOME, and GROWTH. The three risk categories are: CONSERVATIVE,
MODERATE, and AGGRESSIVE. This new classification system makes it easier for
investors to identify which funds are right for them.
Turn to the inside back cover of this report to see a list of the funds
classified by objective and risk. For definitions of the fund categories, see
the Glossary.
Past performance is no guarantee of future results.
[left margin]
Target Maturities Trust: 2000
(BTMTX)
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Target Maturities Trust: 2005
(BTFIX)
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Target Maturities Trust: 2010
(BTTNX)
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Target Maturities Trust: 2015
(BTFTX)
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Target Maturities Trust: 2020
(BTTTX)
- -----------------------------
Target Maturities Trust: 2025
(BTTRX)
- -----------------------------
Our Message to You
- --------------------------------------------------------------------------------
/photo of James E. Stowers III and James E. Stowers, Jr./
James E. Stowers III, seated, with James E. Stowers, Jr.
The U.S. Treasury bond market experienced a remarkable reversal during the
six months ended March 31, 1999. When we last addressed you in the Target funds'
annual report, the market had just rallied as investors rushed to the relative
safety and liquidity of Treasury securities. Investors were spooked by global
economic and financial turmoil, which also motivated the Federal Reserve (the
U.S. central bank) to cut short-term interest rates to bolster a seemingly
vulnerable U.S. economy and help stabilize markets worldwide.
The Fed's actions helped turn things around. By January 1999, overseas
economies were stabilizing, the U.S. economy was posting strong growth, and
investor confidence had rebounded. As a result, investors sold Treasurys in
favor of stocks and higher-yielding bonds, and the zero-coupon bonds that
comprise the Target funds gave back their earlier gains.
It was also an exciting period at American Century. In March, we
consolidated all our funds under the American Century name. Though we are proud
of the venerable Twentieth Century and Benham names, we believe the change makes
it simpler for you to identify your funds.
We also reclassified all 71 of our funds, based on investment goals and
risk levels, so you can more easily choose the funds that are right for you. A
complete list of American Century funds, arranged by their new classifications,
is on the inside back cover of this report.
In addition, we made some enhancements to our Web site. Among the new
features are daily fund information, including return and price data, market and
national news, and a Forms Center with access to the most-requested investor
forms and applications. You can also sign up to receive fund prospectuses and
shareholder reports electronically.
Finally, here's our latest Year 2000 Readiness Disclosure. Our critical
systems have been renovated, tested, and returned to production. We continue to
test these systems, as well as participate in industry-wide tests with our
business partners.
As always, we appreciate your continued confidence in American Century.
Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
[right margin]
Table of Contents
Report Highlights ...................................................... 2
Market Perspective ..................................................... 4
TARGET: 2000
Performance Information ................................................ 5
Management Q&A ......................................................... 6
Schedule of Investments ................................................ 8
TARGET: 2005
Performance Information ................................................ 10
Management Q&A ......................................................... 11
Schedule of Investments ................................................ 13
TARGET: 2010
Performance Information ................................................ 14
Management Q&A ......................................................... 15
Schedule of Investments ................................................ 17
TARGET: 2015
Performance Information ................................................ 18
Management Q&A ......................................................... 19
Schedule of Investments ................................................ 21
TARGET: 2020
Performance Information ................................................ 22
Management Q&A ......................................................... 23
Schedule of Investments ................................................ 25
TARGET: 2025
Performance Information ................................................ 26
Management Q&A ......................................................... 27
Schedule of Investments ................................................ 29
FINANCIAL STATEMENTS
Statements of Assets and
Liabilities ......................................................... 30
Statements of Operations ............................................... 32
Statements of Changes
in Net Assets ....................................................... 34
Notes to Financial
Statements .......................................................... 36
Financial Highlights ................................................... 41
OTHER INFORMATION
Share Class and Retirement
Account Information .................................................. 52
Background Information
Investment Philosophy
and Policies ..................................................... 53
Comparative Indices ................................................. 53
Fund Benchmarks ..................................................... 53
Investment Team
Leaders .......................................................... 53
Glossary ............................................................... 54
www.americancentury.com 1
Report Highlights
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MARKET PERSPECTIVE
* Zero-coupon U.S. Treasury securities (zeros) produced disappointing returns
as interest rates rose during the six months ended March 31, 1999.
* Short-term zeros--less sensitive to interest rate fluctuations than
long-term zeros--were somewhat insulated and managed to post mild gains.
* Late in 1998, global financial crises and floundering stock and bond markets
sparked "safe-haven" buying of Treasurys, boosting prices and sending yields
to historic lows.
* Worried by the continued downshifting of the global economy, the Fed cut
short-term interest rates three times between September and November to
provide needed liquidity to global credit markets and shore up U.S.
prospects.
* Despite market expectations for further rate reductions and slower U.S.
growth, neither materialized.
* Treasury prices fell as overseas markets gained a modicum of stability, the
Fed changed to a neutral stance on short-term interest rates, and the U.S.
economy proved surprisingly robust.
TARGET: 2000
* Target: 2000's returns were modest, in spite of the overall rise in interest
rates during the six months.
* To meet the roughly $20 million in cash outflows that the fund experienced,
we sold some of the portfolio's STRIPS position.
* The net result was a decrease in the portfolio's exposure to STRIPS, which
fell from 40% of assets to 30%. Correspondingly, the portfolio's percentage
of TRs and REFCORPs rose.
* Although the opportunities to add higher-yielding zeros such as REFCORPs
have decreased as Target: 2000's maturity date approaches, we will continue
to search for such potentially return-enhancing buys.
TARGET: 2005
* Reflecting the overall rise in interest rates during the six months, Target:
2005 posted negative returns.
* The fund received roughly $30 million in new investments during the six
months, and while we were able to find some attractive receipt zeros for the
portfolio, most of the new capital was put to work in STRIPS.
* As a result, the portfolio's STRIPS position increased to around 59% of
assets, while the amount of Treasury Receipts (TRs--generic receipt zeros)
rose to 13%, and REFCORPs fell to 7%.
* We will continue to manage Target: 2005 to deliver a pure play on
zero-coupon bonds maturing in 2005.
[left margin]
TARGET: 2000(1)
(BTMTX)
TOTAL RETURNS: AS OF 3/31/99
6 Months 0.85%(2)
1 Year 6.21%
INCEPTION DATE: 3/25/85
NET ASSETS: $213.5 million(3)
TARGET: 2005(1)
(BTFIX)
TOTAL RETURNS: AS OF 3/31/99
6 Months -3.87%(2)
1 Year 7.62%
INCEPTION DATE: 3/25/85
NET ASSETS: $557.2 million(3)
TARGET: 2010(1)
(BTTNX)
TOTAL RETURNS: AS OF 3/31/99
6 Months -7.34%(2)
1 Year 7.39%
INCEPTION DATE: 3/25/85
NET ASSETS: $243.5 million(3)
(1) Investor Class.
(2) Not annualized.
(3) Includes Investor and Advisor Classes.
See Total Returns on pages 5, 10, and 14. Investment terms are defined in the
Glossary on pages 54-55.
2 1-800-345-2021
Report Highlights
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(Continued)
TARGET: 2010
* Reflecting the overall rise in interest rates during the six months, Target:
2010 posted negative returns.
* To meet the roughly $18 million in cash outflows that the fund experienced,
we sold STRIPS, primarily ones maturing around May 2010. Additions to the
portfolio included some REFCORPs that mature around April and October 2010.
* The net result was a 25-day extension of the fund's weighted average
maturity date to November 10, 2010, and an increase of sixty-five cents to
Target: 2010's anticipated value at maturity.
* Going forward, we'll continue to look for attractive opportunities to add
higher-yielding zeros to the portfolio.
TARGET: 2015
* Reflecting the overall rise in interest rates during the six months, Target:
2015 posted negative returns.
* The fund received nearly $60 million in new investments during the six
months, and while we were able to find some attractive REFCORPs for the
portfolio, most of the new capital was put to work in STRIPS.
* As a result, the portfolio's STRIPS position increased from 50% of assets to
63%, while the amount of REFCORPs fell from 50% to 37%.
* We will continue to manage Target: 2015 to deliver a pure play on
zero-coupon bonds maturing in 2015.
TARGET: 2020
* Reflecting the overall rise in interest rates during the six months, Target:
2020 posted negative returns.
* To meet the roughly $100 million in cash outflows that the fund experienced,
we sold STRIPS and REFCORPs.
* Although many of the trends that caused Treasury prices to rise at the end
of 1998 disappeared during the first quarter of 1999, some positive
influences, such as low inflation, remain in place.
* Going forward, we'll continue to look for attractive opportunities to add
REFCORPs to the portfolio.
TARGET: 2025
* Reflecting the overall rise in interest rates during the six months, Target:
2025 posted negative returns.
* The fund received roughly $100 million in new investments during the six
months, and nearly all of the capital was put to work in STRIPS.
* As a result, the portfolio's STRIPS position increased from 67% of assets to
76%, while the amount of REFCORPs fell from 33% to only 24%.
* We will continue to manage Target: 2025 to deliver a pure play on
zero-coupon bonds maturing in 2025.
[right margin]
TARGET: 2015(1)
(BTFTX)
TOTAL RETURNS: AS OF 3/31/99
6 Months -8.78%(2)
1 Year 5.62%
INCEPTION DATE: 9/1/86
NET ASSETS: $229.8 million
TARGET: 2020(1)
(BTTTX)
TOTAL RETURNS: AS OF 3/31/99
6 Months -10.69%(2)
1 Year 5.36%
INCEPTION DATE: 12/29/89
NET ASSETS: $362.8 million(3)
TARGET: 2025(1)
(BTTRX)
TOTAL RETURNS: AS OF 3/31/99
6 Months -11.27%(2)
1 Year 8.33%
INCEPTION DATE: 2/15/96
NET ASSETS: $442.0 million(3)
(1) Investor Class.
(2) Not annualized.
(3) Includes Investor and Advisor Classes.
See Total Returns on pages 18, 22, and 26. Investment terms are defined in the
Glossary on pages 54-55.
www.americancentury.com 3
Market Perspective from Randall W. Merk
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/photo of Randall W. Merk/
Randall W. Merk, chief investment officer of fixed income
LACKLUSTER PERFORMANCE
Zero-coupon U.S. Treasury securities (zeros) produced disappointing returns
as interest rates rose during the six months ended March 31, 1999. Short-term
zeros--less sensitive to interest rate fluctuations than long-term zeros--were
somewhat insulated and managed to post mild gains. (See the accompanying table.)
UNSUSTAINABLE PRICES
The final quarter of 1998 began on an upbeat note for Treasurys. Global
financial crises and floundering stock and bond markets sparked "safe-haven"
buying of Treasurys, boosting prices. Treasurys also benefited from a series of
interest rate cuts by central banks, including the U.S. Federal Reserve (the
Fed). Worried by the continued downshifting of the global economy, the Fed cut
short-term interest rates three times between September and November to provide
needed liquidity to global credit markets and shore up U.S. economic prospects.
Treasurys--considered among the safest and most liquid investments in the
world--rallied and yields fell to historic lows. For example, the yield on the
two-year note fell to 4.06% in October, tying its lowest level in the '90s,
while the 30-year bond's yield fell to an all-time low of 4.71%.
But despite market expectations for further rate reductions and slower U.S.
growth, neither materialized. Buoyed by the Fed's rate cuts, historically high
employment, and solid consumer spending--the backbone of U.S. growth in recent
years--the economy grew at a surprisingly brisk 6% annual pace during the final
three months of 1998.
By mid-December, Treasury prices began to tumble as investors became
increasingly convinced that the economy's eight-year expansion was in no danger
of slowing anytime soon.
THE FED CHANGES ITS STANCE
After edging lower in early 1999 amid increased global stability, the
downward momentum of bond prices accelerated in February in the wake of Fed
chairman Alan Greenspan's semiannual testimony on the state of the U.S. economy.
By the end of his speeches, Mr. Greenspan had confirmed what Treasury prices had
already begun to reflect--namely that the Fed was satisfied with the health of
the U.S. and global economies and had adopted a neutral stance toward rates.
That is, the Fed stood ready to move interest rates in either direction to
maintain economic stability.
With the likelihood of further rate reductions officially removed from the
horizon, Treasury yields continued to rise as subdued demand from investors
caused prices to fall. By the end of March, as demonstrated by the accompanying
graph, zero-coupon Treasury yields were substantially higher than where they
were six months earlier.
[left margin]
"ZERO-COUPON U.S. TREASURY SECURITIES PRODUCED DISAPPOINTING RETURNS AS INTEREST
RATES ROSE DURING THE SIX MONTHS ENDED MARCH 31, 1999."
[line graph - data below]
RISING YIELD CURVE
FOR TREASURY ZEROS
Years to Maturity 10/1/98 3/31/99
1 4.41% 4.88%
2 4.24% 5.04%
3 4.23% 5.16%
4 4.19% 5.20%
5 4.22% 5.25%
6 4.29% 5.35%
7 4.36% 5.44%
8 4.42% 5.45%
9 4.45% 5.53%
10 4.59% 5.63%
11 4.66% 5.68%
12 4.73% 5.73%
13 4.81% 5.77%
14 4.88% 5.82%
15 4.95% 5.87%
16 4.99% 5.88%
17 5.03% 5.90%
18 5.07% 5.91%
19 5.11% 5.93%
20 5.15% 5.94%
21 5.14% 5.93%
22 5.14% 5.92%
23 5.13% 5.92%
24 5.13% 5.91%
25 5.12% 5.90%
26 5.11% 5.88%
27 5.10% 5.86%
28 5.08% 5.85%
29 5.07% 5.83%
30 5.06% 5.81%
ZERO-COUPON TREASURY BOND RETURNS
(FOR THE SIX MONTHS ENDED 3/31/99)*
Coupon STRIPS maturing 11/15/00 1.17%
Coupon STRIPS maturing 11/15/05 -3.28%
Coupon STRIPS maturing 11/15/10 -7.20%
Coupon STRIPS maturing 11/15/15 -8.78%
Coupon STRIPS maturing 11/15/20 -10.68%
Coupon STRIPS maturing 11/15/25 -11.11%
* Not annualized.
Source: Bloomberg Financial Markets
4 1-800-345-2021
Target: 2000--Performance
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TOTAL RETURNS AS OF MARCH 31, 1999
<TABLE>
INVESTOR CLASS (INCEPTION 3/25/85) ADVISOR CLASS (INCEPTION 8/20/98)
TARGET 11/15/00 MERRILL LYNCH TARGET 11/15/00 MERRILL LYNCH
MATURITIES MATURITY LONG-TERM MATURITIES MATURITY LONG-TERM
TRUST: 2000 STRIPS ISSUE TREASURY INDEX TRUST: 2000 STRIPS ISSUE TREASURY INDEX
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) 0.85% 1.17% -5.16% 0.74% 1.17% -5.16%
1 YEAR 6.21% 6.75% 7.07% -- -- --
========================================================================================================================
AVERAGE ANNUAL RETURNS
========================================================================================================================
3 YEARS 6.31% 6.79% 9.88% -- -- --
5 YEARS 6.82% 7.33% 9.71% -- -- --
10 YEARS 9.74% 10.22% 10.88% -- -- --
LIFE OF FUND 11.92% 13.22%(2) 11.95%(2) 3.33% 2.81%(3) -1.68%(3)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Since 3/31/85, the date nearest the class's inception for which data are
available.
(3) Since 8/31/98, the date nearest the class's inception for which data are
available.
See pages 52-54 for more information about share classes, returns, the
comparative index, and the fund's benchmark.
[mountain chart - data below]
GROWTH OF $10,000 OVER 1O YEARS
Value on 3/31/99
Target: 2000 $25,336
Merrill Lynch Long-Term
Treasury Index $28,093
11/15/00 STRIPS Issue $26,473
Target: Merrill Lynch Long-Term 11/15/00
2000 Treasury Index STRIPS Issue
DATE VALUE VALUE VALUE
3/31/89 $10,000 $10,000 $10,000
3/31/90 $11,410 $11,288 $11,469
3/31/91 $12,891 $12,761 $13,053
3/31/92 $14,562 $14,298 $14,773
3/31/93 $17,810 $17,083 $18,163
3/31/94 $18,215 $17,675 $18,590
3/31/95 $18,880 $18,457 $19,382
3/31/96 $21,087 $21,179 $21,737
3/31/97 $21,852 $21,776 $22,614
3/31/98 $23,854 $26,238 $24,799
3/31/99 $25,336 $28,093 $26,473
$10,000 investment made 3/31/89
The graph at left shows the growth of a $10,000 investment in the fund over 10
years. The Merrill Lynch Long-Term Treasury Index and the fund's benchmark are
provided for comparison. The Target: 2000 portfolio's total return includes
operating expenses (such as transaction costs and management fees) that reduce
returns, while the total returns of the index and the benchmark do not.
[line chart - data below]
SHARE PRICE VS. ANTICIPATED VALUE AT MATURITY
TARGET: 2000
Actual Share Price (Historical) $94.58
Anticipated Value at Maturity
(Estimated Share Price) $101.71
Actual Share Price Anticipated Value at Maturity
(Historical) (Estimated Share Price)
1985 $26.77 $100
$35.44 $100
$33.33 $98.69
$37.16 $97.43
$44.52 $96.21
1990 $47.33 $97.59
$57.11 $98.91
$61.947 $101.16
$71.526 $100.708
$66.598 $100.829
1995 $80.408 $100.992
$79.947 $101.102
$86.06 $101.13
$93.78 $101.78
$94.58 $101.71
2000
The top line in the graph represents the fund's Anticipated Value at Maturity
(AVM--defined on page 54), which fluctuates from day to day based on the fund's
expected maturity date. The bottom line represents the fund's historical share
price, which is managed to grow over time to reach the fund's AVM. While this
graph demonstrates the fund's expected long-term growth pattern, please keep in
mind that the fund may experience significant share-price volatility over the
short term. Even if fund shares are held to maturity, there is no guarantee that
the fund's share price will reach its AVM. There is also no guarantee that the
AVM will fluctuate as little in the future as it has in the past.
Both graphs are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see the Total Returns
table above). Past performance is no guarantee of future results. Investment
return and principal value will fluctuate, and redemption value may be more or
less than original cost.
www.americancentury.com 5
Target: 2000--Q&A
- --------------------------------------------------------------------------------
/photo of Dave Schroeder/
An interview with Dave Schroeder, a portfolio manager on the Target
Maturities Trust investment team.
HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 1999?
Target: 2000 provided mildly positive returns, in spite of the overall rise
in interest rates. For the six months ended March 31, 1999, Target: 2000
returned 0.85%,* compared with the 1.17% return of the fund's benchmark, a
STRIPS issue maturing on November 15, 2000. (See the previous page for other
fund performance comparisons.)
Please keep in mind that Target: 2000, unlike its benchmark, is subject to
transaction costs and management fees. To keep the fund's after-expense returns
as close as possible to those of the benchmark, we try to keep the portfolio's
weighted average maturity date in the fourth quarter of the target year and
adjust its mix of zero-coupon bonds (zeros).
SPEAKING OF ADJUSTMENTS TO THE PORTFOLIO, WHAT CHANGES DID YOU MAKE?
To minimize Target: 2000's transaction costs and turnover rate, we
continued to use cash inflows and outflows as opportunities to adjust the
portfolio's composition and its weighted average maturity date. To meet the
roughly $20 million in outflows that the fund experienced, we sold STRIPS. The
net result was a decrease in the portfolio's STRIPS position, which fell from
40% of assets to 30%. Correspondingly, the portfolio's percentage of TRs
(Treasury Receipts--generic receipt zeros) and REFCORPs rose. (See the charts on
page 7.)
WHY DID YOU SELL STRIPS INSTEAD OF OTHER TYPES OF ZEROS?
By selling STRIPS, we were able to meet the fund's liquidity needs without
sacrificing returns. That's because STRIPS generally have lower yields and
higher prices than REFCORPs or other non-STRIP holdings.
WHAT IMPACT DID THESE CHANGES HAVE ON TARGET: 2000'S WEIGHTED AVERAGE MATURITY
DATE?
They caused it to move forward roughly 12 days to November 19, 2000. Many
of the STRIPS that we sold mature in November 2001; they had slightly longer
maturities than many others in the portfolio. So selling them resulted in a
shorter average maturity date for the portfolio, which caused the fund's
anticipated value at maturity to edge seven cents lower.
* All fund returns referenced in this interview are for Investor Class shares.
[left margin]
"BY SELLING STRIPS, WE WERE ABLE TO MEET THE FUND'S LIQUIDITY NEEDS WITHOUT
SACRIFICING RETURNS."
PORTFOLIO AT A GLANCE
3/31/99 9/30/98
NUMBER OF SECURITIES 55 52
ANTICIPATED GROWTH
RATE 4.50% 3.81%
WEIGHTED AVERAGE
MATURITY DATE 11/19/00 12/01/00
ANTICIPATED VALUE AT
MATURITY (AVM)(1) $101.71 $101.78
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.59%(2) 0.59%
Past performance is no guarantee of future results. Even if fund shares are held
to maturity, there is no guarantee that the fund's share price will reach its
AVM. There is also no guarantee that the AVM will fluctuate as little in the
future as it has in the past. For more information, please consult the
prospectus.
(1) See graph on page 5.
(2) Annualized.
Investment terms are defined in the Glossary on pages 54-55.
6 1-800-345-2021
Target: 2000--Q&A
- --------------------------------------------------------------------------------
(Continued)
As that slight decrease in average maturity demonstrates, we generally keep
the fund's average maturity date fairly close to that of its benchmark. By using
such an approach, we are able to take advantage of attractive opportunities,
while helping to ensure that the fund's long-term performance closely tracks
that of the November 15, 2000 STRIPS.
GOING FORWARD, WHAT'S YOUR OUTLOOK FOR THE TREASURY MARKET?
Many of the trends that caused Treasury prices to rise at the end of 1998
disappeared during the first quarter of 1999. On the international front, Asian
and Latin American economies seem to have recovered somewhat from last year's
crises. With global markets looking less grim, "flight-to-quality" demand for
Treasurys has decreased. Domestically, economic growth remains surprisingly
robust--during the first quarter of 1999, the economy expanded at a 4.5% annual
pace.
However, some positive influences remain in place. Inflation is still a
non-issue--prices rose a mere 1.7% for the twelve months ended March 31 (as
measured by the government's consumer price index). As such, we believe there's
little incentive for the Fed to raise interest rates in the near future.
The first federal budget surplus in 30 years is also having a positive
impact on Treasury prices by reducing the amount of new Treasury bond issuance.
Last year the Treasury Department discontinued quarterly auctions of three-year
Treasury notes and began auctioning five-year Treasury notes quarterly, rather
than monthly. A 30-year bond auction was also eliminated.
We wouldn't be surprised if that trend continued. There's been some
discussion about the Treasury Department reducing two-year note auctions from
monthly to only eight times a year. In addition, the elimination of one of the
Treasury's 30-year bond auctions--which would reduce the number to only two a
year--is also a possibility.
WITH THAT OUTLOOK IN MIND, WHAT ARE YOUR PLANS FOR THE PORTFOLIO?
Although there's no assurance that Target: 2000 will reach its anticipated
value at maturity, we will continue to focus our efforts to try to meet or beat
that value. To try and achieve that goal, we will continue to manage Target:
2000 to deliver a pure play on zero-coupon bonds in an effort to provide
shareholders the total return and interest rate sensitivity of a zero maturing
on November 15, 2000. We will also continue to use cash inflows and outflows as
opportunities to adjust the portfolio's composition and weighted average
maturity. That should help keep turnover and transaction costs to a minimum.
[right margin]
"MANY OF THE TRENDS THAT CAUSED TREASURY PRICES TO RISE AT THE END OF 1998
DISAPPEARED DURING THE FIRST QUARTER OF 1999."
[pie charts - data below]
PORTFOLIO COMPOSITION BY SECURITY TYPE
As of March 31, 1999
STRIPS 30%
TRs 43%
REFCORPs 14%
BECCs 4%
Other 9%
As of September 30, 1998
STRIPS 40%
TRs 36%
REFCORPs 11%
BECCs 5%
Other 8%
Security types are defined on pages 54-55.
www.americancentury.com 7
Target: 2000--Schedule of Investments
- --------------------------------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. TREASURY SECURITIES (1)--85.6%
$ 18,144 TBR, 5.83%, 5/15/99 $ 18,038
1,298,250 CUBES, 5.07%, 8/15/99 1,275,324
75,000 ETR, 5.26%, 11/15/99 72,766
81,000 ETR, 5.63%, 11/15/99 78,587
153,000 STRIPS--COUPON, 5.40%,
11/15/99 148,632
2,000,000 STRIPS--PRINCIPAL, 4.88%,
11/15/99 1,942,369
2,836,700 TBR, 7.83%, 11/15/99 2,752,535
75,000 TR, 5.20%, 11/15/99 72,788
349,800 TR, 5.46%, 11/15/99 339,483
133,000 CATS, 5.22%, 2/15/00 127,414
88,125 CUBES, 8.60%, 2/15/00 84,431
100,000 STRIPS--COUPON, 4.63%,
2/15/00 95,907
14,100,000 STRIPS--PRINCIPAL, 5.28%,
2/15/00 13,516,503
306,945 TBR, 8.80%, 2/15/00 293,904
29,708,220 TR, 6.69%, 2/15/00 28,453,268
28,146 TR, 8.50%, 2/15/00 26,957
199,843 TR, 8.88%, 2/15/00 191,401
100,000 TR, 9.28%, 2/15/00 95,776
645,525 TBR, 8.62%, 5/15/00 610,609
849,000 TBR, 8.72%, 5/15/00 803,079
5,000,000 CUBES, 5.50%, 8/15/00 4,665,950
633,000 STRIPS--COUPON, 5.71%,
8/15/00 591,661
5,667,000 STRIPS--PRINCIPAL, 7.14%,
8/15/00 5,296,911
894,045 TBR, 8.72%, 8/15/00 833,531
15,427,980 TR, 4.89%, 8/15/00 14,462,181
500,000 STRIPS--COUPON, 4.16%,
11/15/00 461,667
13,391,000 STRIPS--PRINCIPAL, 8.17%,
11/15/00 12,364,368
289,250 TBR, 5.63%, 11/15/00 266,273
29,600 TR, 8.49%, 11/15/00 27,262
843 TR, 9.43%, 11/15/00 776
75,000 CATS, 5.34%, 2/15/01 68,171
Principal Amount Value
- --------------------------------------------------------------------------------
$ 1,700,000 STRIPS--PRINCIPAL, 5.57%,
2/15/01 $ 1,549,316
87,280 TBR, 5.63%, 2/15/01 79,246
4,657,000 TIGR, 5.52%, 2/15/01 4,232,974
3,933,650 TR, 5.52%, 2/15/01 3,573,525
2,052,928 TR, 5.87%, 2/15/01 1,864,983
4,435,750 TR, 6.92%, 2/15/01 4,029,658
10,000,000 TR, 7.80%, 2/15/01 9,084,501
1,400,000 COUGAR, 5.63%, 5/15/01 1,253,978
1,496,250 CUBES, 6.21%, 5/15/01 1,340,189
44,000 TIGR, 5.39%, 5/15/01 39,468
21,150,000 TR, 7.06%, 5/15/01 18,959,701
14,235,000 STRIPS--PRINCIPAL, 7.44%,
8/15/01 12,634,233
6,320,000 TR, 4.84%, 8/15/01 5,589,845
7,060,020 TR, 5.38%, 8/15/01 6,244,370
8,900,000 BEC, 5.99%, 11/15/01 7,761,486
17,100,000 STRIPS--PRINCIPAL, 4.89%,
11/15/01 14,979,348
--------------
TOTAL ZERO-COUPON U.S.
TREASURY SECURITIES 183,255,343
--------------
(Cost $179,830,314)
ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES(1)--14.4%
10,000,000 REFCORP STRIPS--COUPON,
4.93%, 1/15/00 9,614,379
8,000,000 REFCORP STRIPS--COUPON,
5.55%, 4/15/00 7,609,314
8,442,000 REFCORP STRIPS--COUPON,
5.59%, 10/15/00 7,817,318
3,200,000 REFCORP STRIPS--COUPON,
5.67%, 4/15/01 2,885,498
3,215,000 REFCORP STRIPS--COUPON,
5.70%, 10/15/01 2,823,590
--------------
TOTAL ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES 30,750,099
--------------
(Cost $30,578,244)
TOTAL INVESTMENT SECURITIES--100.0% $214,005,442
==============
(Cost $210,408,558)
See Notes to Financial Statements
8 1-800-345-2021
Target: 2000--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MARCH 31, 1999 (UNAUDITED)
NOTES TO SCHEDULE OF INVESTMENTS
BEC = Book Entry Corpus
CATS = Certificates of Accrual of Treasury Securities
COUGAR = Coupons on Underlying Government Securities
CUBES = Coupons Under Book Entry Safekeeping
ETR = Easy Growth Treasury Receipts
REFCORP = Resolution Funding Corporation
STRIPS = Separate Trading of Registered Interest and Principal of Securities
TBR = Treasury Bond Receipts
TIGR = Treasury Investment Growth Receipts
TR = Treasury Receipts
(1) Rates indicated are the yield to maturity at purchase. These securities are
purchased at a substantial discount from their value at maturity.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the principal amount of each investment
* the market value of each investment
See Notes to Financial Statements
www.americancentury.com 9
Target: 2005--Performance
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF MARCH 31, 1999
<TABLE>
INVESTOR CLASS (INCEPTION 3/25/85) ADVISOR CLASS (INCEPTION 8/3/98)
TARGET 11/15/05 MERRILL LYNCH TARGET 11/15/05 MERRILL LYNCH
MATURITIES MATURITY LONG-TERM MATURITIES MATURITY LONG-TERM
TRUST: 2005 STRIPS ISSUE TREASURY INDEX TRUST: 2005 STRIPS ISSUE TREASURY INDEX
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) -3.87% -3.28% -5.16% -4.02% -3.28% -5.16%
1 YEAR 7.62% 8.56% 7.07% -- -- --
==========================================================================================================================
AVERAGE ANNUAL RETURNS
==========================================================================================================================
3 YEARS 8.81% 9.40% 9.88% -- -- --
5 YEARS 9.49% 10.05% 9.71% -- -- --
10 YEARS 11.61% 11.86% 10.88% -- -- --
LIFE OF FUND 13.91% 15.51%(2) 11.95%(2) 3.81% 5.23% 2.79%
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Since 3/31/85, the date nearest the class's inception for which data are
available.
See pages 52-54 for more information about share classes, returns, the
comparative index, and the fund's benchmark.
[mountain chart - data below]
GROWTH OF $10,000 OVER 1O YEARS
Value on 3/31/99
Target: 2005 $30,004
Merrill Lynch Long-Term
Treasury Index $28,093
11/15/05 STRIPS Issue $30,671
Target: Merrill Lynch Long-Term 11/15/05
2005 Treasury Index STRIPS Issue
DATE VALUE VALUE VALUE
3/31/89 $10,000 $10,000 $10,000
3/31/90 $11,342 $11,288 $11,272
3/31/91 $12,897 $12,761 $12,852
3/31/92 $14,593 $14,298 $14,559
3/31/93 $18,356 $17,083 $18,393
3/31/94 $19,072 $17,675 $19,000
3/31/95 $20,085 $18,457 $20,065
3/31/96 $23,287 $21,179 $23,428
3/31/97 $23,820 $21,776 $24,042
3/31/98 $27,881 $26,238 $28,254
3/31/99 $30,004 $28,093 $30,671
$10,000 investment made 3/31/89
The graph at left shows the growth of a $10,000 investment in the fund over 10
years. The Merrill Lynch Long-Term Treasury Index and the fund's benchmark are
provided for comparison. The Target: 2005 portfolio's total return includes
operating expenses (such as transaction costs and management fees) that reduce
returns, while the total returns of the index and the benchmark do not.
[line chart - data below]
SHARE PRICE VS. ANTICIPATED VALUE AT MATURITY
TARGET: 2005
Actual Share Price (Historical) $73.75
Anticipated Value at Maturity
(Estimated Share Price) $101.07
Actual Share Price Anticipated Value at Maturity
(Historical) (Estimated Share Price)
1985 $16.69 $98
$23.74 $97
$21.28 $94.59
$24.36 $93.66
$30.18 $93.14
1990 $31.26 $97.25
$37.97 $99.29
$41.597 $99.625
$50.575 $100.087
$46.066 $100.516
1995 $61.108 $100.34
$57.829 $100.707
$64.54 $100.85
$76.72 $101.53
$73.75 $101.07
2000
2005
The top line in the graph represents the fund's Anticipated Value at Maturity
(AVM--defined on page 54), which fluctuates from day to day based on the fund's
expected maturity date. The bottom line represents the fund's historical share
price, which is managed to grow over time to reach the fund's AVM. While this
graph demonstrates the fund's expected long-term growth pattern, please keep in
mind that the fund may experience significant share-price volatility over the
short term. Even if fund shares are held to maturity, there is no guarantee that
the fund's share price will reach its AVM. There is also no guarantee that the
AVM will fluctuate as little in the future as it has in the past.
Both graphs are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see the Total Returns
table above). Past performance is no guarantee of future results. Investment
return and principal value will fluctuate, and redemption value may be more or
less than original cost.
10 1-800-345-2021
Target: 2005--Q&A
- --------------------------------------------------------------------------------
(Continued)
An interview with Dave Schroeder (pictured on page 6), a portfolio manager
on the Target Maturities Trust investment team.
HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 1999?
Reflecting the overall rise in interest rates, Target: 2005 posted negative
returns. For the six months ended March 31, 1999, Target: 2005 fell 3.87%,*
compared with the 3.28% decline of the fund's benchmark, a STRIPS issue maturing
on November 15, 2005. (See the previous page for other fund performance
comparisons.)
It's important to remember that, unlike its benchmark, Target: 2005 is
subject to transaction costs and management fees. To keep the fund's
after-expense returns as close as possible to those of the benchmark, we attempt
to enhance performance through conservative changes to the portfolio's weighted
average maturity date and by adjusting its mix of zero-coupon bonds (zeros).
SPEAKING OF PORTFOLIO ADJUSTMENTS, WHAT CHANGES DID YOU MAKE?
To minimize Target: 2005's transaction costs and turnover rate, we
continued to use cash inflows and outflows as opportunities to adjust the
portfolio's composition and its weighted average maturity date. The fund
received roughly $30 million in new investments during the six months, and while
we were able to find some attractive receipt zeros for the portfolio, most of
the new capital was put to work in STRIPS.
We also liquidated some of the fund's REFCORPs because they were trading at
very attractive prices. As a result, the portfolio's STRIPS position increased
to around 59% of assets, while the amount of Treasury Receipts (TRs--generic
receipt zeros) rose to 13%, and REFCORPs fell to 7%.
WHY DID YOU ADD MORE STRIPS THAN OTHER TYPES OF ZEROS?
Mainly because in Target: 2005's area of the investment maturity spectrum,
STRIPS are far more readily available than other types of zeros. Although we
pick up higher-yielding receipt zeros when possible, we often have to rely on
buying STRIPS with the cash inflows to keep the fund fully invested. (See the
charts on page 12.)
WHAT IMPACT DID THESE CHANGES HAVE ON TARGET: 2005'S WEIGHTED AVERAGE MATURITY
DATE?
They caused it to move forward from November 8, 2005, to September 22,
2005, by the end of March. Many of the STRIPS that we purchased mature in May
and August of 2005; they had slightly shorter maturities than many others in the
portfolio.
So adding them resulted in a shorter average maturity date and a drop of
around fifty cents in Target: 2005's anticipated value at maturity. Overall,
however, we generally kept the fund's average maturity close to that of its
benchmark.
* All fund returns referenced in this interview are for Investor Class shares.
[right margin]
"THE FUND RECEIVED ROUGHLY $30 MILLION IN NEW INVESTMENTS DURING THE SIX
MONTHS. . ."
PORTFOLIO AT A GLANCE
3/31/99 9/30/98
NUMBER OF SECURITIES 44 42
ANTICIPATED GROWTH
RATE 4.93% 3.98%
WEIGHTED AVERAGE
MATURITY DATE 9/22/05 11/08/05
ANTICIPATED VALUE AT
MATURITY (AVM)(1) $101.07 $101.53
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.59%(2) 0.59%
Past performance is no guarantee of future results. Even if fund shares are held
to maturity, there is no guarantee that the fund's share price will reach its
AVM. There is also no guarantee that the AVM will fluctuate as little in the
future as it has in the past. For more information, please consult the
prospectus.
(1) See graph on page 10.
(2) Annualized.
Investment terms are defined in the Glossary on pages 54-55.
www.americancentury.com 11
Target: 2005--Q&A
- --------------------------------------------------------------------------------
(Continued)
GOING FORWARD, WHAT'S YOUR OUTLOOK FOR THE TREASURY MARKET?
Many of the trends that caused Treasury prices to rise at the end of 1998
disappeared during the first quarter of 1999. On the international front, Asian
and Latin American economies seem to have recovered somewhat from last year's
crises. With global markets looking less grim, "flight-to-quality" demand for
Treasurys has decreased. Domestically, economic growth remains surprisingly
robust--during the first quarter of 1999, the economy expanded at a 4.5% annual
pace.
However, some positive influences remain in place. Inflation is still a
non-issue--prices rose a mere 1.7% for the twelve months ended March 31 (as
measured by the government's consumer price index). As such, we believe there's
little incentive for the Fed to raise interest rates in the near future.
The first federal budget surplus in 30 years is also having a positive
impact on Treasury prices by reducing the amount of new Treasury bond issuance.
Last year the Treasury Department discontinued quarterly auctions of three-year
Treasury notes and began auctioning five-year Treasury notes quarterly, rather
than monthly. A 30-year bond auction was also eliminated.
We wouldn't be surprised if that trend continued. There's been some
discussion about the Treasury Department reducing two-year note auctions from
monthly to only eight times a year. In addition, the elimination of one of the
Treasury's 30-year bond auctions--which would reduce the number to only two a
year--is also a possibility.
WITH THAT OUTLOOK IN MIND, WHAT ARE YOUR PLANS FOR THE PORTFOLIO?
We will continue to focus our efforts to try to meet or beat Target: 2005's
anticipated value at maturity. In an attempt to accomplish that goal, we will
continue to manage Target: 2005 to deliver a pure play on zero-coupon bonds in
an effort to provide shareholders the total return and interest rate sensitivity
of a zero maturing on November 15, 2005.
To help keep a lid on turnover and transaction costs, we will continue to
use cash inflows and outflows as opportunities to adjust the portfolio's
composition and weighted average maturity.
[left margin]
"WITH GLOBAL MARKETS LOOKING LESS GRIM, 'FLIGHT-TO-QUALITY' DEMAND FOR TREASURYS
HAS DECREASED."
[pie charts - data below]
PORTFOLIO COMPOSITION BY SECURITY TYPE
As of March 31, 1999
STRIPS 59%
REFCORPs 7%
BECCs 19%
TRs 13%
Other 2%
As of September 30, 1998
STRIPS 52%
REFCORPs 30%
BECCs 11%
TRs 4%
Other 3%
Security types are defined on pages 54-55.
12 1-800-345-2021
Target: 2005 --Schedule of Investments
- --------------------------------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. TREASURY SECURITIES(1)--92.5%
$ 5,000,000 BECC, 5.56%, 5/15/04 $ 3,780,334
258,000 ETR, 5.70%, 5/15/04 194,677
2,000,000 BECC, 4.47%, 11/15/04 1,468,999
693,750 CUBES, 6.56%, 11/15/04 511,234
87,000 ETR, 5.96%, 11/15/04 63,762
2,517,000 TIGR, 4.75%, 11/15/04 1,856,844
27,000 TIGR, 5.90%, 11/15/04 19,918
17,000,000 TR, 4.75%, 11/15/04 12,507,000
7,200,000 BECC, 6.95%, 2/15/05 5,201,740
1,500,000 STRIPS--COUPON, 6.37%,
2/15/05 1,097,415
3,456,420 TR, 5.45%, 2/15/05 2,501,424
49,000,000 BECC, 5.83%, 5/15/05 34,860,121
4,615,672 CUBES, 8.59%, 5/15/05 3,295,485
1,000,000 ETR, 6.67%, 5/15/05 709,739
18,374,000 STRIPS--COUPON, 7.96%,
5/15/05 13,244,269
206,559,000 STRIPS--PRINCIPAL, 5.40%,
5/15/05 148,492,231
428,750 TBR, 9.37%, 5/15/05 304,301
6,450,000 TR, 8.38%, 5/15/05 4,577,816
122,000,000 STRIPS--PRINCIPAL, 5.88%,
8/15/05 86,564,140
7,000,020 TR, 4.58%, 8/15/05 4,917,751
30,000,000 BECC, 6.15%, 11/15/05 20,797,713
170,000 CATS, 6.21%, 11/15/05 118,386
491,519 CUBES, 8.86%, 11/15/05 342,069
200,000 LION, 5.73%, 11/15/05 138,473
1,500,000 STRIPS--COUPON, 6.33%,
11/15/05 1,054,734
2,247,000 TBR, 8.45%, 11/15/05 1,553,741
107,056,000 STRIPS--COUPON, 6.31%,
2/15/06 73,721,569
Principal Amount Value
- --------------------------------------------------------------------------------
$ 1,003,875 TR, 5.54%, 2/15/06 $ 682,565
23,678,120 TR, 7.75%, 2/15/06 16,099,472
36,000,000 BECC, 5.09%, 5/15/06 24,075,399
107,000 CATS, 6.05%, 5/15/06 71,905
6,032,000 CATS, 8.83%, 5/15/06 4,028,385
2,567,000 CATS, 8.84%, 5/15/06 1,714,334
566,500 CUBES, 6.53%, 5/15/06 380,430
5,098,000 STRIPS--COUPON, 7.46%,
5/15/06 3,461,697
410,000 TBR, 8.46%, 5/15/06 273,434
36,264,000 TR, 5.29%, 5/15/06 24,184,891
146,346 TR, 8.89%, 5/15/06 98,074
1,299,780 TR, 8.86%, 8/15/06 857,773
22,230,000 BECC, 5.42%, 11/15/06 14,425,751
100,000 U.S. Treasury Corpus, 5.38%,
11/15/06 64,462
--------------
TOTAL ZERO-COUPON U.S.
TREASURY SECURITIES 514,314,457
--------------
(Cost $503,572,153)
ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES(1)--7.5%
2,000,000 REFCORP STRIPS--COUPON,
5.84%, 4/15/05 1,439,565
38,270,000 REFCORP STRIPS--COUPON,
6.59%, 10/15/05 26,857,448
20,319,000 REFCORP STRIPS--COUPON,
6.18%, 7/15/06 13,560,368
--------------
TOTAL ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES 41,857,381
--------------
(Cost $39,535,920)
TOTAL INVESTMENT SECURITIES--100.0% $556,171,838
==============
(Cost $543,108,073)
NOTES TO SCHEDULE OF INVESTMENTS
BECC = Book Entry Callable Corpus
CATS = Certificates of Accrual of Treasury Securities
CUBES = Coupons Under Book Entry Safekeeping
ETR = Easy Growth Treasury Receipts
LION = Lehman Investment Opportunity Note
REFCORP = Resolution Funding Corporation
STRIPS = Separate Trading of Registered Interest and Principal of Securities
TBR = Treasury Bond Receipts
TIGR = Treasury Investment Growth Receipts
TR = Treasury Receipts
(1) Rates indicated are the yield to maturity at purchase. These securities are
purchased at a substantial discount from their value at maturity.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the principal amount of each investment
* the market value of each investment
See Notes to Financial Statements
www.americancentury.com 13
Target: 2010--Performance
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF MARCH 31, 1999
<TABLE>
INVESTOR CLASS (INCEPTION 3/25/85) ADVISOR CLASS (INCEPTION 10/20/98)
TARGET 11/15/10 MERRILL LYNCH TARGET 11/15/10 MERRILL LYNCH
MATURITIES MATURITY LONG-TERM MATURITIES MATURITY LONG-TERM
TRUST: 2010 STRIPS ISSUE TREASURY INDEX TRUST: 2010 STRIPS ISSUE TREASURY INDEX
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) -7.34% -7.20% -5.16% -- -- --
1 YEAR 7.39% 8.14% 7.07% -- -- --
==========================================================================================================================
AVERAGE ANNUAL RETURNS
==========================================================================================================================
3 YEARS 10.83% 11.42% 9.88% -- -- --
5 YEARS 11.11% 11.82% 9.71% -- -- --
10 YEARS 12.79% 13.22% 10.88% -- -- --
LIFE OF FUND 15.26% 16.71%(2) 11.95%(2) -4.57% -4.83%(3) -3.64%(3)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Since 3/31/85, the date nearest the class's inception for which data are
available.
(3) Since 10/31/98, the date nearest the class's inception for which data are
available.
See pages 52-54 for more information about share classes, returns, the
comparative index, and the fund's benchmark.
[mountain chart - data below]
GROWTH OF $10,000 OVER 1O YEARS
Value on 3/31/99
Target: 2010 $33,312
Merrill Lynch Long-Term
Treasury Index $28,093
11/15/10 STRIPS Issue $34,620
Target: Merrill Lynch Long-Term 11/15/10
2010 Treasury Index STRIPS Issue
DATE VALUE VALUE VALUE
3/31/89 $10,000 $10,000 $10,000
3/31/90 $11,460 $11,288 $11,567
3/31/91 $13,107 $12,761 $13,057
3/31/92 $14,723 $14,298 $14,770
3/31/93 $18,592 $17,083 $18,667
3/31/94 $19,670 $17,675 $19,807
3/31/95 $20,546 $18,457 $20,783
3/31/96 $24,472 $21,179 $25,031
3/31/97 $24,971 $21,776 $25,624
3/31/98 $31,022 $26,238 $32,014
3/31/99 $33,312 $28,093 $34,620
$10,000 investment made 3/31/89
The graph at left shows the growth of a $10,000 investment in the fund over 10
years. The Merrill Lynch Long-Term Treasury Index and the fund's benchmark are
provided for comparison. The Target: 2010 portfolio's total return includes
operating expenses (such as transaction costs and management fees) that reduce
returns, while the total returns of the index and the benchmark do not.
[line chart - data below]
SHARE PRICE VS. ANTICIPATED VALUE AT MATURITY
TARGET: 2010
Actual Share Price (Historical) $57.43
Anticipated Value at Maturity
(Estimated Share Price) $105.50
Actual Share Price Anticipated Value at Maturity
(Historical) (Estimated Share Price)
1985 $11.43 $97
$17.65 $97
$14.96 $95.27
$17.31 $97.13
$22.16 $96.66
1990 $22.22 $97.52
$26.9 $98.97
$29.534 $100.179
$37.292 $100.874
$32.981 $101.78
1995 $46.864 $101.788
$42.474 $102.529
$49.16 $103.4
$61.98 $104.85
$57.43 $105.50
2000
2005
2010
The top line in the graph represents the fund's Anticipated Value at Maturity
(AVM--defined on page 54), which fluctuates from day to day based on the fund's
expected maturity date. The bottom line represents the fund's historical share
price, which is managed to grow over time to reach the fund's AVM. While this
graph demonstrates the fund's expected long-term growth pattern, please keep in
mind that the fund may experience significant share-price volatility over the
short term. Even if fund shares are held to maturity, there is no guarantee that
the fund's share price will reach its AVM. There is also no guarantee that the
AVM will fluctuate as little in the future as it has in the past.
Both graphs are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see the Total Returns
table above). Past performance is no guarantee of future results. Investment
return and principal value will fluctuate, and redemption value may be more or
less than original cost.
14 1-800-345-2021
Target: 2010--Q&A
- --------------------------------------------------------------------------------
(Continued)
An interview with Dave Schroeder (pictured on page 6), a portfolio manager
on the Target Maturities Trust investment team.
HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 1999?
Reflecting the overall rise in interest rates, Target: 2010 posted negative
returns. For the six months ended March 31, 1999, Target: 2010 fell 7.34%,*
compared with the 7.20% decline of the fund's benchmark, a STRIPS issue maturing
on November 15, 2010. (See the previous page for other fund performance
comparisons.)
It's important to remember that, unlike its benchmark, Target: 2010 is
subject to transaction costs and management fees. To keep the fund's
after-expense returns as close as possible to those of the benchmark, we attempt
to enhance performance through conservative adjustments to the portfolio's
weighted average maturity date and by shifting its mix of zero-coupon bonds
(zeros).
SPEAKING OF ADJUSTMENTS TO THE PORTFOLIO, WHAT CHANGES DID YOU MAKE?
To minimize Target: 2010's transaction costs and turnover rate, we
continued to use cash inflows and outflows as opportunities to adjust the
portfolio's composition and its weighted average maturity date. To meet the
roughly $18 million in outflows that the fund experienced, we sold STRIPS. The
net result was a decrease in the portfolio's STRIPS position, which fell from
51% of assets to 41%. (See the charts on page 16.)
We also added some attractively priced REFCORPs, especially toward the end
of 1998 when they began offering a significant yield advantage over STRIPS. As
such, the fund's exposure to REFCORPs rose from around 43% of assets to about
52%.
WHY DID YOU SELL STRIPS INSTEAD OF OTHER TYPES OF ZEROS?
By selling STRIPS, we were able to meet the fund's liquidity needs without
sacrificing returns. That's because STRIPS generally have lower yields and
higher prices than REFCORPs or other non-STRIP holdings.
WHAT IMPACT DID THESE CHANGES HAVE ON TARGET: 2010'S WEIGHTED AVERAGE MATURITY
DATE?
They caused it to extend around 25 days to November 10, 2010, by the end of
March. Many of the STRIPS that we sold mature in May 2010; however, the REFCORPs
that we added mature in April and October 2010. We also bought a few REFCORPs
that mature in July 2011. So the net result was a longer average maturity date
for the portfolio and that caused Target: 2010's anticipated value at maturity
to rise sixty-five cents to $105.50 by the end of March.
* All fund returns referenced in this interview are for Investor Class shares.
[right margin]
"BY SELLING STRIPS, WE WERE ABLE TO MEET THE FUND'S LIQUIDITY NEEDS WITHOUT
SACRIFICING RETURNS. "
PORTFOLIO AT A GLANCE
3/31/99 9/30/98
NUMBER OF SECURITIES 18 18
ANTICIPATED GROWTH
RATE 5.31% 4.41%
WEIGHTED AVERAGE
MATURITY DATE 11/10/10 10/16/10
ANTICIPATED VALUE AT
MATURITY (AVM)(1) $105.50 $104.85
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.59%(2) 0.59%
Past performance is no guarantee of future results. Even if fund shares are held
to maturity, there is no guarantee that the fund's share price will reach its
AVM. There is also no guarantee that the AVM will fluctuate as little in the
future as it has in the past. For more information, please consult the
prospectus.
(1) See graph on page 14.
(2) Annualized.
Investment terms are defined in the Glossary on pages 54-55.
www.americancentury.com 15
Target: 2010--Q&A
- --------------------------------------------------------------------------------
(Continued)
GOING FORWARD, WHAT'S YOUR OUTLOOK FOR THE TREASURY MARKET?
Many of the trends that caused Treasury prices to rise at the end of 1998
disappeared during the first quarter of 1999. On the international front, Asian
and Latin American economies seem to have recovered somewhat from last year's
crises. With global markets looking less grim, "flight-to-quality" demand for
Treasurys has decreased. Domestically, economic growth remains surprisingly
robust--during the first quarter of 1999, the economy expanded at a 4.5% annual
pace.
However, some positive influences remain in place. Inflation is still a
non-issue--prices rose a mere 1.7% for the twelve months ended March 31 (as
measured by the government's consumer price index). As such, we believe there's
little incentive for the Fed to raise interest rates in the near future.
The first federal budget surplus in 30 years is also having a positive
impact on Treasury prices by reducing the amount of new Treasury bond issuance.
Last year the Treasury Department discontinued quarterly auctions of three-year
Treasury notes and began auctioning five-year Treasury notes quarterly, rather
than monthly. A 30-year bond auction was also eliminated.
We wouldn't be surprised if that trend continued. There's been some
discussion about the Treasury Department reducing two-year note auctions from
monthly to only eight times a year. In addition, the elimination of one of the
Treasury's 30-year bond auctions--which would reduce the number to only two a
year--is also a possibility.
WITH THAT OUTLOOK IN MIND, WHAT ARE YOUR PLANS FOR THE PORTFOLIO?
Although there's no assurance that Target: 2010 will reach its anticipated
value at maturity, we will continue to focus our efforts to try to meet or beat
that value. In an effort to accomplish that goal, we will continue to manage
Target: 2010 to deliver a pure play on zero-coupon bonds in an effort to provide
shareholders the total return and interest rate sensitivity of a zero maturing
on November 15, 2010.
We will also continue to use cash inflows and outflows as opportunities to
adjust the portfolio's composition and weighted average maturity. That should
help keep turnover and transaction costs to a minimum. In addition, we'll
continue to look for attractive opportunities to add higher-yielding zeros to
the portfolio.
[left margin]
"WE'LL CONTINUE TO LOOK FOR ATTRACTIVE OPPORTUNITIES TO ADD HIGHER-YIELDING
ZEROS TO THE PORTFOLIO."
[pie charts - data below]
PORTFOLIO COMPOSITION BY SECURITY TYPE
As of March 31, 1999
STRIPS 41%
REFCORPs 52%
ETRs 7%
As of September 30, 1998
STRIPS 51%
REFCORPs 43%
ETRs 6%
Security types are defined on pages 54-55.
16 1-800-345-2021
Target: 2010--Schedule of Investments
- --------------------------------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. TREASURY SECURITIES(1)--47.8%
$28,520,000 ETR, 7.11%, 5/15/09 $ 15,662,375
11,500,000 STRIPS--PRINCIPAL, 7.18%,
11/15/09 6,230,051
2,000,000 STRIPS--COUPON, 5.90%,
2/15/10 1,076,778
2,587,000 STRIPS--COUPON, 6.80%,
5/15/10 1,370,487
18,577,000 STRIPS--COUPON, 6.77%,
8/15/10 9,683,415
47,839,000 STRIPS--COUPON, 6.88%,
11/15/10 24,532,341
38,360,000 STRIPS--COUPON, 7.96%,
2/15/11 19,352,678
24,000,000 STRIPS--COUPON, 5.85%,
5/15/11 11,916,673
11,715,000 STRIPS--COUPON, 7.23%,
8/15/11 5,718,299
43,000,000 STRIPS--COUPON, 6.11%,
11/15/11 20,654,113
--------------
TOTAL ZERO-COUPON U.S.
TREASURY SECURITIES 116,197,210
--------------
(Cost $105,044,808)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES(1)--52.2%
$ 2,000,000 REFCORP STRIPS--COUPON,
7.98%, 10/15/09 $ 1,084,246
5,772,000 REFCORP STRIPS--COUPON,
7.85%, 1/15/10 3,077,269
45,728,000 REFCORP STRIPS--COUPON,
6.78%, 4/15/10 23,977,371
89,053,000 REFCORP STRIPS--COUPON,
5.84%, 10/15/10 45,171,504
72,361,000 REFCORP STRIPS--COUPON,
5.67%, 1/15/11 36,103,316
18,850,000 REFCORP STRIPS--COUPON,
7.84%, 4/15/11 9,251,890
7,000,000 REFCORP STRIPS--COUPON,
4.98%, 7/15/11 3,372,897
10,000,000 REFCORP STRIPS--COUPON,
5.46%, 10/15/11 4,744,951
--------------
TOTAL ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES 126,783,444
--------------
(Cost $125,243,286)
TOTAL INVESTMENT SECURITIES--100.0% $242,980,654
==============
(Cost $230,288,094)
NOTES TO SCHEDULE OF INVESTMENTS
ETR = Easy Growth Treasury Receipts
REFCORP = Resolution Funding Corporation
STRIPS = Separate Trading of Registered Interest and Principal of Securities
(1) Rates indicated are the yield to maturity at purchase. These securities are
purchased at a substantial discount from their value at maturity.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the principal amount of each investment
* the market value of each investment
See Notes to Financial Statements
www.americancentury.com 17
Target: 2015--Performance
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF MARCH 31, 1999
INVESTOR CLASS (INCEPTION 9/1/86)
TARGET 11/15/15 MERRILL LYNCH
MATURITIES MATURITY LONG-TERM
TRUST: 2015 STRIPS ISSUE TREASURY INDEX
6 MONTHS(1) -8.78% -8.76% -5.16%
1 YEAR 5.62% 5.82% 7.07%
=====================================================================
AVERAGE ANNUAL RETURNS
=====================================================================
3 YEARS 12.76% 13.18% 9.88%
5 YEARS 12.44% 12.99% 9.71%
10 YEARS 13.52% 13.98% 10.88%
(1) Returns for periods less than one year are not annualized. See pages 53-54
for more information about returns, the comparative index, and the fund's
benchmark.
[mountain chart - data below]
GROWTH OF $10,000 OVER 1O YEARS
Value on 3/31/99
Target: 2015 $35,539
Merrill Lynch Long-Term
Treasury Index $28,093
11/15/15 STRIPS Issue $36,997
Target: Merrill Lynch Long-Term 11/15/15
2015 Treasury Index STRIPS Issue
DATE VALUE VALUE VALUE
3/31/89 $10,000 $10,000 $10,000
3/31/90 $11,457 $11,288 $11,535
3/31/91 $12,899 $12,761 $13,061
3/31/92 $14,602 $14,298 $14,688
3/31/93 $18,196 $17,083 $18,432
3/31/94 $19,773 $17,675 $20,093
3/31/95 $20,438 $18,457 $20,841
3/31/96 $24,789 $21,179 $25,518
3/31/97 $25,210 $21,776 $26,010
3/31/98 $33,648 $26,238 $34,963
3/31/99 $35,539 $28,093 $36,997
$10,000 investment made 3/31/89
The graph at left shows the growth of a $10,000 investment in the fund over 10
years. The Merrill Lynch Long-Term Treasury Index and the fund's benchmark are
provided for comparison. The Target: 2015 portfolio's total return includes
operating expenses (such as transaction costs and management fees) that reduce
returns, while the total returns of the index and the benchmark do not.
[line chart - data below]
SHARE PRICE VS. ANTICIPATED VALUE AT MATURITY
TARGET: 2015
Actual Share Price (Historical) $45.49
Anticipated Value at Maturity
(Estimated Share Price) $112.52
Actual Share Price Anticipated Value at Maturity
(Historical) (Estimated Share Price)
1986 $14.24 $101
$11.37 $102.86
$12.63 $102.75
$16.86 $101.77
1990 $16.29 $102.24
$19.95 $106.05
$21.502 $107.792
$28.064 $106.952
$24.11 $108.832
1995 $36.819 $109.462
$31.962 $110.109
$38.34 $110.52
$49.87 $112.63
$45.49 $112.52
2000
2005
2010
2015
The top line in the graph represents the fund's Anticipated Value at Maturity
(AVM--defined on page 54), which fluctuates from day to day based on the fund's
expected maturity date. The bottom line represents the fund's historical share
price, which is managed to grow over time to reach the fund's AVM. While this
graph demonstrates the fund's expected long-term growth pattern, please keep in
mind that the fund may experience significant share-price volatility over the
short term. Even if fund shares are held to maturity, there is no guarantee that
the fund's share price will reach its AVM. There is also no guarantee that the
AVM will fluctuate as little in the future as it has in the past.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
18 1-800-345-2021
Target: 2015--Q&A
- --------------------------------------------------------------------------------
An interview with Dave Schroeder (pictured on page 6), a portfolio manager
on the Target Maturities Trust investment team.
HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 1999?
Reflecting the overall rise in interest rates, Target: 2015 posted negative
returns. For the six months ended March 31, 1999, Target: 2015 fell 8.78%,
compared with the 8.76% loss of the fund's benchmark, a STRIPS issue maturing on
November 15, 2015. (See the previous page for other fund performance
comparisons.)
Please keep in mind that Target: 2015, unlike its benchmark, is subject to
transaction costs and management fees. To keep the fund's after-expense returns
as close as possible to those of the benchmark, we attempt to enhance
performance through conservative adjustments to the portfolio's weighted average
maturity date and by shifting its mix of zero-coupon bonds (zeros).
SPEAKING OF PORTFOLIO ADJUSTMENTS, WHAT CHANGES DID YOU MAKE?
To minimize Target: 2015's transaction costs and turnover rate, we
continued to use cash inflows and outflows as opportunities to adjust the
portfolio's composition and its weighted average maturity date. The fund
received nearly $60 million in new investments during the six months and while
we were able to find some attractive REFCORPs for the portfolio, most of the new
capital was put to work in STRIPS.
As a result, the portfolio's STRIPS position increased from 50% of assets
to 63%, while the amount of REFCORPs fell from 50% to 37%. (See the charts on
page 20.)
WHY DID YOU ADD MORE STRIPS THAN OTHER TYPES OF ZEROS?
Mainly because STRIPS are far more readily available than REFCORPs, which
are the only other types of zeros available in the fund's area of the maturity
spectrum. Although we pick up higher-yielding REFCORPs when possible, we often
have to rely on buying STRIPS to keep the fund fully invested.
WHAT IMPACT DID THESE CHANGES HAVE ON TARGET: 2015'S WEIGHTED AVERAGE MATURITY
DATE?
The changes had very little impact. Nearly all of the STRIPS that we
purchased mature in November 2015. Because the average maturities of those zeros
were very comparable to the other ones in the portfolio, Target: 2015's average
maturity date extended only six days to November 19, 2015, by the end of March
and resulted in little change to the fund's anticipated value at maturity.
GOING FORWARD, WHAT'S YOUR OUTLOOK FOR THE TREASURY MARKET?
Many of the trends that caused Treasury prices to rise at the end of 1998
disappeared during the first quarter of 1999. On the international front, Asian
and Latin American economies seem to have recovered somewhat from last year's
crises. With global markets
[right margin]
"THE FUND RECEIVED NEARLY $60 MILLION IN NEW INVESTMENTS DURING THE SIX
MONTHS. . ."
PORTFOLIO AT A GLANCE
3/31/99 9/30/98
NUMBER OF SECURITIES 13 12
ANTICIPATED GROWTH
RATE 5.52% 4.81%
WEIGHTED AVERAGE
MATURITY DATE 11/19/15 11/13/15
ANTICIPATED VALUE AT
MATURITY (AVM)(1) $112.52 $112.63
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.59%(2) 0.59%
Past performance is no guarantee of future results. Even if fund shares are held
to maturity, there is no guarantee that the fund's share price will reach its
AVM. There is also no guarantee that the AVM will fluctuate as little in the
future as it has in the past. For more information, please consult the
prospectus.
(1) See graph on page 18.
(2) Annualized.
Investment terms are defined in the Glossary on pages 54-55.
www.americancentury.com 19
Target: 2015--Q&A
- --------------------------------------------------------------------------------
(Continued)
looking less grim, "flight-to-quality" demand for Treasurys has decreased.
Domestically, economic growth remains surprisingly robust--during the first
quarter of 1999, the economy expanded at a 4.5% annual pace.
However, some positive influences remain in place. Inflation is still a
non-issue--prices rose a mere 1.7% for the twelve months ended March 31 (as
measured by the government's consumer price index). As such, we believe there's
little incentive for the Fed to raise interest rates in the near future.
The first federal budget surplus in 30 years is also having a positive
impact on Treasury prices by reducing the amount of new Treasury bond issuance.
Last year the Treasury Department discontinued quarterly auctions of three-year
Treasury notes and began auctioning five-year Treasury notes quarterly, rather
than monthly. A 30-year bond auction was also eliminated.
We wouldn't be surprised if that trend continued. There's been some
discussion about the Treasury Department reducing two-year note auctions from
monthly to only eight times a year. In addition, the elimination of one of the
Treasury's 30-year bond auctions--which would reduce the number to only two a
year--is also a possibility.
WITH THAT OUTLOOK IN MIND, WHAT ARE YOUR PLANS FOR THE PORTFOLIO?
We will continue to focus our efforts to try to meet or beat Target: 2015's
anticipated value at maturity. In an effort to accomplish that goal, we will
continue to manage Target: 2015 to deliver a pure play on zero-coupon bonds in
an effort to provide shareholders the total return and interest rate sensitivity
of a zero maturing on November 15, 2015. To help keep a lid on turnover and
transaction costs, we will continue to use cash inflows and outflows as
opportunities to adjust the portfolio's composition and weighted average
maturity.
[left margin]
"WE WILL CONTINUE TO FOCUS OUR EFFORTS TO TRY TO MEET OR BEAT TARGET: 2015'S
ANTICIPATED VALUE AT MATURITY. "
[pie charts - data below]
PORTFOLIO COMPOSITION BY SECURITY TYPE
As of March 31, 1999
STRIPS 63%
REFCORPs 37%
As of September 30, 1998
STRIPS 50%
REFCORPs 50%
Security types are defined on pages 54-55.
20 1-800-345-2021
Target: 2015 --Schedule of Investments
- --------------------------------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. TREASURY SECURITIES(1) --63.0%
$ 4,350,000 STRIPS--COUPON, 9.22%,
2/15/15 $ 1,684,765
39,408,000 STRIPS--COUPON, 9.14%,
5/15/15 15,028,480
35,050,000 STRIPS--COUPON, 9.17%,
8/15/15 13,144,028
247,808,000 STRIPS--COUPON, 6.31%,
11/15/15 91,423,970
36,300,000 STRIPS--COUPON, 8.38%,
2/15/16 13,189,549
17,700,000 STRIPS--COUPON, 8.39%,
5/15/16 6,337,108
11,000,000 STRIPS--COUPON, 5.60%,
8/15/16 3,875,457
--------------
TOTAL ZERO-COUPON U.S.
TREASURY SECURITIES 144,683,357
--------------
(Cost $125,597,546)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES(1) --37.0%
$ 2,001,000 REFCORP STRIPS--COUPON,
6.13%, 1/15/15 $ 762,438
54,640,000 REFCORP STRIPS--COUPON,
7.51%, 4/15/15 20,489,810
43,121,000 REFCORP STRIPS--COUPON,
7.71%, 7/15/15 15,898,191
50,365,000 REFCORP STRIPS--COUPON,
8.29%, 10/15/15 18,259,259
28,591,000 REFCORP STRIPS--COUPON,
8.21%, 7/15/16 9,889,955
57,500,000 REFCORP STRIPS--COUPON,
6.82%, 10/15/16 19,572,210
--------------
TOTAL ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES 84,871,863
--------------
(Cost $69,106,537)
TOTAL INVESTMENT SECURITIES--100.0% $229,555,220
==============
(Cost $194,704,083)
NOTES TO SCHEDULE OF INVESTMENTS
REFCORP = Resolution Funding Corporation
STRIPS = Separate Trading of Registered Interest and Principal of Securities
(1) Rates indicated are the yield to maturity at purchase. These securities are
purchased at a substantial discount from their value at maturity.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the principal amount of each investment
* the market value of each investment
See Notes to Financial Statements
www.americancentury.com 21
Target: 2020--Performance
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF MARCH 31, 1999
<TABLE>
INVESTOR CLASS (INCEPTION 12/29/89) ADVISOR CLASS (INCEPTION 10/19/98)
TARGET MERRILL LYNCH TARGET 11/15/20 MERRILL LYNCH
MATURITIES FUND LONG-TERM MATURITIES MATURITY LONG-TERM
TRUST: 2020 BENCHMARK(2) TREASURY INDEX TRUST: 2020 STRIPS ISSUE TREASURY INDEX
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) -10.69% -10.68% -5.16% -- -- --
1 YEAR 5.36% 5.85% 7.07% -- -- --
========================================================================================================================
AVERAGE ANNUAL RETURNS
========================================================================================================================
3 YEARS 14.66% 15.24% 9.88% -- -- --
5 YEARS 13.64% 14.24% 9.71% -- -- --
LIFE OF FUND 11.55% 11.16% 9.86% -7.10% -6.70%(3) -3.64%(3)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) From December 1989 through April 1990, the fund's benchmark was an 8/15/19
STRIPS issue; from May 1990 through October 1991, it was an 11/15/19 STRIPS
issue; and from November 1991 to the present, it has been an 11/15/20
STRIPS issue.
(3) Since 10/31/98, the date nearest the class's inception for which data are
available.
See pages 52-54 for more information about share classes, returns, the
comparative index, and the fund's benchmark.
[mountain chart - data below]
GROWTH OF $10,000 OVER LIFE OF FUND
Value on 3/31/99
Target: 2020 $27,500
Merrill Lynch Long-Term
Treasury Index $23,872
Fund Benchmark $26,599
Target: Merrill Lynch Long-Term Fund
2020 Treasury Index Benchmark
DATE VALUE VALUE VALUE
12/29/89 $10,000 $10,000 $10,000
3/31/90 $8,658 $9,592 $8,407
6/30/90 $9,258 $10,005 $8,818
9/30/90 $8,025 $9,794 $7,976
12/31/90 $9,550 $10,645 $9,080
3/31/91 $9,717 $10,843 $9,257
6/30/91 $9,208 $10,900 $8,774
9/30/91 $10,450 $11,802 $10,012
12/31/91 $11,208 $12,608 $10,623
3/31/92 $10,592 $12,151 $9,970
6/30/92 $10,842 $12,654 $10,226
9/30/92 $11,359 $13,486 $10,690
12/31/92 $12,143 $13,612 $11,474
3/31/93 $13,360 $14,518 $12,631
6/30/93 $14,693 $15,295 $13,854
9/30/93 $17,269 $16,225 $16,421
12/31/93 $16,469 $15,956 $15,625
3/31/94 $14,511 $15,021 $13,672
6/30/94 $13,378 $14,587 $12,613
9/30/94 $12,735 $14,501 $11,974
12/31/94 $13,561 $14,767 $12,775
3/31/95 $14,769 $15,683 $13,925
6/30/95 $17,935 $17,402 $17,009
9/30/95 $18,726 $17,816 $17,816
12/31/95 $21,876 $19,298 $20,861
3/31/96 $18,243 $17,998 $17,378
6/30/96 $18,135 $17,969 $17,361
9/30/96 $18,334 $18,236 $17,558
12/31/96 $20,034 $19,106 $19,111
3/31/97 $18,425 $18,504 $17,620
6/30/97 $20,268 $19,519 $19,504
9/30/97 $22,643 $20,635 $21,752
12/31/97 $25,768 $21,960 $24,758
3/31/98 $26,100 $22,296 $25,127
6/30/98 $28,342 $23,319 $27,225
9/30/98 $30,791 $25,171 $29,781
12/31/98 $30,015 $24,934 $29,114
3/31/99 $27,500 $23,872 $26,599
$10,000 investment made 12/31/89
The graph at left shows the growth of a $10,000 investment over the life of the
fund. The Merrill Lynch Long-Term Treasury Index and the fund's benchmark are
provided for comparison. The Target: 2020 portfolio's total return includes
operating expenses (such as transaction costs and management fees) that reduce
returns, while the total returns of the index and the benchmark do not.
[line chart - data below]
SHARE PRICE VS. ANTICIPATED VALUE AT MATURITY
TARGET: 2020
Actual Share Price (Historical) $33.00
Anticipated Value at Maturity
(Estimated Share Price) $106.76
Actual Share Price Anticipated Value at Maturity
(Historical) (Estimated Share Price)
1990 $11.46 $92.6
$13.45 $97.77
$14.575 $102.184
$19.765 $101.274
$16.273 $102.175
1995 $26.245 $102.54
$22 $103.598
$27.17 $104.84
$36.95 $106.96
$33.00 $106.76
2000
2005
2010
2015
2020
The top line in the graph represents the fund's Anticipated Value at Maturity
(AVM--defined on page 54), which fluctuates from day to day based on the fund's
expected maturity date. The bottom line represents the fund's historical share
price, which is managed to grow over time to reach the fund's AVM. While this
graph demonstrates the fund's expected long-term growth pattern, please keep in
mind that the fund may experience significant share-price volatility over the
short term. Even if fund shares are held to maturity, there is no guarantee that
the fund's share price will reach its AVM. There is also no guarantee that the
AVM will fluctuate as little in the future as it has in the past.
Both graphs are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see the Total Returns
table above). Past performance is no guarantee of future results. Investment
return and principal value will fluctuate, and redemption value may be more or
less than original cost.
22 1-800-345-2021
Target: 2020--Q&A
- --------------------------------------------------------------------------------
An interview with Dave Schroeder (pictured on page 6), a portfolio manager
on the Target Maturities Trust investment team.
HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 1999?
Reflecting the overall rise in interest rates, Target: 2020 posted negative
returns. For the six months ended March 31, 1999, Target: 2020's Investor Class
shares fell 10.69%,* compared with the 10.68% loss of the fund's benchmark, a
STRIPS issue maturing on November 15, 2020. (See the previous page for other
fund performance comparisons.)
Please keep in mind that Target: 2020, unlike its benchmark, is subject to
transaction costs and management fees. To keep the fund's after-expense returns
as close as possible to those of the benchmark, we attempt to enhance
performance through conservative adjustments to the portfolio's weighted average
maturity and by shifting its mix of zero-coupon bonds (zeros).
SPEAKING OF ADJUSTMENTS TO THE PORTFOLIO, WHAT CHANGES DID YOU MAKE?
To minimize Target: 2020's transaction costs and turnover rate, we
continued to use cash inflows and outflows as opportunities to adjust the
portfolio's composition and its weighted average maturity date. To meet the
roughly $100 million in outflows that the fund experienced, we sold STRIPS and
REFCORPs. Because we sold both types of zeros, the fund's asset mix changed very
little.
The REFCORPs that we sold were primarily principal zeros--that is, they are
the actual principal payment of a REFCORP bond, traded as a separate security.
The price of the REFCORP principal zeros that we sold had fallen less than
coupon REFCORPs--zeros that are created from the underlying bond's coupon
payments--so the fund's returns were enhanced.
WHAT IMPACT DID THESE CHANGES HAVE ON TARGET: 2020'S WEIGHTED AVERAGE MATURITY
DATE?
They caused it to move forward roughly 14 days to August 22, 2020. Many of
the REFCORPs that we sold mature in October 2020, which is toward the longer end
of the fund's investment maturity spectrum. So selling them resulted in a
shorter average maturity date for the portfolio and about a twenty-cent decrease
in Target: 2020's anticipated value at maturity.
Overall, however, we generally kept the fund's average maturity fairly
close to that of its benchmark. By using such a conservative approach, we are
better able to ensure that Target: 2020's long-term performance closely tracks
that of the November 15, 2020 STRIPS.
GOING FORWARD, WHAT'S YOUR OUTLOOK FOR THE TREASURY MARKET?
Many of the trends that caused Treasury prices to rise at the end of 1998
disappeared during the first quarter of 1999. On the international front, Asian
and Latin American economies seem to have recovered somewhat from last year's
crises. With global markets
* All fund returns referenced in this interview are for Investor Class shares.
[right margin]
"THE PRICE OF THE REFCORP PRINCIPAL ZEROS THAT WE SOLD HAD FALLEN LESS THAN
COUPON REFCORPS--ZEROS THAT ARE CREATED FROM THE UNDERLYING BOND'S COUPON
PAYMENTS--SO THE FUND'S RETURNS WERE ENHANCED."
PORTFOLIO AT A GLANCE
3/31/99 9/30/98
NUMBER OF SECURITIES 14 15
ANTICIPATED GROWTH
RATE 5.56% 4.90%
WEIGHTED AVERAGE
MATURITY DATE 8/22/20 9/05/20
ANTICIPATED VALUE AT
MATURITY (AVM)(1) $106.76 $106.96
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.59%(2) 0.59%
Past performance is no guarantee of future results. Even if fund shares are held
to maturity, there is no guarantee that the fund's share price will reach its
AVM. There is also no guarantee that the AVM will fluctuate as little in the
future as it has in the past. For more information, please consult the
prospectus.
(1) See graph on page 22.
(2) Annualized.
Investment terms are defined in the Glossary on pages 54-55.
www.americancentury.com 23
Target: 2020--Q&A
- --------------------------------------------------------------------------------
(Continued)
looking less grim, "flight-to-quality" demand for Treasurys has decreased.
Domestically, economic growth remains surprisingly robust--during the first
quarter of 1999, the economy expanded at a 4.5% annual pace.
However, some positive influences remain in place. Inflation is still a
non-issue--prices rose a mere 1.7% for the twelve months ended March 31 (as
measured by the government's consumer price index). As such, we believe there's
little incentive for the Fed to raise interest rates in the near future.
The first federal budget surplus in 30 years is also having a positive
impact on Treasury prices by reducing the amount of new Treasury bond issuance.
Last year the Treasury Department discontinued quarterly auctions of three-year
Treasury notes and began auctioning five-year Treasury notes quarterly, rather
than monthly. A 30-year bond auction was also eliminated.
We wouldn't be surprised if that trend continued. There's been some
discussion about the Treasury Department reducing two-year note auctions from
monthly to only eight times a year. In addition, the elimination of one of the
Treasury's 30-year bond auctions--which would reduce the number to only two a
year--is also a possibility.
WITH THAT OUTLOOK IN MIND, WHAT ARE YOUR PLANS FOR THE PORTFOLIO?
Although there's no assurance that Target: 2020 will reach its anticipated
value at maturity, we will continue to focus our efforts to try to meet or beat
that value. In an effort to accomplish that goal, we will continue to manage
Target: 2020 to deliver a pure play on zero-coupon bonds in an effort to provide
shareholders the total return and interest rate sensitivity of a zero maturing
on November 15, 2020.
In addition, we'll continue to look for attractive opportunities to add
REFCORPs to the portfolio. We will also use cash inflows and outflows as
opportunities to adjust the portfolio's composition and weighted average
maturity. That should help keep turnover and transaction costs to a minimum.
[left margin]
"WE'LL CONTINUE TO LOOK FOR ATTRACTIVE OPPORTUNITIES TO ADD REFCORPS TO THE
PORTFOLIO."
[pie charts - data below]
PORTFOLIO COMPOSITION BY SECURITY TYPE
As of March 31, 1999
REFCORPs 52%
STRIPS 48%
As of September 30, 1998
REFCORPs 54%
STRIPS 46%
Security types are defined on pages 54-55.
24 1-800-345-2021
Target: 2020--Schedule of Investments
- --------------------------------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. TREASURY SECURITIES(1)--47.7%
$177,000,000 STRIPS--COUPON, 8.10%,
2/15/20 $ 50,336,356
76,688,000 STRIPS--COUPON, 7.99%,
5/15/20 21,488,421
142,135,000 STRIPS--COUPON, 7.67%,
8/15/20(2) 39,222,019
147,407,000 STRIPS--COUPON, 7.85%,
11/15/20(2) 40,078,883
52,750,000 STRIPS--COUPON, 7.02%,
2/15/21 14,154,471
13,500,000 STRIPS--COUPON, 7.49%,
5/15/21 3,565,478
14,500,000 STRIPS--COUPON, 7.40%,
11/15/21 3,744,726
--------------
TOTAL ZERO-COUPON U.S.
TREASURY SECURITIES 172,590,354
--------------
(Cost $122,669,076)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES(1)--52.3%
$ 79,274,000 REFCORP STRIPS--COUPON,
7.87%, 1/15/20 $ 21,985,812
29,156,000 REFCORP STRIPS--COUPON,
5.92%, 4/15/20 7,963,145
58,656,000 REFCORP STRIPS--COUPON,
7.58%, 7/15/20 15,773,521
210,231,000 REFCORP STRIPS--PRINCIPAL,
8.43%, 7/15/20 56,826,959
23,678,000 REFCORP STRIPS--COUPON,
6.60%, 10/15/20 6,270,557
25,482,000 REFCORP STRIPS--COUPON,
7.98%, 1/15/21 6,658,429
279,945,000 REFCORP STRIPS--PRINCIPAL,
7.34%, 1/15/21 73,536,878
--------------
TOTAL ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES 189,015,301
--------------
(Cost $142,425,274)
TOTAL INVESTMENT SECURITIES--100.0% $361,605,655
==============
(Cost $265,094,350)
NOTES TO SCHEDULE OF INVESTMENTS
REFCORP = Resolution Funding Corporation
STRIPS = Separate Trading of Registered Interest and Principal of Securities
(1) Rates indicated are the yield to maturity at purchase. These securities are
purchased at a substantial discount from their value at maturity.
(2) Security position, or a portion thereof, has been loaned. (See Note 5 in
the Notes to Financial Statements).
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the principal amount of each investment
* the market value of each investment
See Notes to Financial Statements
www.americancentury.com 25
Target: 2025--Performance
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF MARCH 31, 1999
<TABLE>
INVESTOR CLASS (INCEPTION 2/15/96) ADVISOR CLASS (INCEPTION 6/1/98)
TARGET MERRILL LYNCH TARGET 11/15/25 MERRILL LYNCH
MATURITIES FUND LONG-TERM MATURITIES MATURITY LONG-TERM
TRUST: 2025 BENCHMARK(2) TREASURY INDEX TRUST: 2025 STRIPS ISSUE TREASURY INDEX
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) -11.27% -11.11% -5.16% -11.38% -11.11% -5.16%
1 YEAR 8.33% 8.60% 7.07% -- -- --
=========================================================================================================================
AVERAGE ANNUAL RETURNS
=========================================================================================================================
3 YEARS 15.77% 14.62% 9.88% -- -- --
LIFE OF FUND 11.78% 9.94% 8.92%(3) 2.82% 4.70% 4.74%
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) The fund's benchmark was an 8/15/25 STRIPS issue from inception through
January 1998, when the benchmark was changed to an 11/15/25 STRIPS issue.
(3) Since 2/29/96, the date nearest the class's inception for which data are
available.
See pages 52-54 for more information about share classes, returns, the
comparative index, and the fund's benchmark.
[mountain chart - data below]
GROWTH OF $10,000 OVER LIFE OF FUND
Value on 3/31/99
Target: 2025 $14,836
Merrill Lynch Long-Term
Treasury Index $13,012
Fund Benchmark $14,506
Target: Merrill Lynch Long-Term Fund
2025 Treasury Index Benchmark
2/29/96 $10,000 $10,000 $10,000
3/31/96 $9,562 $9,810 $9,632
4/30/96 $9,177 $9,646 $8,975
5/31/96 $9,166 $9,599 $9,028
6/30/96 $9,414 $9,794 $9,361
7/31/96 $9,398 $9,794 $9,288
8/31/96 $8,938 $9,675 $8,808
9/30/96 $9,456 $9,940 $9,343
10/31/96 $10,269 $10,328 $10,159
11/30/96 $11,046 $10,667 $10,856
12/31/96 $10,364 $10,415 $10,158
1/31/97 $9,947 $10,347 $9,721
2/28/97 $9,879 $10,332 $9,612
3/31/97 $9,309 $10,086 $9,077
4/30/97 $9,842 $10,332 $9,512
5/31/97 $10,016 $10,442 $9,672
6/30/97 $10,444 $10,639 $10,133
7/31/97 $12,013 $11,254 $11,673
8/31/97 $11,067 $10,940 $10,733
9/30/97 $11,759 $11,248 $11,358
10/31/97 $12,593 $11,618 $12,216
11/30/97 $13,015 $11,770 $12,714
12/31/97 $13,484 $11,969 $13,127
1/31/98 $13,881 $12,206 $13,554
2/28/98 $13,632 $12,121 $13,254
3/31/98 $13,695 $12,151 $13,356
4/30/98 $13,632 $12,186 $13,314
5/31/98 $14,281 $12,423 $13,854
6/30/98 $15,084 $12,709 $14,642
7/31/98 $14,777 $12,657 $14,404
8/31/98 $16,097 $13,233 $15,795
9/30/98 $16,720 $13,719 $16,320
10/31/98 $16,255 $13,502 $15,980
11/30/98 $16,619 $13,620 $16,306
12/31/98 $16,423 $13,591 $16,103
1/31/99 $16,750 $13,712 $16,497
2/28/99 $15,040 $13,020 $14,737
3/31/99 $14,836 $13,012 $14,506
$10,000 investment made 2/29/96
The graph at left shows the growth of a $10,000 investment over the life of the
fund.* The Merrill Lynch Long-Term Treasury Index and the fund's benchmark are
provided for comparison. The Target: 2025 portfolio's total return includes
operating expenses (such as transaction costs and management fees) that reduce
returns, while the total returns of the index and the benchmark do not.
* 2/29/96 is the date nearest the fund's inception for which index data are
available.
[line chart - data below]
SHARE PRICE VS. ANTICIPATED VALUE AT MATURITY
TARGET: 2025
Actual Share Price (Historical) $28.10
Anticipated Value at Maturity
(Estimated Share Price) $111.41
Actual Share Price Anticipated Value at Maturity
(Historical) (Estimated Share Price)
1996 $17.91 $109.24
$22.27 $110.88
$31.67 $112.23
$28.10 $111.41
2000
2005
2010
2015
2020
2025
The top line in the graph represents the fund's Anticipated Value at Maturity
(AVM--defined on page 54), which fluctuates from day to day based on the fund's
expected maturity date. The bottom line represents the fund's historical share
price, which is managed to grow over time to reach the fund's AVM. While this
graph demonstrates the fund's expected long-term growth pattern, please keep in
mind that the fund may experience significant share-price volatility over the
short term. Even if fund shares are held to maturity, there is no guarantee that
the fund's share price will reach its AVM. There is also no guarantee that the
AVM will fluctuate as little in the future as it has in the past.
Both graphs are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see the Total Returns
table above). Past performance is no guarantee of future results. Investment
return and principal value will fluctuate, and redemption value may be more or
less than original cost.
26 1-800-345-2021
Target: 2025--Q&A
- --------------------------------------------------------------------------------
An interview with Dave Schroeder (pictured on page 6), a portfolio manager
on the Target Maturities Trust investment team.
HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 1999?
Reflecting the overall rise in interest rates, Target: 2025 posted negative
returns. For the six months ended March 31, 1999, Target: 2025 fell 11.27%,*
compared with the 11.11% loss of the fund's benchmark, a STRIPS issue maturing
on November 15, 2025. (See the previous page for other fund performance
comparisons.)
Please keep in mind that Target: 2025, unlike its benchmark, is subject to
transaction costs and management fees. To keep the fund's after-expense returns
as close as possible to those of the benchmark, we attempt to enhance
performance through conservative changes to the portfolio's weighted average
maturity date and by adjusting its mix of zero-coupon bonds (zeros).
SPEAKING OF PORTFOLIO ADJUSTMENTS, WHAT CHANGES DID YOU MAKE?
To minimize Target: 2025's transaction costs and turnover rate, we
continued to use cash inflows and outflows as opportunities to adjust the
portfolio's composition and the weighted average maturity date of the fund. The
fund received roughly $100 million in new investments during the six months, and
nearly all of the capital was put to work in STRIPS.
As a result, the portfolio's STRIPS position increased from 67% of assets
to 76%, while the amount of REFCORPs fell from 33% to only 24%. (See the charts
on page 28.)
WHY DID YOU ADD STRIPS TO THE PORTFOLIO RATHER THAN REFCORPS?
Mainly because STRIPS are far more readily available than REFCORPs, which
are the only other types of zeros available in the fund's area of the maturity
spectrum. So while we add higher-yielding REFCORPs when possible, we often have
to rely on buying STRIPS with the cash inflows to keep the fund fully invested.
WHAT IMPACT DID THE ADDITION OF THOSE STRIPS HAVE ON TARGET: 2025'S WEIGHTED
AVERAGE MATURITY DATE?
Target: 2025's average maturity date fell from May 30, 2025, six months ago
to May 1, 2025, by the end of March. The STRIPS that we purchased mature in late
2024 and early 2025, which makes them slightly shorter than some of the other
ones in the portfolio. So adding them resulted in a shorter average maturity
date for the portfolio and around an eighty-cent drop in Target: 2025's
anticipated value at maturity.
In general, we've kept Target: 2025's weighted average maturity shorter
than that of its benchmark for two reasons: (1) the expected return for zeros
maturing in late 2024 and early 2025 has been more attractive than
later-maturity ones, and (2) zeros maturing in late 2024 and early 2025 are more
readily available.
* All fund returns referenced in this interview are for Investor Class shares.
[right margin]
"THE FUND RECEIVED ROUGHLY $100 MILLION IN NEW INVESTMENTS DURING THE SIX
MONTHS, AND NEARLY ALL OF THE CAPITAL WAS PUT TO WORK IN STRIPS."
PORTFOLIO AT A GLANCE
3/31/99 9/30/98
NUMBER OF SECURITIES 20 20
ANTICIPATED GROWTH
RATE 5.35% 4.80%
WEIGHTED AVERAGE
MATURITY DATE 5/1/25 5/30/25
ANTICIPATED VALUE AT
MATURITY (AVM)(1) $111.41 $112.23
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.59%(2) 0.59%
Past performance is no guarantee of future results. Even if fund shares are held
to maturity, there is no guarantee that the fund's share price will reach its
AVM. There is also no guarantee that the AVM will fluctuate as little in the
future as it has in the past. For more information, please consult the
prospectus.
(1) See graph on page 26.
(2) Annualized.
Investment terms are defined in the Glossary on pages 54-55.
www.americancentury.com 27
Target: 2025--Q&A
- --------------------------------------------------------------------------------
(Continued)
GOING FORWARD, WHAT'S YOUR OUTLOOK FOR THE TREASURY MARKET?
Many of the trends that caused Treasury prices to rise at the end of 1998
disappeared during the first quarter of 1999. On the international front, Asian
and Latin American economies seem to have recovered somewhat from last year's
crises. With global markets looking less grim, "flight-to-quality" demand for
Treasurys has decreased. Domestically, economic growth remains surprisingly
robust--during the first quarter of 1999, the economy expanded at a 4.5% annual
pace.
However, some positive influences remain in place. Inflation is still a
non-issue--prices rose a mere 1.7% for the twelve months ended March 31 (as
measured by the government's consumer price index). As such, we believe there's
little incentive for the Fed to raise interest rates in the near future.
The first federal budget surplus in 30 years is also having a positive
impact on Treasury prices by reducing the amount of new Treasury bond issuance.
Last year the Treasury Department discontinued quarterly auctions of three-year
Treasury notes and began auctioning five-year Treasury notes quarterly, rather
than monthly. A 30-year bond auction was also eliminated.
We wouldn't be surprised if that trend continued. There's been some
discussion about the Treasury Department reducing two-year note auctions from
monthly to only eight times a year. In addition, the elimination of one of the
Treasury's 30-year bond auctions--which would reduce the number to only two a
year--is also a possibility.
WITH THAT OUTLOOK IN MIND, WHAT ARE YOUR PLANS FOR THE PORTFOLIO?
We will continue to focus our efforts to try to meet or beat Target: 2025's
anticipated value at maturity. In an effort to accomplish that goal, we will
continue to manage Target: 2025 to deliver a pure play on zero-coupon bonds in
an effort to provide shareholders the total return and interest rate sensitivity
of a zero maturing on November 15, 2025.
To help keep a lid on turnover and transaction costs, we will continue to
use cash inflows and outflows as opportunities to adjust the portfolio's
composition and weighted average maturity. In addition, we'll continue to look
for attractive opportunities to add REFCORPs to the portfolio.
[left margin]
"THE FIRST FEDERAL BUDGET SURPLUS IN 30 YEARS IS ALSO HAVING A POSITIVE IMPACT
ON TREASURY PRICES BY REDUCING THE AMOUNT OF NEW TREASURY BOND ISSUANCE."
[pie charts - data below]
PORTFOLIO COMPOSITION BY SECURITY TYPE
As of March 31, 1999
STRIPS 76%
REFCORPs 24%
As of September 30, 1998
STRIPS 67%
REFCORPs 33%
Security types are defined on pages 54-55.
28 1-800-345-2021
Target: 2025 --Schedule of Investments
- --------------------------------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
ZERO-COUPON U.S. TREASURY SECURITIES(1)--76.2%
$122,000,000 STRIPS--COUPON, 5.72%,
11/15/24 $ 27,194,637
107,500,000 STRIPS--PRINCIPAL, 6.11%,
11/15/24 24,082,038
337,900,000 STRIPS--COUPON, 6.07%,
2/15/25 74,207,121
512,300,000 STRIPS--PRINCIPAL, 6.05%,
2/15/25 113,074,455
108,000,000 STRIPS--COUPON, 5.81%,
5/15/25 23,408,673
172,000,000 STRIPS--COUPON, 5.73%,
8/15/25 36,777,061
106,600,000 STRIPS--PRINCIPAL, 5.90%,
8/15/25 22,910,303
40,000,000 STRIPS--COUPON, 5.81%,
11/15/25 8,441,608
--------------
TOTAL ZERO-COUPON U.S.
TREASURY SECURITIES 330,095,896
--------------
(Cost $329,394,684)
ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES(1)--23.8%
10,000,000 REFCORP STRIPS--COUPON,
6.19%, 1/15/24 2,249,232
12,000,000 REFCORP STRIPS--COUPON,
6.50%, 4/15/24 2,662,258
Principal Amount Value
- --------------------------------------------------------------------------------
$ 3,926,000 REFCORP STRIPS--COUPON,
7.10%, 7/15/24 $ 858,976
72,083,000 REFCORP STRIPS--COUPON,
6.83%, 10/15/24 15,556,773
41,645,000 REFCORP STRIPS--COUPON,
6.93%, 1/15/25 8,852,975
38,399,000 REFCORP STRIPS--COUPON,
6.68%, 4/15/25 8,052,261
14,500,000 REFCORP STRIPS--COUPON,
6.55%, 7/15/25 2,998,920
95,167,000 REFCORP STRIPS--COUPON,
6.79%, 10/15/25 19,416,720
45,000,000 REFCORP STRIPS--COUPON,
6.81%, 1/15/26 9,043,939
53,000,000 REFCORP STRIPS--COUPON,
6.51%, 4/15/26 10,494,446
36,000,000 REFCORP STRIPS--COUPON,
7.29%, 7/15/26 7,030,997
81,249,000 REFCORP STRIPS--COUPON,
6.98%, 10/15/26 15,655,126
--------------
TOTAL ZERO-COUPON U.S. GOVERNMENT
AGENCY SECURITIES 102,872,623
--------------
(Cost $85,873,599)
TOTAL INVESTMENT SECURITIES--100.0% $432,968,519
==============
(Cost $415,268,283)
NOTES TO SCHEDULE OF INVESTMENTS
REFCORP = Resolution Funding Corporation
STRIPS = Separate Trading of Registered Interest and Principal of Securities
(1) Rates indicated are the yield to maturity at purchase. These securities are
purchased at a substantial discount from their value at maturity.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the principal amount of each investment
* the market value of each investment
See Notes to Financial Statements
www.americancentury.com 29
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
2000 2005 2010
ASSETS
<S> <C> <C> <C>
Investment securities, at value
(identified cost of $210,408,558,
$543,108,073 and $230,288,094,
respectively) (Note 3) ............... $214,005,442 $556,171,838 $242,980,654
Cash ................................... 2,286 1,291,668 464,441
Investment in affiliated money
market fund (Note 2) ................. 50,959 405,582 294,277
Securities lending fee receivable ...... -- -- --
------------ ------------ ------------
214,058,687 557,869,088 243,739,372
------------ ------------ ------------
LIABILITIES
Disbursements in excess of
demand deposit cash .................. 330,141 -- --
Payable for investments purchased ...... -- -- --
Payable for capital shares redeemed .... 128,311 434,119 113,909
Accrued management fees (Note 2) ....... 106,236 276,040 121,072
Distribution and service fees
payable (Note 2) ..................... 261 329 235
Payable for trustees' fees and
expenses ............................. 675 1,751 770
------------ ------------ ------------
565,624 712,239 235,986
------------ ------------ ------------
Net Assets ............................. $213,493,063 $557,156,849 $243,503,386
============ ============ ============
NET ASSETS CONSIST OF:
Capital paid in ........................ $206,858,774 $526,902,473 $226,186,360
Undistributed net investment income .... 2,857,653 6,672,182 3,129,184
Accumulated undistributed net
realized gain on investment
transactions ......................... 179,752 10,518,429 1,495,282
Net unrealized appreciation on
investments (Note 3) ................. 3,596,884 13,063,765 12,692,560
------------ ------------ ------------
$213,493,063 $557,156,849 $243,503,386
============ ============ ============
Investor Class
Net assets ............................. $212,819,009 $556,262,433 $242,944,804
Shares outstanding ..................... 2,250,045 7,542,630 4,230,261
Net asset value per share .............. $ 94.58 $ 73.75 $ 57.43
Advisor Class
Net assets ............................. $ 674,054 $ 894,416 $ 558,582
Shares outstanding ..................... 7,137 12,150 9,737
Net asset value per share .............. $ 94.45 $ 73.61 $ 57.37
</TABLE>
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF ASSETS AND LIABILITIES--This statement details
what the fund owns (assets), what it owes (liabilities), and its net assets as
of the last day of the period. If you subtract what the fund owes from what it
owns, you get the fund's net assets. For each class of shares, the net assets
divided by the total number of shares outstanding gives you the price of an
individual share, or the net asset value per share.
NET ASSETS are also broken down by capital (money invested by shareholders); net
investment income not yet paid to shareholders; net gains earned on investments
but not yet paid to shareholders or net losses on investments (known as realized
gains or losses); and finally, gains or losses on securities still owned by the
fund (known as unrealized appreciation or depreciation). This breakdown tells
you the value of net assets that are performance-related, such as investment
gains or losses, and the value of net assets that are not related to
performance, such as shareholder investments and redemptions.
See Notes to Financial Statements
30 1-800-345-2021
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
(Continued)
MARCH 31, 1999 (UNAUDITED)
2015 2020 2025
ASSETS
<S> <C> <C> <C>
Investment securities, at value
(identified cost of $194,704,083,
$265,094,350 and $415,268,283,
respectively) (Note 3) ............... $229,555,220 $361,605,655 $432,968,519
Cash ................................... 488,395 1,650,834 19,673,663
Investment in affiliated money
market fund (Note 2) ................. 128,589 194,789 1,635,312
Securities lending fee receivable ...... -- 9,139 --
------------ ------------ ------------
230,172,204 363,460,417 454,277,494
------------ ------------ ------------
LIABILITIES
Disbursements in excess of
demand deposit cash .................. -- -- --
Payable for investments purchased ...... -- -- 11,544,260
Payable for capital shares redeemed .... 260,221 441,311 525,068
Accrued management fees (Note 2) ....... 114,583 182,381 170,026
Distribution and service fees
payable (Note 2) ..................... -- 112 149
Payable for trustees' fees and
expenses ............................. 725 1,160 1,086
------------ ------------ ------------
375,529 624,964 12,240,589
------------ ------------ ------------
Net Assets ............................. $229,796,675 $362,835,453 $442,036,905
============ ============ ============
NET ASSETS CONSIST OF:
Capital paid in ........................ $191,348,294 $238,539,051 $419,502,664
Undistributed net investment income .... 2,561,684 4,332,718 3,677,377
Accumulated undistributed
net realized gain on investment
transactions ......................... 1,035,560 23,452,379 1,156,628
Net unrealized appreciation on
investments (Note 3) ................. 34,851,137 96,511,305 17,700,236
------------ ------------ ------------
$229,796,675 $362,835,453 $442,036,905
============ ============ ============
Investor Class
Net assets ............................. $229,796,675 $362,537,899 $441,704,501
Shares outstanding ..................... 5,051,981 10,984,477 15,718,619
Net asset value per share .............. $ 45.49 $ 33.00 $ 28.10
Advisor Class
Net assets ............................. N/A $ 297,554 $ 332,404
Shares outstanding ..................... N/A 9,023 11,853
Net asset value per share .............. N/A $ 32.98 $ 28.04
</TABLE>
See Notes to Financial Statements
www.americancentury.com 31
<TABLE>
<CAPTION>
Statements of Operations
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
2000 2005 2010
INVESTMENT INCOME
Income:
<S> <C> <C> <C>
Interest ............................$ 6,574,574 $ 14,819,729 $ 7,069,426
Income from securities lending ...... -- -- --
------------ ------------ ------------
6,574,574 14,819,729 7,069,426
------------ ------------ ------------
Expenses (Note 2):
Management fees ..................... 655,428 1,565,424 732,635
Distribution fees -- Advisor Class .. 261 316 299
Service fees -- Advisor Class ....... 261 316 299
Trustees' fees and expenses ......... 4,908 10,918 5,394
------------ ------------ ------------
660,858 1,576,974 738,627
------------ ------------ ------------
Net investment income ............... 5,913,716 13,242,755 6,330,799
------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 3)
Net realized gain on investments .... 550,618 12,790,401 5,442,123
Change in net unrealized
appreciation on investments ....... (4,626,613) (48,319,465) (33,244,129)
------------ ------------ ------------
Net realized and unrealized
loss on investments .............. (4,075,995) (35,529,064) (27,802,006)
------------ ------------ ------------
Net Increase (Decrease) in
Net Assets
Resulting from Operations ...........$ 1,837,721 $(22,286,309) $(21,471,207)
============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF OPERATIONS--This statement breaks down how each
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.
Fund OPERATIONS include:
* income earned from investments
* management fees and other expenses
* gains or losses from selling investments (known as realized gains or losses)
* gains or losses on current fund holdings (known as unrealized appreciation or
depreciation)
See Notes to Financial Statements
32 1-800-345-2021
<TABLE>
<CAPTION>
Statements of Operations
- --------------------------------------------------------------------------------
(Continued)
FOR THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
2015 2020 2025
INVESTMENT INCOME
Income:
<S> <C> <C> <C>
Interest ............................$ 5,149,817 $ 10,370,472 $ 8,242,541
Income from securities lending ...... -- 9,139 27,022
------------ ------------ ------------
5,149,817 10,379,611 8,269,563
------------ ------------ ------------
Expenses (Note 2):
Management fees ..................... 548,578 1,203,749 921,830
Distribution fees -- Advisor Class .. -- 78 343
Service fees -- Advisor Class ....... -- 78 343
Trustees' fees and expenses ......... 4,286 8,440 6,579
------------ ------------ ------------
552,864 1,212,345 929,095
------------ ------------ ------------
Net investment income ............... 4,596,953 9,167,266 7,340,468
------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 3)
Net realized gain on investments .... 1,060,175 32,783,641 3,021,874
Change in net unrealized
appreciation on investments ....... (24,947,891) (89,377,955) (52,202,796)
------------ ------------ ------------
Net realized and unrealized
loss on investments .............. (23,887,716) (56,594,314) (49,180,922)
------------ ------------ ------------
Net Increase (Decrease) in
Net Assets
Resulting from Operations ...........$(19,290,763) $(47,427,048) $(41,840,454)
============ ============ ============
</TABLE>
See Notes to Financial Statements
www.americancentury.com 33
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED) AND YEAR ENDED SEPTEMBER 30, 1998
2000 2005 2010
Increase (Decrease) in Net Assets 1999 1998 1999 1998 1999 1998
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income .............$ 5,913,716 $ 13,784,666 $ 13,242,755 $ 21,177,808 $ 6,330,799 $ 10,026,197
Net realized gain on investments .. 550,618 6,149,330 12,790,401 5,444,663 5,442,123 2,154,470
Change in net unrealized
appreciation on investments ..... (4,626,613) 679,135 (48,319,465) 42,618,545 (33,244,129) 34,621,133
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in
net assets resulting
from operations ................. 1,837,721 20,613,131 (22,286,309) 69,241,016 (21,471,207) 46,801,800
------------- ------------- ------------- ------------- ------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income:
Investor Class .................. (13,127,656) (15,765,056) (23,463,873) (15,987,498) (11,224,267) (7,102,391)
Advisor Class ................... (3,731) -- (5,103) -- (872) --
From net realized gains
on investment transactions:
Investor Class .................. (3,117,168) -- (7,397,428) (1,217,264) (6,014,304) (850,424)
Advisor Class ................... (897) -- (1,643) -- (470) --
------------- ------------- ------------- ------------- ------------- -------------
Decrease in net assets from
distributions to shareholders ... (16,249,452) (15,765,056) (30,868,047) (17,204,762) (17,239,913) (7,952,815)
------------- ------------- ------------- ------------- ------------- -------------
CAPITAL SHARE
TRANSACTIONS (NOTE 4)
Net increase (decrease) in net
assets from capital share
transactions .................... (9,683,704) (15,636,711) 76,225,095 200,372,715 (1,613,838) 120,167,530
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease)
in net assets ................... (24,095,435) (10,788,636) 23,070,739 252,408,969 (40,324,958) 159,016,515
NET ASSETS
Beginning of period ............... 237,588,498 248,377,134 534,086,110 281,677,141 283,828,344 124,811,829
------------- ------------- ------------- ------------- ------------- -------------
End of period .....................$ 213,493,063 $ 237,588,498 $ 557,156,849 $ 534,086,110 $ 243,503,386 $ 283,828,344
============= ============= ============= ============= ============= =============
Undistributed net investment
income ..........................$ 2,857,653 $ 10,075,324 $ 6,672,182 $ 16,898,403 $ 3,129,184 $ 8,023,524
============= ============= ============= ============= ============= =============
</TABLE>
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
each fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:
* operations--a summary of the Statement of Operations from the previous page
for the most recent period
* distributions--income and gains distributed to shareholders
* share transactions--shareholders' purchases, reinvestments, and redemptions
Net assets at the beginning of the period plus the sum of operations,
distributions to shareholders and capital share transactions result in net
assets at the end of the period.
See Notes to Financial Statements
34 1-800-345-2021
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
(Continued)
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED) AND YEAR ENDED SEPTEMBER 30, 1998
2015 2020 2025
Increase (Decrease) in Net Assets 1999 1998 1999 1998 1999 1998
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income ............. $ 4,596,953 $ 7,132,681 $ 9,167,266 $ 27,196,872 $ 7,340,468 $ 10,439,415
Net realized gain on investments .. 1,060,175 298,681 32,783,641 55,277,618 3,021,874 1,681,458
Change in net unrealized
appreciation on investments ..... (24,947,891) 29,541,335 (89,377,955) 86,449,383 (52,202,796) 60,753,235
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in
net assets resulting
from operations ................. (19,290,763) 36,972,697 (47,427,048) 168,923,873 (41,840,454) 72,874,108
------------- ------------- ------------- ------------- ------------- -------------
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income:
Investor Class .................. (7,536,220) (6,501,208) (24,377,620) (44,888,306) (12,416,327) (4,549,154)
Advisor Class ................... -- -- (987) -- (9,148) --
From net realized gains
on investment transactions:
Investor Class .................. (295,397) (4,326,524) (61,543,905) (41,866,720) (3,040,070) (305,669)
Advisor Class ................... -- -- (2,512) -- (2,318) --
------------- ------------- ------------- ------------- ------------- -------------
Decrease in net assets from
distributions to shareholders ... (7,831,617) (10,827,732) (85,925,024) (86,755,026) (15,467,863) (4,854,823)
------------- ------------- ------------- ------------- ------------- -------------
CAPITAL SHARE
TRANSACTIONS (NOTE 4)
Net increase (decrease) in net
assets from capital share
transactions .................... 86,837,808 29,036,713 10,135,754 (149,668,103) 143,133,674 214,370,948
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease)
in net assets ................... 59,715,428 55,181,678 (123,216,318) (67,499,256) 85,825,357 282,390,233
NET ASSETS
Beginning of period ............... 170,081,247 114,899,569 486,051,771 553,551,027 356,211,548 73,821,315
------------- ------------- ------------- ------------- ------------- -------------
End of period ..................... $ 229,796,675 $ 170,081,247 $ 362,835,453 $ 486,051,771 $ 442,036,905 $ 356,211,548
============= ============= ============= ============= ============= =============
Undistributed net investment
income .......................... $ 2,561,684 $ 5,500,951 $ 4,332,718 $ 19,544,059 $ 3,677,377 $ 8,762,384
============= ============= ============= ============= ============= =============
</TABLE>
See Notes to Financial Statements
www.americancentury.com 35
Notes to Financial Statements
- --------------------------------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization -- American Century Target Maturities Trust (the trust) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. The trust is composed of the following series:
Target 2000 Fund (2000), Target 2005 Fund (2005), Target 2010 Fund (2010),
Target 2015 Fund (2015), Target 2020 Fund (2020), and Target 2025 Fund (2025)
(the funds). Each fund seeks to provide the highest attainable investment return
consistent with the creditworthiness of U.S. Treasury securities and the
professional management of reinvestment and market risks. Each fund invests
primarily in zero-coupon U.S. Treasury securities and will be liquidated shortly
after the conclusion of its target maturity year. The funds are authorized to
issue two classes of shares: the Investor Class and the Advisor Class. The two
classes of shares differ principally in their respective shareholder servicing
and distribution expenses and arrangements. All shares of the funds represent an
equal pro rata interest in the assets of the class to which such shares belong,
and have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except for class specific expenses and exclusive rights to
vote on matters affecting only individual classes. Sale of the Advisor Class for
2010 and 2020 commenced on October 20, 1998 and October 19, 1998, respectively.
Sale of the Advisor Class for 2015 had not commenced as of the report date. The
following significant accounting policies are in accordance with generally
accepted accounting principles; these principles may require the use of
estimates by fund management.
Security Valuations -- Securities are valued through a commercial pricing
service or at the mean of the most recent bid and asked prices. When valuations
are not readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Trustees.
Security Transactions -- Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.
Investment Income -- Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums.
Income Tax Status -- It is the funds' policy to distribute all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under the provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
Distributions to Shareholders -- Distributions from net investment income
and net realized gains are declared and paid annually in December.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes and may result in reclassification among certain
capital accounts.
Reverse Share Splits -- The Trustees may authorize reverse share splits
immediately after and of a size that exactly offsets the per share amount of the
annual dividend and capital gain distribution (if any). After taking into
account the reverse share split, a shareholder reinvesting dividends and capital
gain distributions will hold exactly the same number of shares owned prior to
the distributions and reverse share split. A shareholder electing to receive
dividends in cash will own fewer shares.
Additional Information -- Funds Distributor, Inc. (FDI) is the trust's
distributor. Certain officers of FDI are also officers of the trust.
36 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MARCH 31, 1999 (UNAUDITED)
2. TRANSACTIONS WITH RELATED PARTIES
The trust has entered into a Management Agreement with American Century
Investment Management, Inc. (ACIM) that provides each fund with investment
advisory and management services in exchange for a single, unified management
fee per class. Expenses excluded from this agreement are brokerage, taxes,
portfolio insurance, interest, fees and expenses of the Trustees who are not
considered "interested persons" as defined in the Investment Company Act of 1940
(including counsel fees) and extraordinary expenses. The fee is calculated daily
and paid monthly. It consists of an Investment Category Fee based on the average
net assets of the funds in a specific fund's investment category and a Complex
Fee based on the average net assets of all the funds managed by ACIM. The rates
for the Investment Category Fee range from 0.2425% to 0.3600% and the rates for
the Complex Fee range from 0.2900% to 0.3100%. The Advisor Class is 0.2500% less
at each point within the Complex Fee range. For the six months ended March 31,
1999, the effective annual Investor Class management fee was 0.59% for each of
the funds.
The Board of Trustees has adopted the Advisor Class Master Distribution and
Shareholder Services Plan (the plan), pursuant to Rule 12b-1 of the Investment
Company Act of 1940. The plan provides that the funds will pay ACIM an annual
distribution fee equal to 0.25% and service fee equal to 0.25%. The fees are
computed daily and paid monthly based on the Advisor Class's average daily
closing net assets during the previous month. The distribution fee provides
compensation for distribution expenses incurred by financial intermediaries in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers, and financial institutions that have
entered into sales agreements with respect to shares of the funds. The service
fee provides compensation for shareholder and administrative services rendered
by ACIM, its affiliates or independent third party providers. Fees incurred
under the plan for the period ending March 31, 1999, were $522, $632, $598,
$156, and $686 for 2000, 2005, 2010, 2020, and 2025, respectively.
Certain officers and trustees of the trust are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the trust's investment manager, ACIM, and the
trust's transfer agent, American Century Services Corporation.
As of March 31, 1999, investments in shares of the Capital Preservation Fund
(CPF) were $50,959, $405,582, $294,277, $128,589, $194,789, and $1,635,312 for
2000, 2005, 2010, 2015, 2020, and 2025, respectively. CPF is a money market fund
managed by ACIM. The terms of these transactions were identical to those with
non-related entities except that, to avoid duplicative management fees, the
funds did not pay ACIM management fees with respect to assets invested in CPF.
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions in U.S. Treasury securities, excluding short-term
investments, were as follows:
<TABLE>
<CAPTION>
2000 2005 2010 2015 2020 2025
<S> <C> <C> <C> <C> <C> <C>
Purchases $28,638,220 $409,114,458 $75,703,277 $154,402,499 $80,794,096 $248,607,380
Proceeds from Sales $66,618,066 $354,820,895 $93,067,887 $75,540,503 $159,946,280 $129,231,150
On March 31, 1999, the composition of unrealized appreciation and depreciation
of investment securities based on the aggregate cost of investments for federal
income tax purposes was as follows:
2000 2005 2010 2015 2020 2025
Appreciation $3,750,043 $16,682,243 $15,556,394 $35,171,730 $96,590,960 $22,150,169
Depreciation (153,159) (4,002,383) (3,002,391) (344,812) (595,036) (5,088,323)
------------ ------------- ------------- ------------- ------------- -------------
Net $3,596,884 $12,679,860 $12,554,003 $34,826,918 $95,995,924 $17,061,846
============ ============= ============= ============= ============= =============
Federal Tax Cost $210,408,558 $543,491,978 $230,426,651 $194,728,302 $265,609,731 $415,906,673
============ ============= ============= ============= ============= =============
</TABLE>
www.americancentury.com 37
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows (unlimited number of
shares authorized):
<TABLE>
<CAPTION>
2000 2005 2010
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS
Six months ended
March 31, 1999
<S> <C> <C> <C> <C> <C> <C>
Sold .................... 474,067 $ 44,644,771 3,099,065 $ 234,230,631 2,111,793 $ 127,049,668
Issued in reinvestment
of distributions ...... 181,337 15,837,405 284,344 20,558,418 291,993 16,796,368
Redeemed ................ (752,412) (70,779,155) (2,382,578) (179,368,755) (2,453,761) (146,052,167)
Reverse share split ..... (185,659) -- (418,534) -- (299,137) --
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) . (282,667) $ (10,296,979) 582,297 $ 75,420,294 (349,112) $ (2,206,131)
============= ============= ============= ============= ============= =============
Year ended
September 30, 1998
Sold .................... 644,385 $ 57,705,555 4,720,449 $ 331,282,758 4,025,597 $ 223,483,879
Issued in reinvestment
of distributions ...... 191,104 15,630,392 270,807 17,061,205 159,789 7,888,903
Redeemed ................ (996,398) (89,034,661) (2,122,395) (148,063,950) (1,984,180) (111,205,252)
Reverse share split ..... (192,640) -- (272,951) -- (160,955) --
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) . (353,549) $ (15,698,714) 2,595,910 $ 200,280,013 2,040,251 $ 120,167,530
============= ============= ============= ============= ============= =============
ADVISOR CLASS
Six months ended
March 31, 1999(1)
Sold .................... 6,459 $ 608,647 12,393 $ 915,755 9,856 $ 598,145
Issued in reinvestment
of distributions ...... 53 4,628 41 2,962 23 1,342
Redeemed ................ -- -- (1,500) (113,916) (119) (7,194)
Reverse share split ..... (53) -- (90) -- (23) --
------------- ------------- ------------- ------------- ------------- -------------
Net increase ............ 6,459 $ 613,275 10,844 $ 804,801 9,737 $ 592,293
============= ============= ============= ============= ============= =============
Period ended
September 30, 1998(2)
Sold .................... 678 $ 62,003 1,571 $ 112,702
Redeemed ................ -- -- (265) (20,000)
------------- ------------- ------------- -------------
Net increase ............ 678 $ 62,003 1,306 $ 92,702
============= ============= ============= =============
</TABLE>
(1) October 20, 1998 (commencement of sale) through March 31, 1999 for 2010.
(2) August 20, 1998 (commencement of sale) through September 30, 1998 for 2000
and August 3, 1998 (commencement of sale) through September 30, 1998 for
2005.
38 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MARCH 31, 1999 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in shares of the funds were as follows (unlimited number of
shares authorized):
<TABLE>
<CAPTION>
2015 2020 2025
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS
Six months ended
March 31, 1999
<S> <C> <C> <C> <C> <C> <C>
Sold ...................... 3,523,760 $168,725,115 6,191,977 $218,714,195 16,636,991 $497,834,734
Issued in reinvestment
of distributions ........ 148,946 7,107,814 2,776,706 81,170,351 483,680 14,680,994
Redeemed ..................(1,867,455) (88,995,121) (8,230,023) (290,053,380) (12,140,017) (369,671,590)
Reverse share split ....... (163,477) -- (2,906,872) -- (507,854) --
------------ ------------ ------------ -------------- ------------ --------------
Net increase (decrease) ... 1,641,774 $86,837,808 (2,168,212) $ 9,831,166 4,472,800 $142,844,138
============ ============ ============ ============== ============ ==============
Year ended
September 30, 1998
Sold ...................... 2,651,059 $117,890,797 13,812,474 $442,006,671 24,090,981 $649,193,136
Issued in reinvestment
of distributions ........ 281,652 10,744,494 3,356,693 85,814,004 199,765 4,802,916
Redeemed .................. (2,235,577) (99,598,578) (21,005,162) (677,488,778) (16,157,277) (439,697,727)
Reverse share split ....... (283,586) -- (3,387,874) -- (201,848) --
------------ ------------ ------------ -------------- ------------ --------------
Net increase (decrease) ... 413,548 $29,036,713 (7,223,869) $(149,668,103) 7,931,621 $214,298,325
============ ============ ============ ============== ============ ==============
ADVISOR CLASS
Six months ended
March 31, 1999(1)
Sold .................................................. 9,023 $301,089 13,480 $410,032
Issued in reinvestment
of distributions .................................... 120 3,499 378 11,465
Redeemed .............................................. -- -- (4,443) (131,961)
Reverse share split ................................... (120) -- (378) --
------------ -------------- ------------ --------------
Net increase .......................................... 9,023 $304,588 9,037 $289,536
============ ============== ============ ==============
Period ended
September 30, 1998(2)
Sold .................................................................................. 20,572 $568,207
Redeemed .............................................................................. (17,756) (495,584)
------------ --------------
Net increase .......................................................................... 2,816 $72,623
============ ==============
</TABLE>
(1) October 19, 1998 (commencement of sale) through March 31, 1999 for 2020.
(2) June 1, 1998 (commencement of sale) through September 30, 1998 for 2025.
www.americancentury.com 39
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
5. SECURITIES LENDING
At March 31, 1999, securities valued at $27,392,087 for 2020 were on loan
to brokers. Securities received as collateral, at this date, were valued at
$28,591,094. The fund's risks in securities lending are that the borrower may
not provide additional collateral when required or return the securities when
due.
- --------------------------------------------------------------------------------
6. BANK LOANS
Effective December 18, 1998, the funds, along with certain other funds
managed by ACIM, entered into an unsecured $570,000,000 bank line of credit
agreement with Chase Manhattan Bank. Borrowings under the agreement bear
interest at the Federal Funds rate plus 0.40%. The funds may borrow money for
temporary or emergency purposes to fund shareholder redemptions. The funds did
not borrow from the line during the period December 18, 1998 through March 31,
1999.
- --------------------------------------------------------------------------------
7. FUND EVENTS
The following name changes became effective March 1, 1999:
===============================================================
NEW NAME FORMER NAME
===============================================================
Fund: Target 2000 Fund American Century - Benham Target
Maturities Trust: 2000
Fund: Target 2005 Fund American Century - Benham Target
Maturities Trust: 2005
Fund: Target 2010 Fund American Century - Benham Target
Maturities Trust: 2010
Fund: Target 2015 Fund American Century - Benham Target
Maturities Trust: 2015
Fund: Target 2020 Fund American Century - Benham Target
Maturities Trust: 2020
Fund: Target 2025 Fund American Century - Benham Target
Maturities Trust: 2025
40 1-800-345-2021
Target: 2000 --Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED SEPTEMBER 30 (EXCEPT AS
NOTED)
<TABLE>
<CAPTION>
Investor Class
1999(1) 1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period .................... $ 93.78 $ 86.05 $ 79.95 $ 76.86 $ 66.93 $ 72.40
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ............. 2.47 5.13 5.10 4.75 4.37 3.99
Net Realized and Unrealized Gain
(Loss) on Investment Transactions .... (1.67) 2.60 1.00 (1.66) 5.56 (9.46)
----------- ----------- ----------- ----------- ----------- -----------
Total From Investment Operations ..... 0.80 7.73 6.10 3.09 9.93 (5.47)
----------- ----------- ----------- ----------- ----------- -----------
Distributions(3)
From Net Investment Income ........... (5.57) (5.64) (5.20) (3.94) (3.42) (3.25)
From Net Realized Gains .............. (1.32) -- -- -- -- (2.95)
In Excess of Net Realized Gains ...... -- -- -- -- -- (1.20)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions .................. (6.89) (5.64) (5.20) (3.94) (3.42) (7.40)
----------- ----------- ----------- ----------- ----------- -----------
Reverse Share Split .................... 6.89 5.64 5.20 3.94 3.42 7.40
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ......... $ 94.58 $ 93.78 $ 86.05 $ 79.95 $ 76.86 $ 66.93
=========== =========== =========== =========== =========== ===========
Total Return(4) ...................... 0.85% 8.97% 7.64% 4.01% 14.84% (7.54)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .................. 0.59%(5) 0.59% 0.56% 0.53% 0.63% 0.59%
Ratio of Net Investment Income
to Average Net Assets .................. 5.26%(5) 5.75% 6.14% 5.99% 6.13% 5.74%
Portfolio Turnover Rate ................ 13% 82% 10% 29% 53% 89%
Net Assets, End of Period
(in thousands) ......................... $ 212,819 $ 237,525 $ 248,377 $ 267,757 $ 294,736 $ 243,895
</TABLE>
(1) Six months ended March 31, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) For years ended prior to September 30, 1997, distributions were calculated
using average shares outstanding during the year. Distributions indicated
for those years will be different than the actual per-share distributions
to shareholders.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced during
the period
See Notes to Financial Statements
www.americancentury.com 41
Target: 2000 --Financial Highlights
- --------------------------------------------------------------------------------
(Continued)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
Advisor Class
1999(1) 1998(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period ........ $ 93.76 $ 91.41
------- -------
Income From Investment Operations
Net Investment Income(3) .................. 2.39 0.54
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ........ (1.70) 1.81
------- -------
Total From Investment Operations .......... 0.69 2.35
------- -------
Distributions
From Net Investment Income ................ (5.50) --
From Net Realized Gains ................... (1.32) --
------- -------
Total Distributions ....................... (6.82) --
------- -------
Reverse Share Split ......................... 6.82 --
------- -------
Net Asset Value, End of Period .............. $ 94.45 $ 93.76
======= =======
Total Return(4) ........................... 0.74% 2.57%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
To Average Net Assets ....................... 0.84%(5) 0.84%(5)
Ratio of Net Investment Income
To Average Net Assets ....................... 5.01%(5) 5.06%(5)
Portfolio Turnover Rate ..................... 13% 82%
Net Assets, End of Period
(in thousands) .............................. $ 674 $ 64
(1) Six months ended March 31, 1999 (unaudited).
(2) August 20, 1998 (commencement of sale) through September 30, 1998.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
See Notes to Financial Statements
42 1-800-345-2021
<TABLE>
<CAPTION>
Target: 2005 --Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED SEPTEMBER 30 (EXCEPT AS
NOTED)
Investor Class
1999(1) 1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period ................... $ 76.72 $ 64.54 $ 57.83 $ 56.61 $ 45.22 $ 51.84
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ............ 1.85 3.84 3.74 3.50 3.33 3.11
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ... (4.82) 8.34 2.97 (2.28) 8.06 (9.73)
----------- ----------- ----------- ----------- ----------- -----------
Total From Investment Operations .... (2.97) 12.18 6.71 1.22 11.39 (6.62)
----------- ----------- ----------- ----------- ----------- -----------
Distributions(3)
From Net Investment Income .......... (3.39) (3.61) (3.61) (2.06) (2.41) (2.70)
From Net Realized Gains ............. (1.07) (0.27) (0.44) (0.58) (0.67) (8.47)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions ................. (4.46) (3.88) (4.05) (2.64) (3.08) (11.17)
----------- ----------- ----------- ----------- ----------- -----------
Reverse Share Split ................... 4.46 3.88 4.05 2.64 3.08 11.17
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........ $ 73.75 $ 76.72 $ 64.54 $ 57.83 $ 56.61 $ 45.22
=========== =========== =========== =========== =========== ===========
Total Return(4) ..................... (3.87)% 18.87% 11.60% 2.15% 25.16% (12.75)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................. 0.59%(5) 0.59% 0.57% 0.58% 0.71% 0.64%
Ratio of Net Investment Income
to Average Net Assets ................. 4.93%(5) 5.53% 6.15% 6.05% 6.58% 6.37%
Portfolio Turnover Rate ............... 66% 35% 15% 31% 34% 68%
Net Assets, End of Period
(in thousands) ........................ $ 556,262 $ 533,986 $ 281,677 $ 238,864 $ 183,452 $ 96,207
</TABLE>
(1) Six months ended March 31, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) For years ended prior to September 30, 1997, distributions were calculated
using average shares outstanding during the year. Distributions indicated
for those years will be different than the actual per-share distributions
to shareholders.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced during
the period
See Notes to Financial Statements
www.americancentury.com 43
Target: 2005 --Financial Highlights
- --------------------------------------------------------------------------------
(Continued)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
Advisor Class
1999(1) 1998(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period ............. $ 76.69 $ 70.91
------- -------
Income From Investment Operations
Net Investment Income(3) ....................... 1.74 0.58
Net Realized and Unrealized Gain
(Loss) on Investment Transactions .............. (4.82) 5.20
------- -------
Total From Investment Operations ............... (3.08) 5.78
------- -------
Distributions
From Net Investment Income ..................... (3.32) --
From Net Realized Gains ........................ (1.07) --
------- -------
Total Distributions ............................ (4.39) --
------- -------
Reverse Share Split .............................. 4.39 --
------- -------
Net Asset Value, End of Period ................... $ 73.61 $ 76.69
======= =======
Total Return(4) ................................ (4.02)% 8.15%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ............................ 0.84%(5) 0.84%(5)
Ratio of Net Investment Income
to Average Net Assets ............................ 4.68%(5) 4.87%(5)
Portfolio Turnover Rate .......................... 66% 35%
Net Assets, End of Period
(in thousands) ................................... $ 894 $ 100
(1) Six months ended March 31, 1999 (unaudited).
(2) August 3, 1998 (commencement of sale) through September 30, 1998.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
See Notes to Financial Statements
44 1-800-345-2021
<TABLE>
<CAPTION>
Target: 2010 --Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED SEPTEMBER 30 (EXCEPT AS NOTED)
Investor Class
1999(1) 1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period ................... $ 61.98 $ 49.16 $ 42.47 $ 42.14 $ 31.67 $ 38.13
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ............ 1.50 2.94 2.79 2.58 2.41 2.24
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ... (6.05) 9.88 3.90 (2.25) 8.06 (8.70)
----------- ----------- ----------- ----------- ----------- -----------
Total From Investment Operations .... (4.55) 12.82 6.69 0.33 10.47 (6.46)
----------- ----------- ----------- ----------- ----------- -----------
Distributions(3)
From Net Investment Income .......... (2.78) (2.46) (2.82) (1.57) (1.48) (1.46)
From Net Realized Gains ............. (1.49) (0.29) (1.17) -- (0.48) (4.31)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions ................. (4.27) (2.75) (3.99) (1.57) (1.96) (5.77)
----------- ----------- ----------- ----------- ----------- -----------
Reverse Share Split ................... 4.27 2.75 3.99 1.57 1.96 5.77
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........ $ 57.43 $ 61.98 $ 49.16 $ 42.47 $ 42.14 $ 31.67
=========== =========== =========== =========== =========== ===========
Total Return(4) ..................... (7.34)% 26.08% 15.75% 0.78% 33.06% (16.92)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................. 0.59%(5) 0.59% 0.62% 0.67% 0.71% 0.68%
Ratio of Net Investment Income
to Average Net Assets ................. 5.05%(5) 5.39% 6.15% 5.98% 6.56% 6.35%
Portfolio Turnover Rate ............... 30% 34% 26% 24% 26% 35%
Net Assets, End of Period
(in thousands) ........................ $ 242,945 $ 283,828 $ 124,812 $ 111,117 $ 95,057 $ 46,312
</TABLE>
(1) Six months ended March 31, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) For years ended prior to September 30, 1997, distributions were calculated
using average shares outstanding during the year. Distributions indicated
for those years will be different than the actual per-share distributions
to shareholders.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced during
the period
See Notes to Financial Statements
www.americancentury.com 45
Target: 2010 --Financial Highlights
- --------------------------------------------------------------------------------
(Continued)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
Advisor Class
1999(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ............. $ 60.12
-------
Income From Investment Operations
Net Investment Income(2) ....................... 1.28
Net Realized and Unrealized Loss
on Investment Transactions ..................... (4.03)
-------
Total From Investment Operations ............... (2.75)
-------
Distributions
From Net Investment Income ..................... (2.76)
From Net Realized Gains ........................ (1.49)
-------
Total Distributions ............................ (4.25)
-------
Reverse Share Split .............................. 4.25
-------
Net Asset Value, End of Period ................... $ 57.37
=======
Total Return(3) .................................. (4.57)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ............................ 0.84%(4)
Ratio of Net Investment Income
to Average Net Assets ............................ 4.95%(4)
Portfolio Turnover Rate .......................... 30%
Net Assets, End of Period
(in thousands) ................................... $ 559
(1) October 20, 1998 (commencement of sale) through March 31, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
See Notes to Financial Statements
46 1-800-345-2021
<TABLE>
<CAPTION>
Target: 2015 --Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED SEPTEMBER 30 (EXCEPT AS NOTED)
Investor Class
1999(1) 1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period ................... $ 49.87 $ 38.34 $ 31.96 $ 32.20 $ 22.79 $ 29.04
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ............ 1.16 2.17 2.00 1.85 1.71 1.57
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ... (5.54) 9.36 4.38 (2.09) 7.70 (7.82)
----------- ----------- ----------- ----------- ----------- -----------
Total From Investment Operations .... (4.38) 11.53 6.38 (0.24) 9.41 (6.25)
----------- ----------- ----------- ----------- ----------- -----------
Distributions(3)
From Net Investment Income .......... (2.10) (2.11) (2.05) (1.28) (0.87) (1.19)
From Net Realized Gains ............. (0.08) (1.40) (0.34) (1.61) -- (7.08)
In Excess of Net Realized Gains ..... -- -- -- -- -- (0.37)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions ................. (2.18) (3.51) (2.39) (2.89) (0.87) (8.64)
----------- ----------- ----------- ----------- ----------- -----------
Reverse Share Split ................... 2.18 3.51 2.39 2.89 0.87 8.64
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........ $ 45.49 $ 49.87 $ 38.34 $ 31.96 $ 32.20 $ 22.79
=========== =========== =========== =========== =========== ===========
Total Return(4) ..................... (8.78)% 30.07% 19.96% (0.74)% 41.29% (21.52)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................. 0.59%(5) 0.59% 0.61% 0.65% 0.71% 0.68%
Ratio of Net Investment Income
to Average Net Assets ................. 4.88%(5) 4.96% 5.79% 5.63% 6.40% 5.97%
Portfolio Turnover Rate ............... 40% 31% 21% 17% 70% 65%
Net Assets, End of Period
(in thousands) ........................ $ 229,797 $ 170,081 $ 114,900 $ 115,654 $ 114,647 $ 66,073
</TABLE>
(1) Six months ended March 31, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) For years ended prior to September 30, 1997, distributions were calculated
using average shares outstanding during the year. Distributions indicated
for those years will be different than the actual per-share distributions
to shareholders.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced during
the period
See Notes to Financial Statements
www.americancentury.com 47
<TABLE>
<CAPTION>
Target: 2020 --Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED SEPTEMBER 30 (EXCEPT AS
NOTED)
Investor Class
1999(1) 1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period ................... $ 36.95 $ 27.17 $ 22.00 $ 22.47 $ 15.28 $ 20.72
----------- ----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ............ 0.78 1.53 1.51 1.41 1.19 1.13
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ... (4.73) 8.25 3.66 (1.88) 6.00 (6.57)
----------- ----------- ----------- ----------- ----------- -----------
Total From Investment Operations .... (3.95) 9.78 5.17 (0.47) 7.19 (5.44)
----------- ----------- ----------- ----------- ----------- -----------
Distributions(3)
From Net Investment Income .......... (2.06) (2.35) (1.45) (0.40) (0.21) (0.28)
From Net Realized Gains ............. (5.20) (2.19) -- (0.04) -- (1.31)
In Excess of Net Realized Gains ..... -- -- -- -- -- (1.18)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions ................. (7.26) (4.54) (1.45) (0.44) (0.21) (2.77)
----------- ----------- ----------- ----------- ----------- -----------
Reverse Share Split ................... 7.26 4.54 1.45 0.44 0.21 2.77
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........ $ 33.00 $ 36.95 $ 27.17 $ 22.00 $ 22.47 $ 15.28
=========== =========== =========== =========== =========== ===========
Total Return(4) ..................... (10.69)% 36.00% 23.50% (2.09)% 47.05% (26.25)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................. 0.59%(5) 0.59% 0.53% 0.61% 0.72% 0.70%
Ratio of Net Investment Income
to Average Net Assets ................. 4.45%(5) 4.83% 6.29% 6.25% 6.24% 6.28%
Portfolio Turnover Rate ............... 19% 18% 14% 47% 78% 116%
Net Assets, End of Period
(in thousands) ........................ $ 362,538 $ 486,052 $ 553,551 $ 926,319 $ 574,702 $ 58,535
</TABLE>
(1) Six months ended March 31, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) For years ended prior to September 30, 1997, distributions were calculated
using average shares outstanding during the year. Distributions indicated
for those years will be different than the actual per-share distributions
to shareholders.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced during
the period
See Notes to Financial Statements
48 1-800-345-2021
Target: 2020 --Financial Highlights
- --------------------------------------------------------------------------------
(Continued)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
Advisor Class
1999(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ............. $ 35.50
-------
Income From Investment Operations
Net Investment Income(2) ......................... 0.67
Net Realized and Unrealized Loss
on Investment Transactions ....................... (3.19)
-------
Total From Investment Operations ................. (2.52)
-------
Distributions
From Net Investment Income ....................... (2.05)
From Net Realized Gains .......................... (5.20)
-------
Total Distributions .............................. (7.25)
-------
Reverse Share Split .............................. 7.25
-------
Net Asset Value, End of Period ................... $ 32.98
=======
Total Return(3) .................................. (7.10)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ............................ 0.84%(4)
Ratio of Net Investment Income
to Average Net Assets ............................ 4.56%(4)
Portfolio Turnover Rate .......................... 19%
Net Assets, End of Period
(in thousands) ................................... $ 298
(1) October 19, 1998 (commencement of sale) through March 31, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
See Notes to Financial Statements
www.americancentury.com 49
<TABLE>
<CAPTION>
Target: 2025 --Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED SEPTEMBER 30 (EXCEPT AS NOTED)
Investor Class
1999(1) 1998 1997 1996(2)
PER-SHARE DATA
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $ 31.67 $ 22.27 $ 17.91 $ 19.85
----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(3) ............... 0.70 1.33 1.21 0.72
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ...... (4.27) 8.07 3.15 (2.66)
----------- ----------- ----------- -----------
Total From Investment Operations ....... (3.57) 9.40 4.36 (1.94)
----------- ----------- ----------- -----------
Distributions
From Net Investment Income ............. (1.28) (0.70) (0.72) --
From Net Realized Gains ................ (0.31) (0.05) -- --
----------- ----------- ----------- -----------
Total Distributions .................... (1.59) (0.75) (0.72) --
----------- ----------- ----------- -----------
Reverse Share Split .................... 1.59 0.75 0.72 --
----------- ----------- ----------- -----------
Net Asset Value, End of Period ......... $ 28.10 $ 31.67 $ 22.27 $ 17.91
=========== =========== =========== ===========
Total Return(4) ........................ (11.27)% 42.21% 24.34% (9.77)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .................. 0.59%(5) 0.59% 0.62% 0.67%(5)
Ratio of Net Investment Income
to Average Net Assets .................. 4.64%(5) 4.94% 6.14% 6.57%(5)
Portfolio Turnover Rate ................ 39% 52% 58% 61%
Net Assets, End of Period
(in thousands) ......................... $ 441,705 $ 356,122 $ 73,821 $ 35,661
</TABLE>
(1) Six months ended March 31, 1999 (unaudited).
(2) February 15, 1996 (inception) through September 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced during
the period
See Notes to Financial Statements
50 1-800-345-2021
Target: 2025 --Financial Highlights
- --------------------------------------------------------------------------------
(Continued)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
Advisor Class
1999(1) 1998(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period .......... $31.64 $27.27
---------- ---------
Income From Investment Operations
Net Investment Income(3) .................... 0.67 0.41
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ........... (4.27) 3.96
---------- ---------
Total From Investment Operations ............ (3.60) 4.37
---------- ---------
Distributions
From Net Investment Income .................. (1.23) --
From Net Realized Gains ..................... (0.31) --
---------- ---------
Total Distributions ......................... (1.54) --
---------- ---------
Reverse Share Split ........................... 1.54 --
---------- ---------
Net Asset Value, End of Period ................ $28.04 $31.64
========== =========
Total Return(4) ............................. (11.38)% 16.02%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......................... 0.84%(5) 0.84%(5)
Ratio of Net Investment Income
to Average Net Assets ......................... 4.39%(5) 4.37%(5)
Portfolio Turnover Rate ....................... 39% 52%
Net Assets, End of Period
(in thousands) ................................ $332 $89
(1) Six months ended March 31, 1999 (unaudited).
(2) June 1, 1998 (commencement of sale) through September 30, 1998.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
See Notes to Financial Statements
www.americancentury.com 51
Share Class and Retirement Account Information
- --------------------------------------------------------------------------------
SHARE CLASSES
Two classes of shares are authorized for sale by the funds: Investor Class
and Advisor Class.
Investor Class shareholders do not pay any commissions or other fees for
purchase of fund shares directly from American Century. Investors who buy
Investor Class shares through a broker-dealer may be required to pay the
broker-dealer a transaction fee. The price and performance of the Investor Class
shares are listed in newspapers. No other class is currently listed.
Advisor Class shares are sold through banks, broker-dealers, insurance
companies, and financial advisors. Advisor Class shares are subject to a 0.50%
Rule 12b-1 service and distribution fee. Half of that fee is available to pay
for recordkeeping and administrative services, and half is available to pay for
distribution services provided by the financial intermediary through which the
Advisor Class shares are purchased. The total expense ratio of the Advisor Class
is 0.25% higher than the total expense ratio of the Investor Class. The Advisor
Class had not commenced as of March 31, 1999, for Target: 2015.
Both classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at American Century. Even if you plan to rollover the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Exchange/Redemption form or an IRS Form W-4P. Call American Century for either
form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.
52 1-800-345-2021
Background Information
- --------------------------------------------------------------------------------
INVESTMENT PHILOSOPHY AND POLICIES
American Century offers 38 fixed-income funds, ranging from money market
portfolios to long-term bond funds and including both taxable and tax-exempt
funds. Each fund is managed to provide a "pure play" on a specific sector of the
fixed-income market. To ensure adherence to this principle, the basic structure
of each fund's portfolio is tied to a specific market index. Fund managers
attempt to add value by making modest portfolio adjustments based on their
analysis of prevailing market conditions. Investment decisions are made by
management teams, which meet regularly to discuss market analysis and investment
strategies.
In addition to these principles, each fund has its own investment policies:
The six Target Maturities Trust funds, including Target: 2000, Target:
2005, Target: 2010, Target: 2015, Target: 2020, and Target: 2025, invest
primarily in zero-coupon U.S. Treasury securities and will be liquidated shortly
after the conclusion of their target maturity year. Although these funds offer a
relatively predictable return if held to maturity, they may be subject to
dramatic price fluctuations that can result in significant gains or losses if
sold prior to maturity.
COMPARATIVE INDICES
The following index is used in the report for fund performance comparisons.
The index is not an investment product available for purchase.
The Merrill Lynch Long-Term Treasury Index is an index of U.S. Treasury
securities with maturities greater than 10 years.
FUND BENCHMARKS
The benchmarks for the Target Maturities Trust funds are coupon STRIPS
issues maturing in the target year of each portfolio.
The benchmark for the Target: 2000 fund is the 11/15/00 STRIPS Issue -- a
zero-coupon Treasury bond that matures November 15, 2000.
The benchmark for the Target: 2005 fund is the 11/15/05 STRIPS Issue -- a
zero-coupon Treasury bond that matures November 15, 2005.
The benchmark for the Target: 2010 fund is the 11/15/10 STRIPS Issue -- a
zero-coupon Treasury bond that matures November 15, 2010.
The benchmark for the Target: 2015 fund is the 11/15/15 STRIPS Issue -- a
zero-coupon Treasury bond that matures November 15, 2015.
The benchmark for the Target: 2020 fund is the 11/15/20 STRIPS Issue -- a
zero-coupon Treasury bond that matures November 15, 2020.
The benchmark for the Target: 2025 fund is the 11/15/25 STRIPS Issue -- a
zero-coupon Treasury bond that matures November 15, 2025.
[right margin]
INVESTMENT TEAM LEADERS
PORTFOLIO MANAGER
DAVE SCHROEDER
JEREMY FLETCHER
www.americancentury.com 53
Glossary
- --------------------------------------------------------------------------------
INVESTMENT TERMS
* Basis Point -- one one-hundredth of a percentage point (or 0.01%). 100 basis
points equal one percentage point (or 1%).
* Coupon -- the stated interest rate of a security.
* Yield Curve -- a graphic representation of the relationship between maturity
and yield for fixed-income securities. Yield curve graphs plot lengthening
maturities along the horizontal axis and rising yields along the vertical axis.
RETURNS
* Total Return figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.
* Average Annual Returns illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year returns, please refer to the "Financial
Highlights" on pages 41-51.
STATISTICAL TERMINOLOGY
* Number of Securities -- the number of different securities held by a fund on a
given date.
* Anticipated Growth Rate (AGR) --an approximation of the annualized rate of
return that an investor may expect from his purchase date to the fund's WAM
date, assuming all dividends and capital gains distributions are reinvested. It
assumes that the AVM is reached on the WAM date.
* Weighted Average Maturity (WAM)-- a measure of the sensitivity of a
fixed-income portfolio to interest rate changes. WAM indicates the average time
until the securities in the portfolio mature, weighted by dollar amount.
* Weighted Average Maturity Date (WAM Date) -- an average of the maturity dates
of a portfolio's securities, weighted by dollar amount. The WAM date is
calculated based on the WAM of the portfolio's investments on a given day.
* Anticipated Value at Maturity (AVM) -- the expected redemption value of a
portfolio share on the portfolio's WAM date. (Even if fund shares are held to
maturity, there is no guarantee that the fund's share price will reach its AVM
or that the AGR will be realized.)
* Expense Ratio -- the operating expenses of the fund, expressed as a percentage
of average net assets. (See Note 2 in the Notes to Financial Statements.)
TYPES OF SECURITIES
* Zero-Coupon Bonds (Zeros) --bonds that make no periodic interest payments.
Instead, they are sold at a deep discount and then redeemed for their full face
value at maturity. When held to maturity, a zero's entire return comes from the
difference between its purchase price and its value at maturity.
TYPES OF ZEROS
* STRIPS (SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES)--
the U.S. Treasury Department program that allows broker-dealers to "strip"
Treasury securities into their component parts. The securities created by this
"stripping" activity are also known as STRIPS. STRIPS are direct obligations of
the U.S. government and are the most liquid (easily bought and sold) Treasury
zeros.
54 1-800-345-2021
Glossary
- --------------------------------------------------------------------------------
(Continued)
* REFCORPs (RESOLUTION FUNDING CORPORATION ZEROS) -- zeros created from bonds
issued by the Resolution Funding Corporation, a U.S. government agency. The
principal portions of these bonds are secured by Treasury zeros, and the
interest portions are guaranteed by the U.S. Treasury. REFCORPs are also
relatively liquid.
* Receipt Zeros -- zeros created and issued by broker-dealers before the STRIPS
program was implemented in 1985. Broker-dealers created receipt zeros by
purchasing Treasury bonds, depositing them in a custodian bank, and then selling
receipts representing ownership interest in the interest coupons or principal
portions of the bonds. The types of receipt zeros include:
TRs (TREASURY RECEIPTS)--generic receipt zeros.
ETRs (EASY-GROWTH TREASURY RECEIPTS)--issued by Dean Witter Reynolds, Inc.
* BECCs -- principal zeros that have been converted from physical delivery to
wirable (i.e., able to be transferred electronically) form.
FUND CLASSIFICATIONS
INVESTMENT OBJECTIVE
The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.
* Capital Preservation--Offers taxable and tax-free money market funds for
relative stability of principal and liquidity.
* Income--Offers funds that can provide current income and competitive yields,
as well as a strong and stable foundation and generally lower volatility levels
than stock funds.
* Growth & Income--Offers funds that emphasize both growth and income,
diversification, varying capitalization sizes, and different investment styles
and strategies.
* Growth--Offers funds with a focus on capital appreciation and long-term
growth, generally providing high return potential with corresponding high price
fluctuation risk.
RISK
The classification of funds by risk category is based on quantitative historical
measures as well as qualitative prospective measures. It is not intended to be a
precise indicator of future risk or return levels. The degree of risk within
each category can vary significantly, and some fund returns have historically
been higher than more aggressive funds or lower than more conservative funds.
Please be aware that the fund's category may change over time. Therefore, it is
important that you read a fund's prospectus or fund profile carefully before
investing to ensure its objectives, policies and risk potential are consistent
with your needs.
* Conservative--these funds generally provide lower return potential with either
low or minimal price fluctuation risk.
* Moderate-- these funds generally provide moderate return potential with
moderate price fluctuation risk.
* Aggressive-- these funds generally provide high return potential with
corresponding high price fluctuation risk.
www.americancentury.com 55
Notes
- --------------------------------------------------------------------------------
56 1-800-345-2021
[inside back cover]
===============================================================================
INVESTMENT OBJECTIVE - CAPITAL PRESERVATION
===============================================================================
RISK LEVEL - CONSERVATIVE
TAXABLE MONEY MARKETS TAX-FREE MONEY MARKETS
Premium Capital Reserve FL Municipal Money Market
Prime Money Market CA Municipal Money Market
Premium Government Reserve CA Tax-Free Money Market
Government Agency Tax-Free Money Market
Money Market
Capital Preservation
===============================================================================
INVESTMENT OBJECTIVE - INCOME
===============================================================================
RISK LEVEL - AGGRESSIVE
TAXABLE BONDS TAX-FREE BONDS
Target 2025* CA High-Yield Municipal
Target 2020* High-Yield Municipal
Target 2015*
Target 2010*
High-Yield
International Bond
RISK LEVEL - MODERATE
TAXABLE BONDS TAX-FREE BONDS
Long-Term Treasury CA Long-Term Tax-Free
Target 2005* Long-Term Tax-Free
Bond CA Insured Tax-Free
Premium Bond
RISK LEVEL - CONSERVATIVE
TAXABLE BONDS TAX-FREE BONDS
Intermediate-Term Bond CA Intermediate-Term Tax-Free
Intermediate-Term Treasury AZ Intermediate-Term Municipal
GNMA FL Intermediate-Term Municipal
Inflation-Adjusted Treasury Intermediate-Term Tax-Free
Limited-Term Bond CA Limited-Term Tax-Free
Target 2000* Limited-Term Tax-Free
Short-Term Government
Short-Term Treasury
===============================================================================
INVESTMENT OBJECTIVE - GROWTH AND INCOME
===============================================================================
RISK LEVEL - AGGRESSIVE
DOMESTIC EQUITY
Small Cap Quantitative
Small Cap Value
RISK LEVEL - MODERATE
ASSET ALLOCATION/BALANCED DOMESTIC EQUITY SPECIALTY
Strategic Allocation -- Equity Growth Utilities
Aggressive Equity Index Real Estate
Balanced Tax-Managed Value
Strategic Allocation -- Income & Growth
Moderate Value
Strategic Allocation -- Equity Income
Conservative
===============================================================================
INVESTMENT OBJECTIVE - GROWTH
===============================================================================
RISK LEVEL - AGGRESSIVE
DOMESTIC EQUITY SPECIALTY INTERNATIONAL
New Opportunities Global Gold Emerging Markets
Giftrust(reg.tm) International Discovery
Vista International Growth
Heritage Global Growth
Growth
Ultra
Select
RISK LEVEL - MODERATE
SPECIALTY
Global Natural Resources
The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.
The classification of funds by risk category is based on quantitative historical
measures as well as qualitative prospective measures. It is not intended to be a
precise indicator of future risk or return levels. The degree of risk within
each category can vary significantly, and some fund returns have historically
been higher than more aggressive funds or lower than more conservative funds.
Please be aware that a fund's category may change over time. Therefore, it is
important that you read a fund's prospectus or fund profile carefully before
investing to ensure its objectives, policies and risk potential are consistent
with your needs.
For a definition of fund categories, see the Glossary.
* While listed within the Income investment objective, the Target funds do not
pay current dividend income. Income dividends are distributed once a year in
December. The Target funds are listed in all three risk categories due to the
dramatic price volatility investors may experience during certain market
conditions. If held to their target dates, however, they can offer a
conservative, dependable way to invest for a specific time horizon.
Please call for a prospectus or profile on any American Century fund. These
documents contain important information including charges and expenses, and you
should read them carefully before you invest or send money.
[back cover]
[american century logo(reg.sm)]
American
Century
P.O. BOX 419200
KANSAS CITY, MISSOURI 64141-6200
WWW.AMERICANCENTURY.COM
INVESTOR RELATIONS
1-800-345-2021 OR 816-531-5575
AUTOMATED INFORMATION LINE
1-800-345-8765
FAX: 816-340-7962
TELECOMMUNICATIONS DEVICE FOR THE DEAF
1-800-634-4113 OR 816-444-3485
BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS
1-800-345-3533
AMERICAN CENTURY TARGET MATURITIES TRUST
INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES
9905 Funds Distributor, Inc.
SH-BKT-16273 (c)1999 American Century Services Corporation
