SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
File No. 2-94608
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 32 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
File No. 811-4165
Amendment No. 34 [X]
(Check appropriate box or boxes.)
AMERICAN CENTURY TARGET MATURITIES TRUST
_________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
4500 Main Street, Kansas City, MO 64111
_________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (816) 531-5575
William M. Lyons, 4500 Main Street, Kansas City, MO 64111
_________________________________________________________________
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: February 1, 2000
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on February 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
AMERICAN CENTURY
Prospectus
Target 2000 Fund
Target 2005 Fund
Target 2010 Fund
Target 2015 Fund
Target 2020 Fund
Target 2025 Fund
FEBRUARY 1, 2000
INVESTOR CLASS
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.
Funds Distributor, Inc.,
Distributor
[american century logo (reg. sm)]
American
Century
[Sidebar]
[american century logo (reg. sm)]
American
Century
American Century
Investments
P.O. Box 419200
Kansas City, MO
64141-6200
[End of Sidebar]
Dear Investor,
Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand prospectus can make your work a lot less daunting. We hope
you'll find this prospectus easy to understand, and more importantly, we hope it
gives you confidence in the investment decisions you have made or are soon to
make.
As you begin to read through this prospectus, take a look at the table of
contents to understand how it is organized. The first four sections take a
close-up look at the funds.
An Overview of the Funds - Learn about fund goals, strategies and risks and
who may or may not want to invest.
Fund Performance History - See how the funds performed from year to year.
Fees and Expenses - Find out fund management fees and other expenses
associated with investing.
Objectives, Strategies and Risks - Take a more detailed look at the principal
investment objectives, strategies and risks presented in the Overview of the
Funds section.
As you continue to read, the Management section will acquaint you with the
fund management team and Investing with American Century gives an overview about
how to invest and how to manage your account.
Share Price and Distributions, Taxes and Financial Highlights wrap up the
prospectus with important financial information you'll need to make an informed
decision.
Naturally, you may have questions about investing after you read through the
prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m. and Saturdays, 9 a.m. to 2 p.m.,
Central time. Give us a call at 1-800-345-2021.
Sincerely,
/s/MARK KILLEN
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
TABLE OF CONTENTS
An Overview of the Funds ................................................... 2
Fund Performance History ................................................... 3
Fees and Expenses .......................................................... 5
Objectives, Strategies and Risks ........................................... 6
Target 2000 Fund
Target 2005 Fund
Target 2010 Fund
Target 2015 Fund
Target 2020 Fund
Target 2025 Fund
Basics of Fixed-Income Investing ........................................... 8
Management ................................................................. 11
Investing with American Century ............................................ 13
Share Price and Distributions .............................................. 17
Taxes ...................................................................... 18
Multiple Class Information ................................................. 19
Financial Highlights ....................................................... 20
[Sidebar]
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
[graphic of pointing finger]
This symbol highlights special information and helpful tips.
[End of Sidebar}
American Century Investments
AN OVERVIEW OF THE FUNDS
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
These funds seek the highest return consistent with investment in U.S. Treasury
securities.
WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
The funds invest primarily in zero-coupon U.S. Treasury securities. Each fund
invests in different types of these DEBT SECURITIES and has different risks. The
following chart shows the differences among the funds' primary investments and
principal risks. It is designed to help you compare these funds with each other;
it should not be used to compare these funds with other mutual funds. A more
detailed description about the funds' investment strategies and risks begins on
page 6.
Fund Primary Investments Principal Risks
--------------------------------------------------------------------------------
Target 2000 Zero-coupon U.S. Treasury securities Lowest interest rate risk
Target 2005 Zero-coupon U.S. Treasury securities Medium interest rate risk
Shorter Term Less Volatile Target 2010 Zero-coupon U.S. Treasury securities High interest rate risk
[graphic of vertical arrow] Target 2015 Zero-coupon U.S. Treasury securities High interest rate risk
Longer Term More Volatile Target 2020 Zero-coupon U.S. Treasury securities High interest rate risk
Target 2025 Zero-coupon U.S. Treasury securities Highest interest rate risk
Each fund will be liquidated shortly after the conclusion of its target maturity
year.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
WHO MAY WANT TO INVEST IN THE FUNDS?
The funds may be a good investment if you are
* investing through an IRA or other tax-advantaged retirement plan
* seeking long-term financial goals that correspond to the maturity year of a
particular fund
* comfortable with fluctuating share prices, which increase as each funds'
maturity year approaches
* comfortable with the funds' other investment risks
WHO MAY NOT WANT TO INVEST IN THE FUNDS?
The funds may not be a good investment if you are
* seeking current income
* a short-term investor
* investing for long-term capital appreciation
* looking for the added security of FDIC insurance
[Sidebar]
DEBT SECURITIES include fixed-income investments such as notes, bonds,
commercial paper and U.S. Treasury bills.
[graphic of pointing finger]
An investment in the funds is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
[End of Sidebar]
2 American Century Investments 1-800-345-2021
FUND PERFORMANCE HISTORY
TARGET 2000 FUND
TARGET 2005 FUND
TARGET 2010 FUND
TARGET 2015 FUND
TARGET 2020 FUND
TARGET 2025 FUND
Annual Total Returns
The following bar chart shows the performance of the funds' Investor Class
shares for each of the last 10 calendar years or for each full calendar year in
the life of a fund if less than 10 years. It indicates the volatility of the
funds' historical returns from year to year.
[data from bar chart below]
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
Target 2000 2.90% 7.36% 7.05% 1.99% 20.74% -6.89% 15.46% 8.47% 20.66% 6.31%
Target 2005 -5.80% 12.87% 11.63% -1.24% 32.65% -8.90% 21.56% 9.56% 21.47% 3.58%
Target 2010 -11.79% 15.07% 16.75% -3.54% 42.09% -11.56% 26.28% 9.78% 21.06% 0.27%
Target 2015 -14.57% 14.60% 22.92% -6.03% 52.72% -14.08% 30.51% 7.77% 22.47% -3.38%
Target 2020 -18.35% 16.49% 28.62% -8.42% 61.34% -17.66% 35.62% 8.33% 17.36% -4.50%
Target 2025 -20.70% 21.81% 30.11%
[Sidebar]
[graphic of pointing finger]
The performance information on this page is designed to help you see how the
funds' returns can vary. Keep in mind that past performance does not predict how
the funds will perform in the future.
[End of Sidebar]
www.americancentury.com American Century Investments 3
The highest and lowest quarterly returns for the period reflected in the bar
chart are:
Highest Lowest
----------------------------------------------------------------------------
Target 2000 9.79% (4Q 1990) -4.93% (1Q 1994)
Target 2005 12.69% (4Q 1990) -7.65% (1Q 1990)
Target 2010 15.87% (2Q 1995) -10.88% (1Q 1990)
Target 2015 18.47% (4Q 1990) -13.82% (1Q 1996)
Target 2020 21.44% (2Q 1995) -16.61% (1Q 1996)
Target 2025 14.68% (4Q 1997) -10.19% (1Q 1997)
Average Annual Total Returns
The following table shows the average annual total returns of the funds'
Investor Class shares for the periods indicated. The benchmarks are unmanaged
indices (except as noted) that have no operating costs and are included in the
table for performance comparison.
For the calendar year ended December 31, 1999 1 year 5 years 10 years Life of Fund(1)
----------------------------------------------------------------------------------------------------------------------------
Target 2000 2.90% 7.80% 8.09% 11.47%
11/15/2000 Maturity STRIPS Issue(2) 3.44% 8.34% 8.50% 12.73%(3)
Merrill Lynch Long-Term Treasury Index -8.61% 9.06% 8.59% 10.95%(3)
----------------------------------------------------------------------------------------------------------------------------
Target 2005 -5.80% 9.22% 9.02% 12.93%
11/15/2005 Maturity STRIPS Issue(2) -5.46% 9.75% 9.27% 14.43%(3)
Merrill Lynch Long-Term Treasury Index -8.61% 9.06% 8.59% 10.95%(3)
----------------------------------------------------------------------------------------------------------------------------
Target 2010 -11.79% 10.18% 9.22% 13.89%
11/15/2010 Maturity STRIPS Issue(2) -11.50% 10.95% 9.59% 15.28%(3)
Merrill Lynch Long-Term Treasury Index -8.61% 9.06% 8.59% 10.95%(3)
----------------------------------------------------------------------------------------------------------------------------
Target 2015 -14.57% 11.54% 9.46% 9.40%
11/15/2015 Maturity STRIPS Issue(2) -14.11% 12.18% 9.86% 9.66%(4)
Merrill Lynch Long-Term Treasury Index -8.61% 9.06% 8.59% 8.61%(4)
----------------------------------------------------------------------------------------------------------------------------
Target 2020 -18.35% 12.56% 9.37% 9.37%
11/15/2020 Maturity STRIPS Issue(2) -18.10% 13.29% 9.08% 9.08%
Merrill Lynch Long-Term Treasury Index -8.61% 9.06% 8.59% 8.59%
----------------------------------------------------------------------------------------------------------------------------
Target 2025 -20.70% N/A N/A 5.77%
11/15/2025 Maturity STRIPS Issue(2) -21.23% N/A N/A 6.40%(5)
Merrill Lynch Long-Term Treasury Index -8.61% N/A N/A 5.81%(5)
(1) The inception dates are: Target 2000, Target 2005 and Target 2010: March
25, 1985; Target 2015: September 1, 1986; Target 2020: December 29, 1989;
and Target 2025: February 15, 1996.
(2) Each Target fund is designed to perform like a zero-coupon security with
the same term to maturity as the fund. The STRIPS issues listed in this
table are U.S. Treasury zero-coupon securities with similar maturity dates
as the respective fund. The STRIPS issues are not indices, but are
important benchmarks of the Target funds' performance.
(3) Since March 31, 1985, the date nearest the fund's inception for which data
are available.
(4) Since September 30, 1986, the date nearest the fund's inception for which
data are available.
(5) Since February 29, 1996, the date nearest the fund's inception for which
data are available.
[Sidebar]
For current performance information, including yields, please call us at
1-800-345-2021 or visit American Century's Web site at www.americancentury.com.
[End of Sidebar]
4 American Century Investments 1-800-345-2021
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Investor Class shares of other American Century funds
* to redeem your shares
The following table describes the fees and expenses you will pay if you buy and
hold shares of the funds.
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees Expenses(2) Operating Expenses
-------------------------------------------------------------------------------------------------------
Target 2000 0.59% None 0.00% 0.59%
Target 2005 0.59% None 0.00% 0.59%
Target 2010 0.59% None 0.00% 0.59%
Target 2015 0.59% None 0.00% 0.59%
Target 2020 0.59% None 0.00% 0.59%
Target 2025 0.59% None 0.00% 0.59%
(1) Based on expenses incurred during the funds' most recent fiscal year. The
funds have stepped fee schedules. As a result, the funds' management fee
rate generally decreases as fund assets increase.
(2) Other expenses, which include the fees and expenses of the funds'
independent trustees, their legal counsel and interest, were less than
0.005% for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
---------------------------------------------------------------------
Target 2000 $60 $189 $329 $736
Target 2005 $60 $189 $329 $736
Target 2010 $60 $189 $329 $736
Target 2015 $60 $189 $329 $736
Target 2020 $60 $189 $329 $736
Target 2025 $60 $189 $329 $736
[Sidebar]
[graphic of pointing finger]
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
[End of Sidebar]
www.americancentury.com American Century Investments 5
OBJECTIVES, STRATEGIES AND RISKS
TARGET 2000 FUND
TARGET 2005 FUND
TARGET 2010 FUND
TARGET 2015 FUND
TARGET 2020 FUND
TARGET 2025 FUND
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
These funds seek the highest return consistent with investment in U.S. Treasury
securities.
HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVES?
The funds invest primarily in zero-coupon U.S. Treasury securities. Each fund is
designed to provide an investment experience that is similar to a direct
investment in a zero-coupon U.S. Treasury security.
WHAT ARE THE DIFFERENCES BETWEEN THE FUNDS?
Each fund is managed to mature in the year identified in its name; therefore,
each fund's WEIGHTED AVERAGE MATURITY is different. Funds with longer weighted
average maturities have the most volatile share prices. For example, Target 2025
has the longest weighted average maturity, and its share price will fluctuate
the most.
WHAT ARE ZERO-COUPON TREASURY SECURITIES?
U.S. Treasury bonds have the traditional design of debt securities. Interest is
paid periodically until maturity, when the principal is repaid. Zero-coupon
Treasury securities, however, do not make any periodic interest payments.
Instead, all of the interest and principal is paid when the securities mature.
Zero-coupon Treasury securities are created by separating a traditional Treasury
bond's interest and principal payment obligation. Each payment obligation
becomes a separate zero-coupon Treasury security. These securities are created
by financial institutions (like a dealer), the U.S. Treasury and other agencies
of the federal government. The important characteristic is that the final
maturity value of a zero-coupon Treasury security is supported by U.S. Treasury
securities.
Zero-coupon Treasury securities are beneficial for investors who wish to invest
for a fixed period of time at a selected rate. When an investor purchases a
traditional bond, it is paid periodic interest at a predetermined rate. This
interest payment must be reinvested elsewhere. However, the investor may not be
able to reinvest this interest payment in an investment that has a return
similar to a traditional bond. This is called reinvestment risk. Because
zero-coupon securities do not pay interest periodically, investors in
zero-coupon securities are not exposed to reinvestment risk.
HOW IS AN INVESTMENT IN THE FUNDS LIKE AN INVESTMENT IN ZERO-COUPON U.S.
TREASURY SECURITIES?
The investment performance of the funds is designed to be similar to an
investment in zero-coupon U.S. Treasury security. If you invest in a fund,
reinvest all distributions and hold your shares until the fund is liquidated,
your investment experience should be similar to that of an investment in a
zero-coupon U.S. Treasury security with the same term to maturity as the fund.
Each fund is managed to provide an investment return and maturity value that
will not differ substantially from the ANTICIPATED GROWTH RATE (AGR) and
ANTICIPATED VALUE AT MATURITY (AVM) calculated on the day the shares were
purchased.
[Sidebar]
WEIGHTED AVERAGE MATURITY is described in more detail under "Basics of
Fixed-Income Investing."
[graphic of pointing finger]
Because all of the interest and principal is paid when the securities mature,
zero-coupon securities are bought and sold at prices below their face value.
A fund's ANTICIPATED GROWTH RATE is an estimate of the annualized rate of growth
that an investor may expect from the purchase date to the fund's weighted
average maturity date.
The ANTICIPATED VALUE AT MATURITY is an estimate of a fund's net asset value as
of the fund's weighted average maturity date. It is based on the maturity
values of the fund's zero-coupon Treasury securities.
[End of Sidebar]
6 American Century Investments 1-800-345-2021
The advisor calculates each fund's AGR and AVM every business day. AGR and AVM
calculations assume, among other factors, that the fund's operating expenses (as
a percentage of the fund's assets) and composition of securities held by each
fund remain constant for the life of the fund. While many factors can influence
each fund's daily AGR and AVM, they tend to fluctuate within narrow ranges. The
following table shows how each fund's AVM has fluctuated in the last five
years.
Anticipated Values at Maturity
9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
----------------------------------------------------------------------------------
Target 2000 $100.99 $101.10 $101.13 $101.78 $101.51
Target 2005 $100.32 $100.71 $100.85 $101.53 $101.28
Target 2010 $101.02 $102.53 $103.40 $104.85 $105.56
Target 2015 $109.62 $110.11 $110.52 $112.63 $112.62
Target 2020 $102.31 $103.60 $104.84 $106.96 $107.30
Target 2025 N/A $109.24 $110.88 $112.23 $111.81
WHAT HAPPENS WHEN A FUND REACHES ITS MATURITY YEAR?
* The fund managers may begin buying traditional Treasury securities consistent
with a fund's investment objective and pending maturity.
* As a fund's zero-coupon Treasury securities mature, its proceeds will be
invested in Treasury bills.
* Each fund will be liquidated shortly after the conclusion of its target
maturity year.
Additional information about the funds' investments is available in their annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
Because the funds have different weighted average maturities, each fund will
respond differently to changes in interest rates. Funds with longer weighted
average maturities are more sensitive to interest rate changes. When interest
rates rise, the funds' share values will decline, but the share values of funds
with longer weighted average maturities generally will decline further. This
interest rate sensitivity is greater for the funds than for traditional
Treasury funds.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
The funds' share values will fluctuate. In general, funds that have higher
potential gain have a higher potential loss.
While we recommend that shareholders hold their investment in a fund until the
fund is liquidated, we do not restrict your (or any other shareholders') ability
to redeem shares. When a fund's shareholders redeem their shares before the
target maturity year, unanticipated capital gains or losses may result. The fund
will distribute these capital gains and losses to all shareholders.
The funds are designed to provide an investment that is similar to investing in
a zero-coupon U.S. Treasury security that matures in the year identified in its
name. The fund managers adhere to investment policies that are designed to
ensure that this happens. However, a precise forecast of a fund's final maturity
value and yield to maturity are not possible.
[Sidebar]
[graphic of pointing finger]
This table is designed to show the narrow ranges in which each fund's AVMs vary
over time. There is no guarantee that the funds' AVMs will fluctuate as little
in the future.
[graphic of pointing finger]
The investment performance of the funds is designed to be similar to an
investment in an equivalent zero-coupon U.S. Treasury security. However, an
investment in the funds involves different risks.
[End of Sidebar]
www.americancentury.com American Century Investments 7
BASICS OF FIXED-INCOME INVESTING
DEBT SECURITIES
When a fund buys a debt security, which is also called a fixed-income security,
it is essentially lending money to the issuer of the security. Notes, bonds,
commercial paper and Treasury bills are examples of debt securities. After the
debt security is first sold by the issuer, it may be bought and sold by other
investors. The price of the security may rise or fall based on many factors,
including changes in interest rates, liquidity and credit quality.
The fund managers decide which debt securities to buy and sell by
* determining which securities help a fund meet its maturity requirements
* identifying securities that satisfy a fund's credit quality standards
* evaluating the current economic conditions and assessing the risk of
inflation
* evaluating special features of the securities that may make them more or less
attractive
WEIGHTED AVERAGE MATURITY
Like most loans, debt securities eventually must be repaid (or refinanced) at
some date. This date is called the maturity date. The number of days left to a
debt security's maturity date is called the remaining maturity. The longer a
debt security's remaining maturity, generally the more sensitive it is to
changes in interest rates.
Because a bond fund will own many debt securities, the fund managers calculate
the average of the remaining maturities of all the debt securities the fund owns
to evaluate the interest rate sensitivity of the entire portfolio. This average
is weighted according to the size of the fund's individual holdings and is
called WEIGHTED AVERAGE MATURITY. The following chart shows how fund managers
would calculate the weighted average maturity for a fund that owned only two
debt securities.
Amount of Percent of Remaining Weighted
Security Owned Portfolio Maturity Maturity
----------------------------------------------------------------------------------------------------------
Debt Security A $100,000 25% 1,000 days 250 days
Debt Security B $300,000 75% 10,000 days 7,500 days
Weighted Average Maturity 7,750 days
TYPES OF RISK
The basic types of risk that the funds face are described below.
INTEREST RATE RISK
Generally, interest rates and the prices of debt securities move in opposite
directions. When interest rates fall, the prices of most debt securities rise;
when interest rates rise, prices fall. Because the funds invest primarily in
debt securities, changes in interest rates will affect the funds' performance.
This sensitivity to interest rate changes is called interest rate risk.
The degree to which interest rate changes affect a fund's performance varies and
is related to the weighted average maturity of a particular fund. For example,
when interest rates rise, you can expect the share value of a long-term bond
fund to fall more than that of a short-term bond fund. When rates fall, the
opposite is true.
[Sidebar]
WEIGHTED AVERAGE MATURITY is a tool that the fund managers use to approximate
the remaining term to maturity of a fund's investment portfolio.
[graphic of pointing finger]
The longer a fund's weighted average maturity, the more sensitive it is to
changes in interest rates.
[End of Sidebar]
8 American Century Investments 1-800-345-2021
When interest rates change, longer maturity bonds generally experience a greater
change in price. The following table shows the likely effect of a 1% increase in
interest rates on the price of 7% coupon bonds of differing maturities:
Remaining Maturity Current Price Price After 1% Increase Change in Price
-------------------------------------------------------------------------------------------
1 year $100.00 $99.06 -0.94%
3 years $100.00 $97.38 -2.62%
10 years $100.00 $93.20 -6.80%
30 years $100.00 $88.69 -11.31%
CREDIT RISK
Credit risk is the risk that an obligation won't be paid and a loss will result.
A high credit rating indicates a high degree of confidence by the rating
organization that the issuer will be able to withstand adverse business,
financial or economic conditions and be able to make interest and principal
payments on time. Generally, a lower credit rating indicates a greater risk of
non-payment. A lower rating also may indicate that the issuer has a more senior
series of debt securities, which means that if the issuer has difficulties
making its payments, the more senior series of debt is first in line for
payment.
The fund managers do not invest solely on the basis of a security's credit
rating; they also consider other factors, including potential returns. Higher
credit ratings usually mean lower interest rate payments, so investors often
purchase securities that aren't the highest rated to increase return. If a fund
purchases lower-rated securities, it assumes additional credit risk.
The following chart shows the authorized credit quality ranges for the funds
offered by this Prospectus.
-----------------------------------------
Quality
-----------------------------------------
High Quality
----------------------------
A-1 A-2 A-3
P-1 P-2 P-3
MIG-1 MIG-2 MIG-3
SP-1 SP-2 SP-3
AAA AA A BBB BB B CCC CC C D
--------------------------------------------------------------------------------
Target 2000 X
--------------------------------------------------------------------------------
Target 2005 X
--------------------------------------------------------------------------------
Target 2010 X
--------------------------------------------------------------------------------
Target 2015 X
--------------------------------------------------------------------------------
Target 2020 X
--------------------------------------------------------------------------------
Target 2025 X
--------------------------------------------------------------------------------
------------------------------------- -- --------------------------------------
INVESTMENT GRADE NON-INVESTMENT GRADE
------------------------------------- -- --------------------------------------
Strictly speaking, U.S. Treasury securities are not "rated" AAA. However, U.S.
Treasury securities are backed by the full faith and credit of the United
States, and are considered among the safest securities in the world. The rating
on U.S. Treasury securities is, therefore, considered to be equivalent to AAA.
LIQUIDITY RISK
Debt securities can become difficult to sell, or less liquid, for a variety of
reasons, such as lack of an active trading market. The chance that a fund will
have liquidity issues is called liquidity risk.
[Sidebar]
[graphic of pointing finger]
Credit quality may be lower when the
issuer has
* a high debt level,
* a short operating history,
* a senior level of debt,
* a difficult, competitive environment or
* a less stable cash flow
[graphic of pointing finger]
The Statement of Additional Information provides a detailed description of these
securities' ratings.
[End of Sidebar]
www.americancentury.com American Century Investments 9
A COMPARISON OF BASIC RISK FACTORS
The following chart depicts the basic risks of investing in the funds. It is
designed to help you compare these funds with each other; it shouldn't be used
to compare these funds with other mutual funds.
Interest Rate Risk Credit Risk(1) Liquidity Risk(2)
---------------------------------------------------------------------------------
Target 2000 Lowest Low Low
Target 2005 Medium Low Low
Target 2010 High Low Low
Target 2015 High Low Low
Target 2020 High Low Low
Target 2025 Highest Low Low
(1) Because the funds all invest in zero-coupon Treasury securities, there is no
difference in credit risk. U.S. Treasury securities are considered among the
safest securities in the world because they are backed by the full faith and
credit of the United States.
(2) The Treasury market is considered the most liquid in the world.
The funds engage in a variety of investment techniques as they pursue their
investment objectives. Each technique has its own characteristics, and may pose
some level of risk to the funds. If you would like to learn more about these
techniques, you should review the Statement of Additional Information before
making an investment.
10 American Century Investments 1-800-345-2021
MANAGEMENT
WHO MANAGES THE FUNDS?
The Board of Trustees, investment advisor and fund management team play key
roles in the management of the funds.
THE BOARD OF TRUSTEES
The Board of Trustees oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Trustees does not manage the funds, it has hired an investment advisor to do so.
More than two-thirds of the trustees are independent of the funds' advisor; that
is, they are not employed by and have no financial interest in the advisor.
THE INVESTMENT ADVISOR
The funds' investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958. The advisor is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the funds
and directing the purchase and sale of their investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the funds to operate.
For the services it provided to the funds during the most recent fiscal year,
the advisor received a unified management fee based on a percentage of the
average net assets of the Investor Class shares of the funds. The rate of the
management fee for each fund is determined monthly on a class-by-class basis
using a two-step formula that takes into account the fund's strategy (money
market, bond or equity) and the total amount of mutual fund assets the advisor
manages.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor paid all
expenses of managing and operating the funds except brokerage expenses, taxes,
interest, fees and expenses of the independent trustees (including legal counsel
fees), and extraordinary expenses. A portion of the management fee may be paid
by the funds' advisor to unaffiliated third parties who provide recordkeeping
and administrative services that would otherwise be performed by an affiliate of
the advisor.
Management Fees Paid by the Funds to the Advisor as a Percentage of Average Net
Assets for the Most Recent Fiscal Year Ended September 30, 1999
---------------------------------------------------------------------------
Target 2000 0.59%
Target 2005 0.59%
Target 2010 0.59%
Target 2015 0.59%
Target 2020 0.59%
Target 2025 0.59%
www.americancentury.com American Century Investments 11
THE FUND MANAGEMENT TEAM
The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the funds. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for a fund as they see fit, guided by the fund's investment objective
and strategy.
The portfolio managers on the investment team are identified below:
DAVID W. SCHROEDER
Mr. Schroeder, Vice President and Portfolio Manager, has been a member of the
team that manages the Target funds since joining American Century in July 1990.
He holds a bachelor of arts from Pomona College.
JEREMY FLETCHER
Mr. Fletcher, Portfolio Manager, has been a member of the team that manages the
Target funds since August 1997. He joined American Century in October 1991 as an
Investor Relations Representative. He has bachelor's degrees in economics and
mathematics from Claremont McKenna College.
FUNDAMENTAL INVESTMENT POLICIES
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the funds may not be changed
without a shareholder vote. The Board of Trustees may change any other policies
and investment strategies.
[Sidebar]
[graphic of pointing finger]
Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing permitted personal trades.
12 American Century Investments 1-800-345-2021
INVESTING WITH AMERICAN CENTURY
SERVICES AUTOMATICALLY AVAILABLE TO YOU
You automatically will have access to the services listed below when you open
your account. If you do not want these services, see "Conducting Business in
Writing" below.
CONDUCTING BUSINESS IN WRITING
If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form.
WAYS TO MANAGE YOUR ACCOUNT
----------------------------------------------------------------------------
BY TELEPHONE
Investor Relations
1-800-345-2021
Business, Not-For-Profit
and Employer-Sponsored
Retirement Plans
1-800-345-3533
Automated Information Line
1-800-345-8765
[graphic of telephone]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Call or use our Automated Information Line if you have authorized us to accept
telephone instructions.
MAKE ADDITIONAL INVESTMENTS
Call or use our Automated Information Line if you have authorized us to invest
from your bank account.
SELL SHARES
Call a Service Representative.
--------------------------------------------------------------------------------
ONLINE
www.americancentury.com
[graphic of computer]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Exchange shares from another American Century account.
MAKE ADDITIONAL INVESTMENTS
Make an additional investment into an established American Century account if
you have authorized us to invest from your bank account.
SELL SHARES
Not available.
--------------------------------------------------------------------------------
BY MAIL OR FAX
P.O. Box 419200
Kansas City, MO 64141-6200
Fax
816-340-7962
[graphic of envelope]
OPEN AN ACCOUNT
Send a signed, completed application and check or money order payable to
American Century Investments.
EXCHANGE SHARES
Send written instructions to exchange your shares from one American Century
account to another.
MAKE ADDITIONAL INVESTMENTS
Send your check or money order for at least $50 with an investment slip or $250
without an investment slip. If you don't have an investment slip, include your
name, address and account number on your check or money order.
SELL SHARES
Send written instructions or a redemption form to sell shares. Call a Service
Representative to request a form.
www.americancentury.com American Century Investments 13
A NOTE ABOUT MAILINGS TO SHAREHOLDERS
To reduce expenses and demonstrate respect for our environment, we will deliver
a single copy of most financial reports and prospectuses to investors who share
an address, even if the accounts are registered under different names. In most
cases, we also will deliver account statements for all of the investors in a
household in a single envelope. If you would like to receive separate mailings,
please call us and we will begin individual delivery within 30 days. If you'd
like to reduce mailbox clutter even more, visit www.americancentury.com and
sign up to receive these documents by email.
YOUR GUIDE TO SERVICES AND POLICIES
When you open an account, you will receive a services guide, which explains the
services available to you and the policies of the funds and the transfer agent.
-----------------------------------------------------------------------------
AUTOMATICALLY
[graphic of rotating arrows]
OPEN AN ACCOUNT
Not available.
EXCHANGE SHARES
Send written instructions to set up an automatic exchange of your shares from
one American Century account to another.
MAKE ADDITIONAL INVESTMENTS
With the automatic investment privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.
SELL SHARES
If you have at least $10,000 in your account, you may sell shares automatically
by establishing Check-A-Month or Automatic Redemption plans.
--------------------------------------------------------------------------------
BY WIRE
[graphic of pointing finger]
Please remember if you request redemptions by wire, $10 will be deducted from
the amount redeemed. Your bank also may charge a fee.
[graphic of wire machine]
OPEN AN ACCOUNT
Call to set up your account or mail a completed application to the address
provided in the "By mail" section. Give your bank the following information to
wire money.
* Our bank information:
Commerce Bank N.A.
Routing No. 101000019
Account No. 2804918
* The fund name
* Your American Century account number*
* Your name
* The contribution year (for IRAs only)
*For additional investments only
MAKE ADDITIONAL INVESTMENTS
Follow the wire instructions.
SELL SHARES
You can receive redemption proceeds by wire or electronic transfer.
EXCHANGE SHARES
Not available.
--------------------------------------------------------------------------------
IN PERSON
[graphic of a person]
If you prefer to handle your transactions in person, visit one of our Investor
Centers and a representative can help you open an account, make additional
investments, and sell or exchange shares.
4500 Main St. 4917 Town Center Drive
Kansas City, Missouri Leawood, Kansas
8 a.m. to 5:30 p.m., Monday-Friday 8 a.m. to 6 p.m., Monday-Friday
8 a.m. to noon, Saturday
1665 Charleston Road 9445 East County Line Road, Suite A
Mountain View, California Englewood, Colorado
8 a.m. to 5 p.m., Monday-Friday 8 a.m. to 6 p.m., Monday-Friday
8 a.m. to noon, Saturday
14 American Century Investments 1-800-345-2021
MINIMUM INITIAL INVESTMENT AMOUNTS
To open an account, the minimum investments are:
----------------------------------------------------------------------------
Individual or Joint $2,500
Traditional IRA $1,000
Roth IRA $1,000
Education IRA $500
UGMA/UTMA $2,500
403(b) No minimum
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
If your redemption activity causes your account balance to fall below the
minimum initial investment amount, we will notify you and give you 90 days to
meet the minimum. If you do not meet the deadline, American Century will redeem
the shares in the account and send the proceeds to your address of record.
ABUSIVE TRADING PRACTICES
We do not permit market timing or other abusive trading practices in our funds.
Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the funds and their shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.
SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the assets of the fund if that percentage is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. The securities
would be selected from the fund's portfolio by the fund managers. A payment in
securities can help the fund's remaining shareholders avoid tax liabilities that
they might otherwise have incurred had the fund sold securities prematurely to
pay the entire redemption amount in cash.
We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice.
Also, if payment is made in securities, a shareholder may have to pay brokerage
or other transaction costs to convert the securities to cash.
If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining investors.
www.americancentury.com American Century Investments 15
INVESTING THROUGH FINANCIAL INTERMEDIARIES
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
* minimum investment requirements
* exchange policies
* fund choices
* cutoff time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the funds' annual reports, semiannual
reports and Statement of Additional Information are available from your
intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although transactions in fund shares may be made directly with American Century
at no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the funds.
American Century has contracts with certain financial intermediaries requiring
them to track the time investment orders are received and to comply with
procedures relating to the transmission of orders. The funds have authorized
those intermediaries to accept orders on each fund's behalf up to the time at
which the net asset value is determined. If those orders are transmitted to
American Century and paid for in accordance with the contract, they will be
priced at the net asset value next determined after your request is received in
the form required by the intermediary on a fund's behalf.
[Sidebar]
[graphic of pointing finger]
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
[End of Sidebar]
16 American Century Investments 1-800-345-2021
SHARE PRICE AND DISTRIBUTIONS
SHARE PRICE
American Century determines the NET ASSET VALUE (NAV) of each fund as of ONE
HOUR BEFORE the close of regular trading on the New York Stock Exchange (usually
4 p.m. Eastern time) on each day the Exchange is open. On days when the Exchange
is not open (including certain U.S. holidays), we do not calculate the NAV. The
NAV of a fund share is the current value of the fund's assets, minus any
liabilities, divided by the number of fund shares outstanding.
If current market prices of securities owned by a fund are not readily available
from an independent pricing service, the advisor may determine their fair value
in accordance with procedures adopted by the fund's Board.
We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in good order.
DISTRIBUTIONS
Federal tax laws require each fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the funds will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received, as well as CAPITAL GAINS realized on the
sale of investment securities. Each fund generally pays distributions from net
income and capital gains, if any, once a year in December. The funds may make
more frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.
You will participate in fund distributions, when they are declared, starting the
day after your purchase is effective. For example, if you purchase shares on a
day that a distribution is declared, you will not receive that distribution. If
you redeem shares, you will receive any distribution declared on the day you
redeem. If you redeem all shares, we will include any distributions received
with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information regarding distributions and your
distribution options.
REVERSE SHARE SPLITS
When a fund pays its distributions, the Board also declares a reverse share
split for each fund that exactly offsets the per-share amount of the
distribution. If you reinvest your dividends, this reverse share split means
that you will hold exactly the same number of shares after a dividend as you did
before. This reverse share split makes changes in the funds' share prices behave
like changes in the values of zero-coupon securities.
FUND LIQUIDATION
During a fund's target maturity year, you will be asked how you want your shares
liquidated. You can choose one of the following
* cash
* shares of another American Century mutual fund
If you do not tell us by December 31 of the target year how you want your shares
liquidated, your money will be exchanged for shares of Capital Preservation, an
American Century Treasury money market fund.
[Sidebar]
The NET ASSET VALUE, or NAV, of a fund is the price of the fund's shares.
CAPITAL GAINS are increases in the values of capital assets, such as stock, from
the time the assets are purchased. Tax becomes due on capital gains once an
asset is sold.
[End of Sidebar]
www.americancentury.com American Century Investments 17
TAXES
The tax consequences of owning shares of the funds will vary depending on
whether you own them through a taxable or tax-deferred account. Tax consequences
result from distributions by the funds of dividend and interest income they have
received or capital gains they have generated through their investment
activities. Tax consequences also result from sales of fund shares by investors
after the net asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a
professional tax advisor.
Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
sales by you of fund shares may cause you to be taxed on your investment.
Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28% Bracket or Above
--------------------------------------------------------------------------------------------
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund or whether you reinvest your distributions in
additional shares or take them in cash. American Century will inform you of the
tax status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV).
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.
Taxes on Transactions
Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain and disallowed to the extent of any distribution of tax-exempt income to
you with respect to those shares. If a loss is realized on the redemption of
fund shares, the reinvestment in additional fund shares within 30 days before or
after the redemption may be subject to the wash sale rules of the Internal
Revenue Code. This may result in a postponement of the recognition of such loss
for federal income tax purposes.
If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.
[graphic of pointing finger]
Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The funds distribute those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.
If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.
18 American Century Investments 1-800-345-2021
MULTIPLE CLASS INFORMATION
American Century offers two classes of the funds: Investor Class and Advisor
Class. The shares offered by this Prospectus are Investor Class shares and have
no up-front or deferred charges, commissions or 12b-1 fees.
American Century offers the other class of shares primarily through
employer-sponsored retirement plans, or through institutions like banks,
broker-dealers and insurance companies. The other class has different fees,
expenses and/or minimum investment requirements from the Investor Class. The
difference in the fee structures between the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the advisor for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. Different fees and expenses will affect performance. For
additional information concerning the other class of shares not offered by this
Prospectus, call us at 1-800-345-3533 for Advisor Class shares. You also can
contact a sales representative or financial intermediary who offers that class
of shares.
Except as described below, all classes of shares of the funds have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; and (d) each class
may have different exchange privileges.
www.americancentury.com American Century Investments 19
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The tables on the next few pages itemize what contributed to the changes in
share price during the most recently ended fiscal year. They also show the
changes in share price for this period in comparison to changes over the last
five fiscal years or less, if the share class is not five years old.
On a per-share basis, each table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to investors
* reverse share split
* share price at the end of the period
Each table also includes some key statistics for the period as appropriate
* TOTAL RETURN - the overall percentage of return of the fund, assuming the
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 fund's buying and selling activit
The Financial Highlights for the fiscal years ended September 30, 1998, and
1999, have been audited by PricewaterhouseCoopers LLP, independent accountants.
Their report is included in the funds' annual report, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request. Prior years' information was audited by other independent auditors,
whose report also is incorporated by reference into the Statement of Additional
Information.
20 American century Investments 1-800-2021
TARGET 2000 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period ..................$ 93.78 $ 86.05 $ 79.95 $ 76.86 $ 66.93
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 5.06 5.13 5.10 4.75 4.37
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (2.73) 2.60 1.00 (1.66) 5.56
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... 2.33 7.73 6.10 3.09 9.93
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (5.57) (5.64) (5.20) (3.94) (3.42)
From Net Realized Gains ............................. (1.32) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (6.89) (5.64) (5.20) (3.94) (3.42)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 6.89 5.64 5.20 3.94 3.42
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................$ 96.11 $ 93.78 $ 86.05 $ 79.95 $ 76.86
=========== =========== =========== =========== ===========
Total Return(3) ..................................... 2.48% 8.97% 7.64% 4.01% 14.84%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.56% 0.53% 0.63%
Ratio of Net Investment Income to Average Net Assets .. 5.34% 5.75% 6.14% 5.99% 6.13%
Portfolio Turnover Rate ............................... 31% 82% 10% 29% 53%
Net Assets, End of Period (in thousands) ..............$ 201,971 $ 237,525 $ 248,377 $ 267,757 $ 294,736
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
www.americancentury.com American Century Investments 21
TARGET 2005 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period ..................$ 76.72 $ 64.54 $ 57.83 $ 56.61 $ 45.22
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 3.77 3.84 3.74 3.50 3.33
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .......................... (7.94) 8.34 2.97 (2.28) 8.06
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (4.17) 12.18 6.71 1.22 11.39
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (3.39) (3.61) (3.61) (2.06) (2.41)
From Net Realized Gains ............................. (1.07) (0.27) (0.44) (0.58) (0.67)
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (4.46) (3.88) (4.05) (2.64) (3.08)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 4.46 3.88 4.05 2.64 3.08
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................$ 72.55 $ 76.72 $ 64.54 $ 57.83 $ 56.61
=========== =========== =========== =========== ===========
Total Return(3) ..................................... (5.44)% 18.87% 11.60% 2.15% 25.16%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.57% 0.58% 0.71%
Ratio of Net Investment Income to Average Net Assets .. 5.10% 5.53% 6.15% 6.05% 6.58%
Portfolio Turnover Rate ............................... 81% 35% 15% 31% 34%
Net Assets, End of Period (in thousands) ..............$ 490,248 $ 533,986 $ 281,677 $ 238,864 $ 183,452
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
22 American Century Investments 1-800-345-2021
TARGET 2010 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period .................. $ 61.98 $ 49.16 $ 42.47 $ 42.14 $ 31.67
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 3.07 2.94 2.79 2.58 2.41
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (9.95) 9.88 3.90 (2.25) 8.06
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (6.88) 12.82 6.69 0.33 10.47
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (2.78) (2.46) (2.82) (1.57) (1.48)
From Net Realized Gains ............................. (1.33) (0.29) (1.17) -- (0.48)
In Excess of Net Realized Gains ..................... (0.16) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (4.27) (2.75) (3.99) (1.57) (1.96)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 4.27 2.75 3.99 1.57 1.96
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................ $ 55.10 $ 61.98 $ 49.16 $ 42.47 $ 42.14
=========== =========== =========== =========== ===========
Total Return(3) ..................................... (11.10)% 26.08% 15.75% 0.78% 33.06%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.62% 0.67% 0.71%
Ratio of Net Investment Income to Average Net Assets .. 5.31% 5.39% 6.15% 5.98% 6.56%
Portfolio Turnover Rate ............................... 49% 34% 26% 24% 26%
Net Assets, End of Period (in thousands) .............. $ 240,606 $ 283,828 $ 124,812 $ 111,117 $ 95,057
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
www.americancentury.com American Century Investments 23
TARGET 2015 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period ..................$ 49.87 $ 38.34 $ 31.96 $ 32.20 $ 22.79
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 2.39 2.17 2.00 1.85 1.71
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (9.22) 9.36 4.38 (2.09) 7.70
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (6.83) 11.53 6.38 (0.24) 9.41
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (2.10) (2.11) (2.05) (1.28) (0.87)
From Net Realized Gain .............................. -- (1.40) (0.34) (1.61) --
In Excess of Net Realized Gains ..................... (0.08) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (2.18) (3.51) (2.39) (2.89) (0.87)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 2.18 3.51 2.39 2.89 0.87
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................$ 43.04 $ 49.87 $ 38.34 $ 31.96 $ 32.20
=========== =========== =========== =========== ===========
Total Return(3) ..................................... (13.70)% 30.07% 19.96% (0.74)% 41.29%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.61% 0.65% 0.71%
Ratio of Net Investment Income to Average Net Assets .. 5.25% 4.96% 5.79% 5.63% 6.40%
Portfolio Turnover Rate ............................... 55% 31% 21% 17% 70%
Net Assets, End of Period (in thousands) ..............$ 218,193 $ 170,081 $ 114,900 $ 115,654 $ 114,647
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
24 American Century Investments 1-800-345-2021
TARGET 2020 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period ..................$ 36.95 $ 27.17 $ 22.00 $ 22.47 $ 15.28
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 1.62 1.53 1.51 1.41 1.19
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (7.96) 8.25 3.66 (1.88) 6.00
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (6.34) 9.78 5.17 (0.47) 7.19
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (2.06) (2.35) (1.45) (0.40) (0.21)
From Net Realized Gains ............................. (5.20) (2.19) -- (0.04) --
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (7.26) (4.54) (1.45) (0.44) (0.21)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 7.26 4.54 1.45 0.44 0.21
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................$ 30.61 $ 36.95 $ 27.17 $ 22.00 $ 22.47
=========== =========== =========== =========== ===========
Total Return(3) ..................................... (17.16)% 36.00% 23.50% (2.09)% 47.05%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.53% 0.61% 0.72%
Ratio of Net Investment Income to Average Net Assets .. 4.82% 4.83% 6.29% 6.25% 6.24%
Portfolio Turnover Rate ............................... 31% 18% 14% 47% 78%
Net Assets, End of Period (in thousands) ..............$ 316,707 $ 486,052 $ 553,551 $ 926,319 $ 574,702
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
www.americancentury.com American Century Investments 25
TARGET 2025 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30 (except as noted)
Per-Share Data
1999 1998 1997 1996(1)
Net Asset Value, Beginning of Period ........................ $ 31.67 $ 22.27 $ 17.91 $ 19.85
----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) .................................. 1.46 1.33 1.21 0.72
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .............................. (6.91) 8.07 3.15 (2.66)
----------- ----------- ----------- -----------
Total From Investment Operations ............................ (5.45) 9.40 4.36 (1.94)
----------- ----------- ----------- -----------
Distributions
From Net Investment Income ................................ (1.28) (0.70) (0.72) --
From Net Realized Gains ................................... -- (0.05) -- --
In Excess of Net Realized Gains ........................... (0.31) -- -- --
----------- ----------- ----------- -----------
Total Distributions ....................................... (1.59) (0.75) (0.72) --
----------- ----------- ----------- -----------
Reverse Share Split ......................................... 1.59 0.75 0.72 --
----------- ----------- ----------- -----------
Net Asset Value, End of Period .............................. $ 26.22 $ 31.67 $ 22.27 $ 17.91
=========== =========== =========== ===========
Total Return(3) ........................................... (17.21)% 42.21% 24.34% (9.77)%
Ratios/Supplemental Data
1999 1998 1997 1996(1)
Ratio of Operating Expenses to Average Net Assets ........... 0.59% 0.59% 0.62% 0.67%(4)
Ratio of Net Investment Income to Average Net Assets ........ 5.25% 4.94% 6.14% 6.57%(4)
Portfolio Turnover Rate ..................................... 54% 52% 58% 61%
Net Assets, End of Period (in thousands) .................... $ 754,356 $ 356,122 $ 73,821 $ 35,661
(1) February 15, 1996 (inception) through September 30, 1996.
(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.
26 American Century Investments 1-800-345-2021
NOTES
www.americancentury.com American Century Investments 27
NOTES
28 American Century Investments 1-800-345-2021
NOTES
www.americancentury.com American Century Investments 29
MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS
Annual and Semiannual Reports
These reports contain more information about the funds' investments and the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the funds' operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.
You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the funds or your accounts, by contacting American Century at
the address or telephone numbers listed below.
You also can get information about the funds (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
* In person SEC Public Reference Room
Washington, D.C. Call 202-942-8090 for location
and hours.
* On the Internet EDGAR database at www.sec.gov
By email request at [email protected]
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
Investment Company Act File No. 811-4165
[american century logo (reg. sm)]
American
Century
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
0002
SH-PRS-18749
AMERICAN CENTURY
Prospectus
Target 2000 Fund
Target 2005 Fund
Target 2010 Fund
Target 2015 Fund
Target 2020 Fund
Target 2025 Fund
FEBRUARY 1, 2000
ADVISOR CLASS
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.
Funds Distributor, Inc.,
Distributor
[american century logo (reg. sm)]
American
Century
[Sidebar]
[american century logo (reg. sm)]
American
Century
American Century
Investments
P.O. Box 419385
Kansas City, MO
64141-6385
Dear Investor,
Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand prospectus can make your work a lot less daunting. We hope
you'll find this prospectus easy to understand, and more importantly, we hope it
gives you confidence in the investment decisions you have made or are soon to
make.
As you begin to read through this prospectus, take a look at the table of
contents to understand how it is organized. The first four sections take a
close-up look at the funds.
An Overview of the Funds - Learn about fund goals, strategies and risks and
who may or may not want to invest.
Fund Performance History - See how the funds performed from year to year.
Fees and Expenses - Find out fund management fees and other expenses
associated with investing.
Objectives, Strategies and Risks - Take a more detailed look at the principal
investment objectives, strategies and risks presented in the Overview of the
Funds section.
As you continue to read, the Management section will acquaint you with the
fund management team and Investing with American Century gives an overview about
how to invest and how to manage your account.
Share Price and Distributions, Taxes and Financial Highlights wrap up the
prospectus with important financial information you'll need to make an informed
decision.
Naturally, you may have questions about investing after you read through the
prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, a Service Representative will be happy to
help weekdays, 8 a.m. to 5:30 p.m. Central time. Give us a call at
1-800-345-3533.
Sincerely,
/s/MARK KILLEN
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
TABLE OF CONTENTS
An Overview of the Funds .................................................. 2
Fund Performance History .................................................. 3
Fees and Expenses ......................................................... 5
Objectives, Strategies and Risks .......................................... 6
Target 2000 Fund
Target 2005 Fund
Target 2010 Fund
Target 2015 Fund
Target 2020 Fund
Target 2025 Fund
Basics of Fixed-Income Investing .......................................... 8
Management ................................................................ 11
Investing with American Century ........................................... 13
Share Price and Distributions ............................................. 15
Taxes ..................................................................... 16
Multiple Class Information ................................................ 17
Financial Highlights ...................................................... 18
Performance Information of Other Class .................................... 25
[Sidebar]
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its
definition in the left margin.
[graphic of pointing finger]
This symbol highlights special information and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUNDS
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
These funds seek the highest return consistent with investment in U.S. Treasury
securities.
WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
The funds invest primarily in zero-coupon U.S. Treasury securities. Each fund
invests in different types of these DEBT SECURITIES and has different risks. The
following chart shows the differences among the funds' primary investments and
principal risks. It is designed to help you compare these funds with each other;
it should not be used to compare these funds with other mutual funds. A more
detailed description about the funds' investment strategies and risks begins on
page 6.
Fund Primary Investments Principal Risks
--------------------------------------------------------------------------------
Target 2000 Zero-coupon U.S. Treasury securities Lowest interest rate risk
Shorter Term Less Volatile Target 2005 Zero-coupon U.S. Treasury securities Medium interest rate risk
[graphic of arrow] Target 2010 Zero-coupon U.S. Treasury securities High interest rate risk
Longer Term More Volatile Target 2015 Zero-coupon U.S. Treasury securities High interest rate risk
Target 2020 Zero-coupon U.S. Treasury securities High interest rate risk
Target 2025 Zero-coupon U.S. Treasury securities Highest interest rate risk
Each fund will be liquidated shortly after the conclusion of its target maturity
year.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
WHO MAY WANT TO INVEST IN THE FUNDS?
The funds may be a good investment if you are
* investing through an IRA or other tax-advantaged retirement plan
* seeking long-term financial goals that correspond to the maturity year of a
particular fund
* comfortable with fluctuating share prices, which increase as each funds'
maturity year approaches
* comfortable with the funds' other investment risks
WHO MAY NOT WANT TO INVEST IN THE FUNDS?
The funds may not be a good investment if you are
* seeking current income
* a short-term investor
* investing for long-term capital appreciation
* looking for the added security of FDIC insurance
[Sidebar]
DEBT SECURITIES include fixed-income investments such as notes, bonds,
commercial paper and U.S. Treasury bills.
[graphic of poinging finger]
An investment in the funds is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
[End of Sidebar]
2 American Century Investments 1-800-345-3533
FUND PERFORMANCE HISTORY
TARGET 2000 FUND
TARGET 2005 FUND
TARGET 2010 FUND
TARGET 2015 FUND
TARGET 2020 FUND
TARGET 2025 FUND
Annual Total Returns
The following bar chart shows the performance of the funds' Advisor Class shares
for each full calendar year in the life of the class. It indicates the
volatility of the funds' historical returns from year to year. Target 2015 is
not included because it does not yet have a full calendar year of performance.
[data from bar chart below]
1999
Target 2000 2.64%
Target 2005 -6.02%
Target 2010 -12.03%
Target 2015
Target 2020 -18.52%
Target 2025 -20.895
The highest and lowest quarterly returns for the period reflected in the bar
chart are:
Highest Lowest
----------------------------------------------------------------------------
Target 2000 1.00% (3Q 1999) 0.30% (1Q 1999)
Target 2005 0.28% (3Q 1999) -3.08% (1Q 1999)
Target 2010 -1.10% (3Q 1999) -5.49% (1Q 1999)
Target 2020 -2.40% (3Q 1999) -8.41% (1Q 1999)
Target 2025 -1.47% (3Q 1999) -9.75% (1Q 1999)
[Sidebar]
[graphic of poinging finger]
The performance information on this page is designed to help you see how the
funds' returns can vary. Keep in mind that past performance does not predict how
the funds will perform in the future.
[End of Sidebar]
www.americancentury.com American Century Investments 3
Average Annual Total Returns
The following table shows the average annual total returns of the funds' Advisor
Class shares for the periods indicated. The benchmarks are unmanaged indices
(except as noted) that have no operating costs and are included in the table for
performance comparison. Target 2015 is not included because it does not yet have
a full calendar year of performance.
For the calendar year ended December 31, 1999 1 year Life of Fund(1)
-----------------------------------------------------------------------------
Target 2000 2.64% 4.18%
11/15/2000 Maturity STRIPS Issue(2) 3.44% 4.32%(3)
Merrill Lynch Long-Term Treasury Index -8.61% -4.66%(3)
-----------------------------------------------------------------------------
Target 2005 -6.02% 0.47%
11/15/2005 Maturity STRIPS Issue(2) -5.46% 1.45%
Merrill Lynch Long-Term Treasury Index -8.61% -1.33%
-----------------------------------------------------------------------------
Target 2010 -12.03% -9.43%
11/15/2010 Maturity STRIPS Issue(2) -11.50% -9.41%(4)
Merrill Lynch Long-Term Treasury Index -8.61% -6.89%(4)
-----------------------------------------------------------------------------
Target 2020 -18.52% -14.68%
11/15/2020 Maturity STRIPS Issue(2) -18.10% -14.20%(4)
Merrill Lynch Long-Term Treasury Index -8.61% -6.89%(4)
-----------------------------------------------------------------------------
Target 2025 -20.89% -6.35%
11/15/2025 Maturity STRIPS Issue(2) -21.23% -5.41%
Merrill Lynch Long-Term Treasury Index -8.61% -0.02%
(1) The inception dates are: Target 2000: August 20, 1998; Target 2005: August
3, 1998; Target 2010: October 20, 1998; Target 2020: October 19, 1998; and
Target 2025: June 1, 1998.
(2) Each Target fund is designed to perform like a zero-coupon security with
the same term to maturity as the fund. The STRIPS issues listed in this
table are U.S. Treasury zero-coupon securities with similar maturity dates
as the respective fund. The STRIPS issues are not indices, but are
mportant benchmarks of the Target funds' performance.
(3) Since August 31, 1998, the date nearest the fund's inception for which data
are available.
(4) Since October 31, 1998, the date nearest the fund's inception for which
data are available.
[Sidebar]
[graphic of poinging finger]
For current performance information, including yields, please call us at
1-800-345-3533 or visit American Century's Web site at www.americancentury.com.
[End of Sidebar]
4 American Century Investments 1-800-345-3533
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Advisor Class shares of other American Century funds
* to redeem your shares
The following table describes the fees and expenses you will pay if you buy and
hold shares of the funds.
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees(2) Expenses(3) Operating Expenses
------------------------------------------------------------------------------------------
Target 2000 0.34% 0.50% 0.00% 0.84%
Target 2005 0.34% 0.50% 0.00% 0.84%
Target 2010 0.34% 0.50% 0.00% 0.84%
Target 2015 0.34% 0.50% 0.00% 0.84%
Target 2020 0.34% 0.50% 0.00% 0.84%
Target 2025 0.34% 0.50% 0.00% 0.84%
(1) Based on expenses incurred during the funds' most recent fiscal year. The
funds have stepped fee schedules. As a result, the funds' management fee
rate generally decreases as fund assets increase.
(2) The 12b-1 fee is designed to permit investors to purchase Advisor Class
shares through broker-dealers, banks, insurance companies and other
financial intermediaries. A portion of the fee is used to compensate them
for ongoing recordkeeping and administrative services that would otherwise
be performed by an affiliate of the advisor, and a portion is used to
compensate them for distribution and other shareholder services. For more
information, see Service and Distribution Fees in this Prospectus.
(3) Other expenses, which include the fees and expenses of the funds'
independent trustees, their legal counsel and interest, were less than
0.005% for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
---------------------------------------------------------
Target 2000 $86 $268 $465 $1,034
Target 2005 $86 $268 $465 $1,034
Target 2010 $86 $268 $465 $1,034
Target 2015 $86 $268 $465 $1,034
Target 2020 $86 $268 $465 $1,034
Target 2025 $86 $268 $465 $1,034
[Sidebar]
[graphic of poinging finger]
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
[End of Sidebar]
www.americancentury.com American Century Investments 5
OBJECTIVES, STRATEGIES AND RISKS
TARGET 2000 FUND
TARGET 2005 FUND
TARGET 2010 FUND
TARGET 2015 FUND
TARGET 2020 FUND
TARGET 2025 FUND
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
These funds seek the highest return consistent with investment in U.S. Treasury
securities.
HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVES?
The funds invest primarily in zero-coupon U.S. Treasury securities. Each fund is
designed to provide an investment experience that is similar to a direct
investment in a zero-coupon U.S. Treasury security.
WHAT ARE THE DIFFERENCES BETWEEN THE FUNDS?
Each fund is managed to mature in the year identified in its name; therefore,
each fund's WEIGHTED AVERAGE MATURITY is different. Funds with longer weighted
average maturities have the most volatile share prices. For example, Target 2025
has the longest weighted average maturity, and its share price will fluctuate
the most.
WHAT ARE ZERO-COUPON TREASURY SECURITIES?
U.S. Treasury bonds have the traditional design of debt securities. Interest is
paid periodically until maturity, when the principal is repaid. Zero-coupon
Treasury securities, however, do not make any periodic interest payments.
Instead, all of the interest and principal is paid when the securities mature.
Zero-coupon Treasury securities are created by separating a traditional Treasury
bond's interest and principal payment obligation. Each payment obligation
becomes a separate zero-coupon Treasury security. These securities are created
by financial institutions (like a dealer), the U.S. Treasury and other agencies
of the federal government. The important characteristic is that the final
maturity value of a zero-coupon Treasury security is supported by U.S. Treasury
securities.
Zero-coupon Treasury securities are beneficial for investors who wish to invest
for a fixed period of time at a selected rate. When an investor purchases a
traditional bond, it is paid periodic interest at a predetermined rate. This
interest payment must be reinvested elsewhere. However, the investor may not be
able to reinvest this interest payment in an investment that has a return
similar to a traditional bond. This is called reinvestment risk. Because
zero-coupon securities do not pay interest periodically, investors in
zero-coupon securities are not exposed to reinvestment risk.
HOW IS AN INVESTMENT IN THE FUNDS LIKE AN INVESTMENT IN ZERO-COUPON U.S.
TREASURY SECURITIES?
The investment performance of the funds is designed to be similar to an
investment in zero-coupon U.S. Treasury security. If you invest in a fund,
reinvest all distributions and hold your shares until the fund is liquidated,
your investment experience should be similar to that of an investment in a
zero-coupon U.S. Treasury security with the same term to maturity as the fund.
Each fund is managed to provide an investment return and maturity value that
will not differ substantially from the ANTICIPATED GROWTH RATE (AGR) and
ANTICIPATED VALUE AT MATURITY (AVM) calculated on the day the shares were
purchased.
[Sidebar]
WEIGHTED AVERAGE MATURITY is described in more detail under Basics of
Fixed-Income Investing.
[graphic of poinging finger]
Because all of the interest and principal is paid when the securities mature,
zero-coupon securities are bought and sold at prices below their face value.
A fund's ANTICIPATED GROWTH RATE is an estimate of the annualized rate of growth
that an investor may expect from the purchase date to the fund's weighted
average maturity date.
The ANTICIPATED VALUE AT MATURITY is an estimate of a fund's net asset value as
of the fund's weighted average maturity date. It is based on the maturity values
of the fund's zero-coupon Treasury securities.
[End of Sidebar]
6 American Century Investments 1-800-345-3533
The advisor calculates each fund's AGR and AVM every business day. AGR and AVM
calculations assume, among other factors, that the fund's operating expenses (as
a percentage of the fund's assets) and composition of securities held by each
fund remain constant for the life of the fund. While many factors can influence
each fund's daily AGR and AVM, they tend to fluctuate within narrow ranges. The
following table shows how each fund's AVM has fluctuated in the last five years
Anticipated Values at Maturity
9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
------------------------------------------------------------------------------
Target 2000 $100.99 $101.10 $101.13 $101.78 $101.51
Target 2005 $100.32 $100.71 $100.85 $101.53 $101.28
Target 2010 $101.02 $102.53 $103.40 $104.85 $105.56
Target 2015 $109.62 $110.11 $110.52 $112.63 $112.62
Target 2020 $102.31 $103.60 $104.84 $106.96 $107.30
Target 2025 N/A $109.24 $110.88 $112.23 $111.81
WHAT HAPPENS WHEN A FUND REACHES ITS MATURITY YEAR?
* The fund managers may begin buying traditional Treasury securities consistent
with a fund's investment objective and pending maturity.
* As a fund's zero-coupon Treasury securities mature, its proceeds will be
invested in Treasury bills.
* Each fund will be liquidated shortly after the conclusion of its target
maturity year.
Additional information about the funds' investments is available in their annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
Because the funds have different weighted average maturities, each fund will
respond differently to changes in interest rates. Funds with longer weighted
average maturities are more sensitive to interest rate changes. When interest
rates rise, the funds' share values will decline, but the share values of funds
with longer weighted average maturities generally will decline further. This
interest rate sensitivity is greater for the funds than for traditional Treasury
funds.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
The funds' share values will fluctuate. In general, funds that have higher
potential gain have a higher potential loss.
While we recommend that shareholders hold their investment in a fund until the
fund is liquidated, we do not restrict your (or any other shareholders') ability
to redeem shares. When a fund's shareholders redeem their shares before the
target maturity year, unanticipated capital gains or losses may result. The fund
will distribute these capital gains and losses to all shareholders.
The funds are designed to provide an investment that is similar to investing in
a zero-coupon U.S. Treasury security that matures in the year identified in its
name. The fund managers adhere to investment policies that are designed to
ensure that this happens. However, a precise forecast of a fund's final maturity
value and yield to maturity are not possible.
[Sidebar]
[graphic of poinging finger]
This table is designed to show the narrow ranges in which each fund's AVMs vary
over time. There is no guarantee that the funds' AVMs will fluctuate as little
in the future.
[graphic of poinging finger]
The investment performance of the funds is designed to be similar to an
investment in an equivalent zero-coupon U.S. Treasury security. However, an
investment in the funds involves different risks.
[End of Sidebar]
www.americancentury.com American Century Investments 7
BASICS OF FIXED-INCOME INVESTING
DEBT SECURITIES
When a fund buys a debt security, which is also called a fixed-income security,
it is essentially lending money to the issuer of the security. Notes, bonds,
commercial paper and Treasury bills are examples of debt securities. After the
debt security is first sold by the issuer, it may be bought and sold by other
investors. The price of the security may rise or fall based on many factors,
including changes in interest rates, liquidity and credit quality.
The fund managers decide which debt securities to buy and sell by
* determining which securities help a fund meet its maturity requirements
* identifying securities that satisfy a fund's credit quality standards
* evaluating the current economic conditions and assessing the risk of
inflation
* evaluating special features of the securities that may make them more or less
attractive
WEIGHTED AVERAGE MATURITY
Like most loans, debt securities eventually must be repaid (or refinanced) at
some date. This date is called the maturity date. The number of days left to a
debt security's maturity date is called the remaining maturity. The longer a
debt security's remaining maturity, generally the more sensitive it is to
changes in interest rates.
Because a bond fund will own many debt securities, the fund managers calculate
the average of the remaining maturities of all the debt securities the fund owns
to evaluate the interest rate sensitivity of the entire portfolio. This average
is weighted according to the size of the fund's individual holdings and is
called WEIGHTED AVERAGE MATURITY. The following chart shows how fund managers
would calculate the weighted average maturity for a fund that owned only two
debt securities.
Amount of Percent of Remaining Weighted
Security Owned Portfolio Maturity Maturity
--------------------------------------------------------------------------------------------------
Debt Security A $100,000 25% 1,000 days 250 days
Debt Security B $300,000 75% 10,000 days 7,500 days
Weighted Average Maturity 7,750 days
TYPES OF RISK
The basic types of risk that the funds face are described below.
INTEREST RATE RISK
Generally, interest rates and the prices of debt securities move in opposite
directions. When interest rates fall, the prices of most debt securities rise;
when interest rates rise, prices fall. Because the funds invest primarily in
debt securities, changes in interest rates will affect the funds' performance.
This sensitivity to interest rate changes is called interest rate risk.
The degree to which interest rate changes affect a fund's performance varies and
is related to the weighted average maturity of a particular fund. For example,
when interest rates rise, you can expect the share value of a long-term bond
fund to fall more than that of a short-term bond fund. When rates fall, the
opposite is true.
[Sidebar]
WEIGHTED AVERAGE MATURITY is a tool that the fund managers use to approximate
the remaining term to maturity of a fund's investment portfolio.
[graphic of poinging finger]
The longer a fund's weighted average maturity, the more sensitive it is to
changes in interest rates.
[End of Sidebar]
8 American Century Investments 1-800-345-3533
When interest rates change, longer maturity bonds generally experience a greater
change in price. The following table shows the likely effect of a 1% increase in
interest rates on the price of 7% coupon bonds of differing maturities:
Remaining Maturity Current Price Price After 1% Increase Change in Price
---------------------------------------------------------------------------------------
1 year $100.00 $99.06 -0.94%
3 years $100.00 $97.38 -2.62%
10 years $100.00 $93.20 -6.80%
30 years $100.00 $88.69 -11.31%
CREDIT RISK
Credit risk is the risk that an obligation won't be paid and a loss will result.
A high credit rating indicates a high degree of confidence by the rating
organization that the issuer will be able to withstand adverse business,
financial or economic conditions and be able to make interest and principal
payments on time. Generally, a lower credit rating indicates a greater risk of
non-payment. A lower rating also may indicate that the issuer has a more senior
series of debt securities, which means that if the issuer has difficulties
making its payments, the more senior series of debt is first in line for
payment.
The fund managers do not invest solely on the basis of a security's credit
rating; they also consider other factors, including potential returns. Higher
credit ratings usually mean lower interest rate payments, so investors often
purchase securities that aren't the highest rated to increase return. If a fund
purchases lower-rated securities, it assumes additional credit risk.
The following chart shows the authorized credit quality ranges for the funds
offered by this Prospectus.
-----------------------------------------
Quality
-----------------------------------------
High Quality
----------------------------
A-1 A-2 A-3
P-1 P-2 P-3
MIG-1 MIG-2 MIG-3
SP-1 SP-2 SP-3
AAA AA A BBB BB B CCC CC C D
--------------------------------------------------------------------------------
Target 2000 X
--------------------------------------------------------------------------------
Target 2005 X
--------------------------------------------------------------------------------
Target 2010 X
--------------------------------------------------------------------------------
Target 2015 X
--------------------------------------------------------------------------------
Target 2020 X
--------------------------------------------------------------------------------
Target 2025 X
--------------------------------------------------------------------------------
------------------------------------- -- --------------------------------------
INVESTMENT GRADE NON-INVESTMENT GRADE
------------------------------------- -- --------------------------------------
Strictly speaking, U.S. Treasury securities are not rated AAA. However, U.S.
Treasury securities are backed by the full faith and credit of the United
States, and are considered among the safest securities in the world. The rating
on U.S. Treasury securities is, therefore, considered to be equivalent to AAA.
LIQUIDITY RISK
Debt securities can become difficult to sell, or less liquid, for a variety of
reasons, such as lack of an active trading market. The chance that a fund will
have liquidity issues is called liquidity risk.
[Sidebar]
[graphic of poinging finger]
Credit quality may be lower when the issuer has
* a high debt level,
* a short operating history,
* a senior level of debt,
* a difficult, competitive environment or
* a less stable cash flow
[graphic of poinging finger]
The Statement of Additional Information provides a detailed description of these
securities' ratings.
[End of Sidebar]
www.americancentury.com American Century Investments 9
A COMPARISON OF BASIC RISK FACTORS
The following chart depicts the basic risks of investing in the funds. It is
designed to help you compare these funds with each other; it shouldn't be used
to compare these funds with other mutual funds.
Interest Rate Risk Credit Risk(1) Liquidity Risk(2)
---------------------------------------------------------------------------
Target 2000 Lowest Low Low
Target 2005 Medium Low Low
Target 2010 High Low Low
Target 2015 High Low Low
Target 2020 High Low Low
Target 2025 Highest Low Low
(1) Because the funds all invest in zero-coupon Treasury securities, there is
no difference in credit risk. U.S. Treasury securities are considered among
the safest securities in the world because they are backed by the full
faith and credit of the United States.
(2) The Treasury market is considered the most liquid in the world.
The funds engage in a variety of investment techniques as they pursue their
investment objectives. Each technique has its own characteristics, and may pose
some level of risk to the funds. If you would like to learn more about these
techniques, you should review the Statement of Additional Information before
making an investment.
10 American Century Investments 1-800-345-3533
MANAGEMENT
WHO MANAGES THE FUNDS?
The Board of Trustees, investment advisor and fund management team play key
roles in the management of the funds.
THE BOARD OF TRUSTEES
The Board of Trustees oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Trustees does not manage the funds, it has hired an investment advisor to do so.
More than two-thirds of the trustees are independent of the funds' advisor; that
is, they are not employed by and have no financial interest in the advisor.
THE INVESTMENT ADVISOR
The funds' investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958. The advisor is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the funds
and directing the purchase and sale of their investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the funds to operate.
For the services it provided to the funds during the most recent fiscal year,
the advisor received a unified management fee based on a percentage of the
average net assets of the Advisor Class shares of the funds. The rate of the
management fee for each fund is determined monthly on a class-by-class basis
using a two-step formula that takes into account the fund's strategy (money
market, bond or equity) and the total amount of mutual fund assets the advisor
manages.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor paid all
expenses of managing and operating the funds except brokerage expenses, taxes,
interest, fees and expenses of the independent trustees (including legal counsel
fees), and extraordinary expenses. A portion of the management fee may be paid
by the funds' advisor to unaffiliated third parties who provide recordkeeping
and administrative services that would otherwise be performed by an affiliate of
the advisor.
Management Fees Paid by the Funds to the Advisor as a Percentage of Average
Net Assets for the Most Recent Fiscal Year Ended September 30, 1999
--------------------------------------------------------------------------
Target 2000 0.34%
Target 2005 0.34%
Target 2010 0.34%
Target 2015 0.34%
Target 2020 0.34%
Target 2025 0.34%
www.americancentury.com American Century Investments 11
THE FUND MANAGEMENT TEAM
The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the funds. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for a fund as they see fit, guided by the fund's investment objective
and strategy.
The portfolio managers on the investment team are identified below:
DAVID W. SCHROEDER
Mr. Schroeder, Vice President and Portfolio Manager, has been a member of the
team that manages the Target funds since joining American Century in July 1990.
He holds a bachelor of arts from Pomona College.
JEREMY FLETCHER
Mr. Fletcher, Portfolio Manager, has been a member of the team that manages the
Target funds since August 1997. He joined American Century in October 1991 as an
Investor Relations Representative. He has bachelor's degrees in economics and
mathematics from Claremont McKenna College.
FUNDAMENTAL INVESTMENT POLICIES
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the funds may not be changed
without a shareholder vote. The Board of Trustees may change any other policies
and investment strategies.
[Sidebar]
[graphic of poinging finger]
Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing permitted personal trades.
[End of Sidebar]
12 American Century Investments 1-800-345-3533
INVESTING WITH AMERICAN CENTURY
ELIGIBILITY FOR ADVISOR CLASS SHARES
The Advisor Class shares are intended for purchase by participants in
employer-sponsored retirement or savings plans and for persons purchasing shares
through broker-dealers, banks, insurance companies and other financial
intermediaries that provide various administrative and distribution services.
INVESTING THROUGH FINANCIAL INTERMEDIARIES
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
* minimum investment requirements
* exchange policies
* fund choices
* cutoff time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the funds' annual reports, semiannual
reports and Statement of Additional Information are available from your
intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although transactions in fund shares may be made directly with American Century
at no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the funds.
American Century has contracts with certain financial intermediaries requiring
them to track the time investment orders are received and to comply with
procedures relating to the transmission of orders. The funds have authorized
those intermediaries to accept orders on each fund's behalf up to the time at
which the net asset value is determined. If those orders are transmitted to
American Century and paid for in accordance with the contract, they will be
priced at the net asset value next determined after your request is received in
the form required by the intermediary on a fund's behalf.
[Sidebar]
[graphic of poinging finger]
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
[End of Sidebar]
www.americancentury.com American Century Investments 13
ABUSIVE TRADING PRACTICES
We do not permit market timing or other abusive trading practices in our funds.
Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the funds and their shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.
SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the assets of the fund if that percentage is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. The securities
would be selected from the fund's portfolio by the fund managers. A payment in
securities can help the fund's remaining shareholders avoid tax liabilities that
they might otherwise have incurred had the fund sold securities prematurely to
pay the entire redemption amount in cash.
We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice.
Also, if payment is made in securities, a shareholder may have to pay brokerage
or other transaction costs to convert the securities to cash.
If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining investors.
14 American Century Investments 1-800-345-3533
SHARE PRICE AND DISTRIBUTIONS
SHARE PRICE
American Century determines the NET ASSET VALUE (NAV) of each fund as of ONE
HOUR BEFORE the close of regular trading on the New York Stock Exchange (usually
4 p.m. Eastern time) on each day the Exchange is open. On days when the Exchange
is not open (including certain U.S. holidays), we do not calculate the NAV. The
NAV of a fund share is the current value of the fund's assets, minus any
liabilities, divided by the number of fund shares outstanding.
If current market prices of securities owned by a fund are not readily available
from an independent pricing service, the advisor may determine their fair value
in accordance with procedures adopted by the fund's Board.
We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in good order.
DISTRIBUTIONS
Federal tax laws require each fund to make distributions to its shareholders in
order to qualify as a regulated investment company. Qualification as a
regulated investment company means the funds will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received, as well as CAPITAL GAINS realized on the
sale of investment securities. Each fund generally pays distributions from net
income and capital gains, if any, once a year in December. The funds may make
more frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.
You will participate in fund distributions, when they are declared, starting the
day after your purchase is effective. For example, if you purchase shares on a
day that a distribution is declared, you will not receive that distribution. If
you redeem shares, you will receive any distribution declared on the day you
redeem. If you redeem all shares, we will include any distributions received
with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information regarding distributions and your
distribution options.
REVERSE SHARE SPLITS
When a fund pays its distributions, the Board also declares a reverse share
split for each fund that exactly offsets the per-share amount of the
distribution. If you reinvest your dividends, this reverse share split means
that you will hold exactly the same number of shares after a dividend as you did
before. This reverse share split makes changes in the funds' share prices behave
like changes in the values of zero-coupon securities.
FUND LIQUIDATION
During a fund's target maturity year, you will be asked how you want your shares
liquidated. You can choose one of the following
* cash
* shares of another American Century mutual fund
If you do not tell us by December 31 of the target year how you want your shares
liquidated, your money will be exchanged for shares of Capital Preservation, an
American Century Treasury money market fund.
[Sidebar]
The NET ASSET VALUE, or NAV, of a fund is the price of the fund's shares.
CAPITAL GAINS are increases in the values of capital assets, such as stock, from
the time the assets are purchased. Tax becomes due on capital gains once an
asset is sold.
[End of Sidebar]
www.americancentury.com American Century Investments 15
TAXES
The tax consequences of owning shares of the funds will vary depending on
whether you own them through a taxable or tax-deferred account. Tax consequences
result from distributions by the funds of dividend and interest income they have
received or capital gains they have generated through their investment
activities. Tax consequences also result from sales of fund shares by investors
after the net asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a
professional tax advisor.
Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
sales by you of fund shares may cause you to be taxed on your investment.
Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28% Bracket or Above
-------------------------------------------------------------------------------------------
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund or whether you reinvest your distributions in
additional shares or take them in cash. American Century will inform you of the
tax status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV).
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.
Taxes on Transactions
Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain and disallowed to the extent of any distribution of tax-exempt income to
you with respect to those shares. If a loss is realized on the redemption of
fund shares, the reinvestment in additional fund shares within 30 days before or
after the redemption may be subject to the wash sale rules of the Internal
Revenue Code. This may result in a postponement of the recognition of such loss
for federal income tax purposes.
If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.
[Sidebar]
[graphic of poinging finger]
Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The funds distribute those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.
If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.
[End of Sidebar]
16 American Century Investments 1-800-345-3533
MULTIPLE CLASS INFORMATION
American Century offers two classes of the funds: Investor Class and Advisor
Class. The shares offered by this Prospectus are Advisor Class shares and are
offered primarily through employer-sponsored retirement plans, or through
institutions like banks, broker-dealers and insurance companies.
American Century offers another class of shares that has no up-front or deferred
charges, commissions or 12b-1 fees. The other class has different fees, expenses
and/or minimum investment requirements from the Advisor Class. The difference in
the fee structures between the classes is the result of their separate
arrangements for shareholder and distribution services and not the result of any
difference in amounts charged by the advisor for core investment advisory
services. Accordingly, the core investment advisory expenses do not vary by
class. Different fees and expenses will affect performance. For additional
information concerning the other class of shares not offered by this Prospectus,
call us at 1-800-345-2021 for Investor Class shares. You also can contact a
sales representative or financial intermediary who offers that class of shares.
Except as described below, all classes of shares of the funds have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; and (d) each class
may have different exchange privileges.
SERVICE AND DISTRIBUTION FEES
Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. The funds' Advisor Class shares have a 12b-1 Plan. Under the Plan,
the funds pay an annual fee of 0.50% of fund assets, half for certain
shareholder and administrative services and half for distribution services. The
advisor, as paying agent for the funds, pays all or a portion of such fees to
the banks, broker-dealers and insurance companies that make such shares
available. Because these fees are paid out of the funds' assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges. For additional
information about the Plan and its terms, see Multiple Class Structure--Master
Distribution and Shareholder Services Plan in the Statement of Additional
Information.
www.americancentury.com American Century Investments 17
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The tables on the next few pages itemize what contributed to the changes in
share price during the most recently ended fiscal year. They also show the
changes in share price for this period in comparison to changes over the last
five fiscal years or less, if the share class is not five years old.
On a per-share basis, each table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to investors
* reverse share split
* share price at the end of the period
Each table also includes some key statistics for the period as appropriate
* TOTAL RETURN - the overall percentage of return of the fund, assuming the
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 fund's buying and selling activit
The Financial Highlights for the fiscal years ended September 30, 1998, and
1999, have been audited by PricewaterhouseCoopers LLP, independent accountants.
Their report is included in the funds' annual report, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request. Prior years' information was audited by other independent auditors,
whose report also is incorporated by reference into the Statement of Additional
Information.
18 American Century Investments 1-800-345-3533
TARGET 2000 FUND
Advisor Class
For a Share Outstanding Throughout the Years Ended September 30 (except as noted)
Per-Share Data
1999 1998(1)
Net Asset Value, Beginning of Period ..................$ 93.76 $ 91.41
-------- --------
Income From Investment Operations
Net Investment Income(2) ............................ 4.88 0.54
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ........................ (2.79) 1.81
-------- --------
Total From Investment Operations .................... 2.09 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 ........................$ 95.85 $ 93.76
======== ========
Total Return(3) ..................................... 2.23% 2.57%
Ratios/Supplemental Data
1999 1998(1)
Ratio of Operating Expenses to Average Net Assets ..... 0.84% 0.84%(4)
Ratio of Net Investment Income to Average Net Assets .. 5.09% 5.06%(4)
Portfolio Turnover Rate ............................... 31% 82%
Net Assets, End of Period (in thousands) ..............$ 932 $ 64
(1) August 20, 1998 (commencement of sale) through September 30, 1998.
(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.
www.americancentury.com American Century Investments 19
TARGET 2005 FUND
Advisor Class
For a Share Outstanding Throughout the Years Ended September 30 (except as noted)
Per-Share Data
1999 1998(1)
Net Asset Value, Beginning of Period ..................$ 76.69 $ 70.91
--------- ---------
Income From Investment Operations
Net Investment Income(2) ............................ 3.60 0.58
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ........................ (7.95) 5.20
--------- ---------
Total From Investment Operations .................... (4.35) 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 ........................$ 72.34 $ 76.69
========= =========
Total Return(3) ..................................... (5.67)% 8.15%
Ratios/Supplemental Data
1999 1998(1)
Ratio of Operating Expenses to Average Net Assets ..... 0.84% 0.84%(4)
Ratio of Net Investment Income to Average Net Assets .. 4.85% 4.87%(4)
Portfolio Turnover Rate ............................... 81% 35%
Net Assets, End of Period (in thousands) ..............$ 2,533 $ 100
(1) August 3, 1998 (commencement of sale) through September 30, 1998.
(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.
20 American Century Investments 1-800-345-3533
TARGET 2010 FUND
Advisor Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ............................ $ 60.12
---------
Income From Investment Operations
Net Investment Income(2) ...................................... 2.81
Net Realized and Unrealized Loss on Investment Transactions ... (7.97)
---------
Total From Investment Operations .............................. (5.16)
---------
Distributions
From Net Investment Income .................................... (2.76)
From Net Realized Gains ....................................... (1.33)
In Excess of Net Realized Gains ............................... (0.16)
---------
Total Distributions ........................................... (4.25)
---------
Reverse Share Split ............................................. 4.25
---------
Net Asset Value, End of Period .................................. $ 54.96
=========
Total Return(3) ............................................... (8.58)%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets ............... 0.84%(4)
Ratio of Net Investment Income to Average Net Assets ............ 5.06%(4)
Portfolio Turnover Rate ......................................... 49%
Net Assets, End of Period (in thousands) ........................ $ 1,194
(1) October 20, 1998 (commencement of sale) through September 30, 1999.
(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.
www.americancentury.com American Century Investments 21
TARGET 2015 FUND
Advisor Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ........................... $ 43.65
--------
Income From Investment Operations
Net Investment Income(2) ..................................... 0.46
Net Realized and Unrealized Loss on Investment Transactions .. (1.09)
--------
Total From Investment Operations ............................. (0.63)
--------
Net Asset Value, End of Period ................................. $ 43.02
========
Total Return(3) ................................................ (1.44)%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets .............. 0.83%(4)
Ratio of Net Investment Income to Average Net Assets ........... 5.01%(4)
Portfolio Turnover Rate ........................................ 55%
Net Assets, End of Period (in thousands) ....................... $ 7
(1) July 23, 1999 (commencement of sale) through September 30, 1999.
(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.
22 American Century Investments 1-800-345-3533
TARGET 2020 FUND
Advisor Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ........................... $ 35.50
--------
Income From Investment Operations
Net Investment Income(2) ..................................... 1.50
Net Realized and Unrealized Loss on Investment Transactions .. (6.45)
--------
Total From Investment Operations ............................. (4.95)
--------
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 ................................. $ 30.55
========
Total Return(3) .............................................. (13.94)%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets .............. 0.84%(4)
Ratio of Net Investment Income to Average Net Assets ........... 4.57%(4)
Portfolio Turnover Rate ........................................ 31%
Net Assets, End of Period (in thousands) ....................... $ 574
(1) October 19, 1998 (commencement of sale) through September 30, 1999.
(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.
www.americancentury.com American Century Investments 23
TARGET 2025 FUND
Advisor Class
For a Share Outstanding Throughout the Years Ended September 30 (except as noted)
Per-Share Data
1999 1998(1)
Net Asset Value, Beginning of Period ................................... $ 31.64 $ 27.27
-------- --------
Income From Investment Operations
Net Investment Income(2) ............................................. 1.39 0.41
Net Realized and Unrealized Gain (Loss) on Investment Transactions ... (6.90) 3.96
-------- --------
Total From Investment Operations ..................................... (5.51) 4.37
-------- --------
Distributions
From Net Investment Income ........................................... (1.23) --
From Net Realized Gains .............................................. -- --
In Excess of Net Realized Gains ...................................... (0.31) --
-------- --------
Total Distributions .................................................. (1.54) --
-------- --------
Reverse Share Split .................................................... 1.54 --
-------- --------
Net Asset Value, End of Period ......................................... $ 26.13 $ 31.64
-------- --------
Total Return(3) ...................................................... (17.41)% 16.02%
Ratios/Supplemental Data
1999 1998(1)
Ratio of Operating Expenses to Average Net Assets ...................... 0.84% 0.84%(4)
Ratio of Net Investment Income to Average Net Assets ................... 5.00% 4.37%(4)
Portfolio Turnover Rate ................................................ 54% 52%
Net Assets, End of Period (in thousands) ............................... $ 997 $ 89
(1) June 1, 1998 (commencement of sale) through September 30, 1998.
(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.
24 American Century Investments 1-800-345-3533
PERFORMANCE INFORMATION OF OTHER CLASS
The following financial information is provided to show the performance of the
funds' original class of shares. This class, the Investor Class, has a total
expense ratio that is 0.25% lower than the Advisor Class. The Advisor Class is
made available to institutional shareholders or through financial intermediaries
that do not require the same level of shareholder and administrative services
from the advisor as Investor Class shareholders. As a result, the advisor is
able to charge these classes a lower unified management fee. If the Advisor
Class had existed during the periods presented, its performance would have been
lower because of the additional expense.
The tables on the next few pages itemize what contributed to the changes in
share price during the most recently ended fiscal year. They also show the
changes in share price for this period in comparison to changes over the last
five fiscal years.
On a per-share basis, each table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to investors
* reverse share split
* share price at the end of the period
Each table also includes some key statistics for the period as appropriate
* TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO - perating 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 fund's buying and selling activity
The Financial Highlights for the fiscal years ended September 30, 1998, and
1999, have been audited by PricewaterhouseCoopers LLP, independent accountants.
Their report is included in the funds' annual report, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request. Prior years' information was audited by other independent auditors,
whose report also is incorporated by reference into the Statement of Additional
Information.
www.americancentury.com American Century Investments 25
TARGET 2000 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period ..................$ 93.78 $ 86.05 $ 79.95 $ 76.86 $ 66.93
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 5.06 5.13 5.10 4.75 4.37
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (2.73) 2.60 1.00 (1.66) 5.56
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... 2.33 7.73 6.10 3.09 9.93
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (5.57) (5.64) (5.20) (3.94) (3.42)
From Net Realized Gains ............................. (1.32) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (6.89) (5.64) (5.20) (3.94) (3.42)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 6.89 5.64 5.20 3.94 3.42
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................$ 96.11 $ 93.78 $ 86.05 $ 79.95 $ 76.86
=========== =========== =========== =========== ===========
Total Return(3) ..................................... 2.48% 8.97% 7.64% 4.01% 14.84%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.56% 0.53% 0.63%
Ratio of Net Investment Income to Average Net Assets .. 5.34% 5.75% 6.14% 5.99% 6.13%
Portfolio Turnover Rate ............................... 31% 82% 10% 29% 53%
Net Assets, End of Period (in thousands) ..............$ 201,971 $ 237,525 $ 248,377 $ 267,757 $ 294,736
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
26 American Century Investments 1-800-345-2021
TARGET 2005 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period ..................$ 76.72 $ 64.54 $ 57.83 $ 56.61 $ 45.22
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 3.77 3.84 3.74 3.50 3.33
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .......................... (7.94) 8.34 2.97 (2.28) 8.06
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (4.17) 12.18 6.71 1.22 11.39
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (3.39) (3.61) (3.61) (2.06) (2.41)
From Net Realized Gains ............................. (1.07) (0.27) (0.44) (0.58) (0.67)
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (4.46) (3.88) (4.05) (2.64) (3.08)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 4.46 3.88 4.05 2.64 3.08
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................$ 72.55 $ 76.72 $ 64.54 $ 57.83 $ 56.61
=========== =========== =========== =========== ===========
Total Return(3) ..................................... (5.44)% 18.87% 11.60% 2.15% 25.16%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.57% 0.58% 0.71%
Ratio of Net Investment Income to Average Net Assets .. 5.10% 5.53% 6.15% 6.05% 6.58%
Portfolio Turnover Rate ............................... 81% 35% 15% 31% 34%
Net Assets, End of Period (in thousands) ..............$ 490,248 $ 533,986 $ 281,677 $ 238,864 $ 183,452
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
www.americancentury.com American Century Investments 27
TARGET 2010 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period .................. $ 61.98 $ 49.16 $ 42.47 $ 42.14 $ 31.67
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 3.07 2.94 2.79 2.58 2.41
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (9.95) 9.88 3.90 (2.25) 8.06
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (6.88) 12.82 6.69 0.33 10.47
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (2.78) (2.46) (2.82) (1.57) (1.48)
From Net Realized Gains ............................. (1.33) (0.29) (1.17) -- (0.48)
In Excess of Net Realized Gains ..................... (0.16) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (4.27) (2.75) (3.99) (1.57) (1.96)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 4.27 2.75 3.99 1.57 1.96
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................ $ 55.10 $ 61.98 $ 49.16 $ 42.47 $ 42.14
=========== =========== =========== =========== ===========
Total Return(3) ..................................... (11.10)% 26.08% 15.75% 0.78% 33.06%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.62% 0.67% 0.71%
Ratio of Net Investment Income to Average Net Assets .. 5.31% 5.39% 6.15% 5.98% 6.56%
Portfolio Turnover Rate ............................... 49% 34% 26% 24% 26%
Net Assets, End of Period (in thousands) .............. $ 240,606 $ 283,828 $ 124,812 $ 111,117 $ 95,057
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
TARGET 2015 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period ..................$ 49.87 $ 38.34 $ 31.96 $ 32.20 $ 22.79
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 2.39 2.17 2.00 1.85 1.71
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (9.22) 9.36 4.38 (2.09) 7.70
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (6.83) 11.53 6.38 (0.24) 9.41
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (2.10) (2.11) (2.05) (1.28) (0.87)
From Net Realized Gain .............................. -- (1.40) (0.34) (1.61) --
In Excess of Net Realized Gains ..................... (0.08) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (2.18) (3.51) (2.39) (2.89) (0.87)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 2.18 3.51 2.39 2.89 0.87
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................$ 43.04 $ 49.87 $ 38.34 $ 31.96 $ 32.20
=========== =========== =========== =========== ===========
Total Return(3) ..................................... (13.70)% 30.07% 19.96% (0.74)% 41.29%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.61% 0.65% 0.71%
Ratio of Net Investment Income to Average Net Assets .. 5.25% 4.96% 5.79% 5.63% 6.40%
Portfolio Turnover Rate ............................... 55% 31% 21% 17% 70%
Net Assets, End of Period (in thousands) ..............$ 218,193 $ 170,081 $ 114,900 $ 115,654 $ 114,647
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
www.americancentury.com American Century Investments 29
TARGET 2020 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30
Per-Share Data
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period ..................$ 36.95 $ 27.17 $ 22.00 $ 22.47 $ 15.28
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(1) ............................ 1.62 1.53 1.51 1.41 1.19
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (7.96) 8.25 3.66 (1.88) 6.00
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (6.34) 9.78 5.17 (0.47) 7.19
----------- ----------- ----------- ----------- -----------
Distributions(2)
From Net Investment Income .......................... (2.06) (2.35) (1.45) (0.40) (0.21)
From Net Realized Gains ............................. (5.20) (2.19) -- (0.04) --
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (7.26) (4.54) (1.45) (0.44) (0.21)
----------- ----------- ----------- ----------- -----------
Reverse Share Split ................................... 7.26 4.54 1.45 0.44 0.21
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................$ 30.61 $ 36.95 $ 27.17 $ 22.00 $ 22.47
=========== =========== =========== =========== ===========
Total Return(3) ..................................... (17.16)% 36.00% 23.50% (2.09)% 47.05%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 0.59% 0.59% 0.53% 0.61% 0.72%
Ratio of Net Investment Income to Average Net Assets .. 4.82% 4.83% 6.29% 6.25% 6.24%
Portfolio Turnover Rate ............................... 31% 18% 14% 47% 78%
Net Assets, End of Period (in thousands) ..............$ 316,707 $ 486,052 $ 553,551 $ 926,319 $ 574,702
(1) Computed using average shares outstanding throughout the period.
(2) 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.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
30 American Century Investments 1-800-345-2021
TARGET 2025 FUND
Investor Class
For a Share Outstanding Throughout the Years Ended September 30 (except as noted)
Per-Share Data
1999 1998 1997 1996(1)
Net Asset Value, Beginning of Period ........................ $ 31.67 $ 22.27 $ 17.91 $ 19.85
----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) .................................. 1.46 1.33 1.21 0.72
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .............................. (6.91) 8.07 3.15 (2.66)
----------- ----------- ----------- -----------
Total From Investment Operations ............................ (5.45) 9.40 4.36 (1.94)
----------- ----------- ----------- -----------
Distributions
From Net Investment Income ................................ (1.28) (0.70) (0.72) --
From Net Realized Gains ................................... -- (0.05) -- --
In Excess of Net Realized Gains ........................... (0.31) -- -- --
----------- ----------- ----------- -----------
Total Distributions ....................................... (1.59) (0.75) (0.72) --
----------- ----------- ----------- -----------
Reverse Share Split ......................................... 1.59 0.75 0.72 --
----------- ----------- ----------- -----------
Net Asset Value, End of Period .............................. $ 26.22 $ 31.67 $ 22.27 $ 17.91
=========== =========== =========== ===========
Total Return(3) ........................................... (17.21)% 42.21% 24.34% (9.77)%
Ratios/Supplemental Data
1999 1998 1997 1996(1)
Ratio of Operating Expenses to Average Net Assets ........... 0.59% 0.59% 0.62% 0.67%(4)
Ratio of Net Investment Income to Average Net Assets ........ 5.25% 4.94% 6.14% 6.57%(4)
Portfolio Turnover Rate ..................................... 54% 52% 58% 61%
Net Assets, End of Period (in thousands) .................... $ 754,356 $ 356,122 $ 73,821 $ 35,661
(1) February 15, 1996 (inception) through September 30, 1996.
(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.
www.americancentury.com American Century Investments 31
Notes
32 American Century Investments 1-800-345-3533
www.americancentury.com American Century Investments 33
Notes
MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS
Annual and Semiannual Reports
These reports contain more information about the funds' investments and the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the funds' operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.
You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the funds or your accounts, by contacting American Century at
the address or telephone numbers listed below.
You also can get information about the [fund/funds] (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
* In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for
location and hours.
* On the Internet EDGAR database at www.sec.gov
By email request [email protected]
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
Investment Company Act File No. 811-4165
[american century logo(reg.sm)]
American
Century
American Century Investments
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-345-3533 or 816-531-5575
0002
SH-PRS-18750
AMERICAN CENTURY
Statement of Additional Information
Target 2000 Fund
Target 2005 Fund
Target 2010 Fund
Target 2015 Fund
Target 2020 Fund
Target 2025 Fund
[american century logo(reg.sm)]
American
Century
[left margin]
FEBRUARY 1, 2000
American Century
Target Maturities Trust
THIS STATEMENT OF ADDITIONAL INFORMATION ADDS TO THE DISCUSSION IN THE FUNDS'
PROSPECTUS, DATED FEBRUARY 1, 2000, BUT IS NOT A PROSPECTUS. THE STATEMENT OF
ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FUNDS' CURRENT
PROSPECTUS. IF YOU WOULD LIKE A COPY OF THE PROSPECTUS, PLEASE CONTACT US AT
THE ADDRESS OR TELEPHONE NUMBERS LISTED ON THE BACK COVER OR VISIT AMERICAN
CENTURY'S WEB SITE AT WWW.AMERICANCENTURY.COM.
THIS STATEMENT OF ADDITIONAL INFORMATION INCORPORATES BY REFERENCE CERTAIN
INFORMATION THAT APPEARS IN THE FUNDS' ANNUAL AND SEMIANNUAL REPORTS, WHICH ARE
DELIVERED TO ALL INVESTORS. YOU MAY OBTAIN A FREE COPY OF THE FUNDS' ANNUAL OR
SEMIANNUAL REPORT BY CALLING 1-800-345-2021.
Funds Distributor, Inc.,
Distributor
TABLE OF CONTENTS
The Fund's History ........................................................ 2
Fund Investment Guidelines ................................................ 2
Fund Investments and Risks ................................................ 2
Investment Strategies and Risks ...................................... 2
Investment Policies .................................................. 6
Temporary Defensive Measures ......................................... 8
Portfolio Turnover ................................................... 8
Management ................................................................ 9
The Board of Trustees ................................................ 9
Officers ............................................................. 12
The Funds' Principal Shareholders ......................................... 13
Service Providers ......................................................... 14
Investment Advisor ................................................... 14
Transfer Agent and Administrator ..................................... 17
Distributor .......................................................... 17
Other Service Providers ................................................... 18
Custodian Banks ...................................................... 18
Independent Accountants .............................................. 18
Brokerage Allocation ...................................................... 18
Information About Fund Shares ............................................. 18
Fund Liquidations .................................................... 19
Multiple Class Structure ............................................. 19
Buying and Selling Fund Shares ....................................... 22
Valuation of a Fund's Securities ..................................... 22
Taxes ..................................................................... 23
Federal Income Tax ................................................... 23
How Fund Performance Information Is Calculated ............................ 24
Performance Comparisons .............................................. 26
Multiple Class Performance Advertising ............................... 26
Financial Statements ...................................................... 26
Explanation of Fixed-Income Securities Ratings ............................ 27
www.americancentury.com American Century Investments 1
THE FUNDS' HISTORY
American Century Target Maturities Trust is a registered open-end management
investment company that was organized as a Massachusetts business trust on March
25, 1985. The Trust was known as Benham Target Maturities Trust until January
1997. Throughout this Statement of Additional Information we refer to American
Century Target Maturities Trust as the Trust.
Each fund described in this Statement of Additional Information is a separate
series of the Trust and operates for many purposes as if it were an independent
company. Each fund has its own investment objective, strategy, management team,
assets, tax identification and stock registration number.
INVESTOR CLASS ADVISOR CLASS
---------------------------------------------------------------------------------------
Fund Inception Date Ticker Symbol Inception Date Ticker Symbol
---------------------------------------------------------------------------------------
Target 2000 Fund 03/25/1985 BTMTX 08/20/1998 N/A
---------------------------------------------------------------------------------------
Target 2005 Fund 03/25/1985 BTFIX 08/03/1998 N/A
---------------------------------------------------------------------------------------
Target 2010 Fund 03/25/1985 BTTNX 10/20/1998 N/A
---------------------------------------------------------------------------------------
Target 2015 Fund 09/01/1986 BTFTX 07/23/1999 N/A
---------------------------------------------------------------------------------------
Target 2020 Fund 12/29/1989 BTTTX 10/19/1998 N/A
---------------------------------------------------------------------------------------
Target 2025 Fund 02/15/1996 BTTRX 06/01/1998 BTMTF
FUND INVESTMENT GUIDELINES
This section explains the extent to which the funds' advisor, American Century
Investment Management, Inc., can use various investment vehicles and strategies
in managing a fund's assets. Descriptions of the investment techniques and risks
associated with each appear in the section, "Investment Strategies and Risks,"
which begins on this page. In the case of the funds' principal investment
strategies, these descriptions elaborate upon discussions contained in the
Prospectus.
Each fund is a diversified open-end investment company as defined in the
Investment Company Act of 1940 (the Investment Company Act). Diversified means
that, with respect to 75% of its total assets, each fund will not invest more
than 5% of its total assets in the securities of a single issuer or own more
than 10% of the outstanding voting securities of a single issuer (other than
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities).
To meet federal tax requirements for qualification as a regulated investment
company, each fund must limit its investments so that at the close of each
quarter of its taxable year (1) no more than 25% of its total assets are
invested in the securities of a single issuer (other than the U.S. government or
a regulated investment company), and (2) with respect to at least 50% of its
total assets, no more than 5% of its total assets are invested in the securities
of a single issuer.
FUND INVESTMENTS AND RISKS
INVESTMENT STRATEGIES AND RISKS
This section describes various investment vehicles and strategies the fund
managers can use in managing a fund's assets. It also details the risks
associated with each, because each investment vehicle and strategy contributes
to a fund's overall risk profile.
2 American Century Investments 1-800-345-2021
Zero-Coupon Securities
Zero-coupon U.S. Treasury securities (or zeros) are the unmatured interest
coupons and underlying principal portions of U.S. Treasury bonds. Originally,
these securities were created by broker-dealers who bought Treasury bonds and
deposited these securities with a custodian bank. The broker-dealers then sold
receipts representing ownership interests in the coupons or principal portions
of the bonds. Some examples of zero-coupon securities sold through custodial
receipt programs are CATS (Certificates of Accrual on Treasury Securities),
TIGRs (Treasury Investment Growth Receipts) and generic TRs (Treasury Receipts).
The U.S. Treasury subsequently introduced a program called Separate Trading of
Registered Interest and Principal of Securities (STRIPS), through which it
exchanges eligible securities for their component parts and then allows the
component parts to trade in book-entry form. (Book-entry trading eliminates the
bank credit risks associated with broker-dealer-sponsored custodial receipt
programs.) STRIPS are direct obligations of the U.S. government and have the
same credit risks as other U.S. Treasury securities.
The Resolution Funding Corporation (REFCORP) issues bonds whose interest
payments are guaranteed by the U.S. Treasury and whose principal amounts are
secured by zero-coupon U.S. Treasury securities held in a separate custodial
account at the Federal Reserve Bank of New York. The principal amount and
maturity date of REFCORP bonds are the same as the par amount and maturity date
of the corresponding zeros; upon maturity, REFCORP bonds are repaid from the
proceeds of the zeros. REFCORP zeros are the unmatured coupons and principal
portions of REFCORP bonds. The U.S. government and its agencies may issue
securities in zero-coupon form. These securities are referred to as original
issue zero-coupon securities.
Managing to the Target Year
ANTICIPATED VALUE AT MATURITY
The maturity values of zero-coupon bonds are specified at the time the bonds are
issued, and this feature, combined with the ability to calculate yield to
maturity, has made these instruments popular investment vehicles for investors
seeking reliable investments to meet long-term financial goals.
To provide a comparable investment opportunity while allowing investors the
flexibility to purchase or redeem shares each day the funds are open for
business, each fund consists primarily of zero-coupon bonds but is actively
managed to accommodate shareholder activity and to take advantage of perceived
market opportunities. Because of this active management approach, the fund
managers do not guarantee that a certain price per share will be attained by the
time a fund is liquidated. Instead, the fund managers attempt to track the price
behavior of a directly held zero-coupon bond by:
(1) Maintaining a weighted average maturity within the fund's target maturity
year;
(2) Investing at least 90% of assets in securities that mature within one year
of the fund's target maturity year;
(3) Investing a substantial portion of assets in Treasury STRIPS (the most
liquid Treasury zero);
(4) Under normal conditions, maintaining a cash balance of less than 1%;
(5) Executing portfolio transactions necessary to accommodate net shareholder
purchases or redemptions on a daily basis; and
(6) Whenever feasible, contacting several U.S. government securities dealers for
each intended transaction in an effort to obtain the best price on each
transaction.
www.americancentury.com American Century Investments 3
These measures enable the fund managers to calculate an anticipated value at
maturity (AVM) for each fund that approximates the price per share the fund will
achieve by its weighted average maturity date. The AVM calculation is as
follows:
AVM = NAV (1+AGR)(2T)
---
2
where NAV = the fund's current price per share, T = the fund's weighted average
term to maturity in years, and AGR = the fund's anticipated growth rate.
This calculation assumes that the shareholder will reinvest all dividend and
capital gain distributions (if any). It also assumes an expense ratio and a
portfolio composition that remain constant for the life of the fund. Because
fund expenses and composition do not remain constant, the fund managers
calculate AVM for each fund each day the funds are open for business.
In addition to the measures described above, which the advisor believes are
adequate to ensure close correspondence between the price behavior of each fund
and the price behavior of directly held zero-coupon bonds with comparable
maturities, each fund has made an undertaking to the Securities and Exchange
Commission (SEC) that each fund will invest at least 90% of its net assets in
zero-coupon bonds until it is within four years of its target maturity year and
at least 80% of its net assets in zero-coupon securities while the fund is
within two to four years of its target maturity year. This undertaking may be
revoked if the market supply of zero-coupon securities diminishes unexpectedly,
although it will not be revoked without prior consultation with the SEC. In
addition, the advisor has undertaken that any coupon-bearing bond purchased on
behalf of a fund will have a duration that falls within the fund's target
maturity year.
ANTICIPATED GROWTH RATE
The fund managers also calculate an anticipated growth rate (AGR) for each fund
each day the funds are open for business. AGR is a calculation of the annualized
rate of growth an investor may expect from his or her purchase date to the
fund's target maturity date. As is the case with calculations of AVM, the AGR
calculation assumes that the investor will reinvest all dividends and capital
gain distributions (if any) and that the fund's expense ratio and portfolio
composition will remain constant. Each fund's AGR changes from day to day
primarily because of changes in interest rates and, to a lesser extent, to
changes in portfolio composition and other factors that affect the value of the
fund's investments.
The advisor expects that shareholders who hold their shares until a fund's
weighted average maturity date and who reinvest all dividends and capital gain
distributions, if any, will realize an investment return and maturity value that
do not differ substantially from the AGR and AVM calculated on the day his or
her shares were purchased.
The following table illustrates investor experience with Target 1990, a series
of the Trust that was first offered on March 25, 1985, and that was liquidated
on January 25, 1991. This table is not indicative of the future performance of
the existing funds.
Calculations in the table may not reconcile precisely due to rounding to two
decimal points of share price, AGR and weighted average maturity.
4 American Century Investments 1-800-345-2021
Weighted
Share Price Average
Date (NAV) AGR Maturity (T) AVM
-------------------------------------------------------------------------------
April 1985 $56.03 10.58 5.64 $100.25
June $60.62 9.68 5.42 $101.17
September $62.72 9.44 5.08 $100.23
December $67.75 8.26 4.95 $101.15
-------------------------------------------------------------------------------
March 1986 $73.60 6.86 4.69 $100.98
June $74.80 6.83 4.38 $100.38
September $76.82 6.59 4.16 $100.63
December $79.01 6.27 3.86 $100.26
-------------------------------------------------------------------------------
March 1987 $79.88 6.34 3.59 $99.93
June $79.01 7.21 3.27 $99.63
September $77.28 8.57 3.14 $100.62
December $81.02 7.52 2.76 $99.33
-------------------------------------------------------------------------------
March 1988 $83.61 6.98 2.51 $99.33
June $83.97 6.55 2.62 $99.42
September $84.96 6.97 2.09 $98.04
December $85.70 8.39 1.68 $98.38
-------------------------------------------------------------------------------
March 1989 $86.76 9.18 1.50 $99.25
June $90.47 7.57 1.23 $99.16
September $91.91 7.81 0.98 $99.08
December $94.00 7.38 0.74 $99.17
-------------------------------------------------------------------------------
March 1990 $95.62 7.68 0.52 $99.44
June $97.48 7.44 0.32 $99.82
September $99.32 6.73 0.15 $100.31
December $101.13 4.33 0.07 $101.43
-------------------------------------------------------------------------------
Note that the Target 1990's share price on December 31, 1990, was not the same
as its AVM on that date because the fund had not yet been liquidated and still
held short-term Treasury securities with a 25-day maturity. The fund was
liquidated on January 25, 1991, at a final share price of $101.46.
As a further demonstration of how the funds have behaved over time, the
following tables show each fund's AGR and AVM as of September 30 for each of the
past five years.
The funds' share prices and growth rates are not guaranteed by the Trust or any
of its affiliates. There is no guarantee that the funds' AVMs will fluctuate in
the same manner in the future as they have in the past.
Anticipated
Growth Rate 9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
------------------------------------------------------------------------------
Target 2000 5.37% 5.75% 5.24% 3.81% 5.08%
------------------------------------------------------------------------------
Target 2005 5.75% 6.17% 5.57% 3.98% 5.64%
------------------------------------------------------------------------------
Target 2010 6.04% 6.44% 5.80% 4.41% 5.95%
------------------------------------------------------------------------------
Target 2015 6.21% 6.58% 5.93% 4.81% 6.06%
------------------------------------------------------------------------------
Target 2020 6.20% 6.59% 5.98% 4.90% 6.10%
------------------------------------------------------------------------------
Target 2025 N/A 6.43% 5.86% 4.80% 5.73%
------------------------------------------------------------------------------
www.americancentury.com American Century Investments 5
Anticipated
Value at
Maturity 9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
------------------------------------------------------------------------------
Target 2000 $100.99 $101.10 $101.13 $101.78 $101.51
------------------------------------------------------------------------------
Target 2005 $100.32 $100.71 $100.85 $101.53 $101.28
------------------------------------------------------------------------------
Target 2010 $101.02 $102.53 $103.40 $104.85 $105.56
------------------------------------------------------------------------------
Target 2015 $109.62 $110.11 $110.52 $112.63 $112.62
------------------------------------------------------------------------------
Target 2020 $102.31 $103.60 $104.84 $106.96 $107.30
------------------------------------------------------------------------------
Target 2025 N/A $109.24 $110.88 $112.23 $111.81
------------------------------------------------------------------------------
Coupon-Bearing U.S. Treasury Securities
U.S. Treasury bills, notes and bonds are direct obligations of the U.S.
Treasury. Historically, they have involved no risk of loss of principal if held
to maturity. Between issuance and maturity, however, the prices of these
securities change in response to changes in market interest rates.
Coupon-bearing securities generate current interest payments, and part of a
fund's return may come from reinvesting interest earned on these securities.
Cash Management
Each fund may invest up to 5% of its total assets in any money market fund,
including those managed by the advisor, provided that the investment is
consistent with the fund's investment policies and restrictions.
Loans of Portfolio Securities
Each fund may lend its portfolio securities to earn additional income. If a
borrower defaults on a securities loan, the lending fund could experience delays
in recovering the securities it loaned; if the value of the loaned securities
increased over the value of the collateral, the fund could suffer a loss. To
minimize the risk of default on securities loans, the advisor, American Century
Investment Management, Inc., adheres to the following guidelines governing
lending of securities prescribed by the Board of Trustees. These guidelines
strictly govern (1) the type and amount of collateral that must be received by
the fund; (2) the circumstances under which additions to that collateral must be
made by borrowers; (3) the return received by the fund on the loaned securities;
(4) the limitations on the percentage of fund assets on loan; and (5) the credit
standards applied in evaluating potential borrowers of portfolio securities. In
addition, the guidelines require that the fund have the option to terminate any
loan of a portfolio security at any time and set requirements for recovery of
securities from borrowers.
INVESTMENT POLICIES
Unless otherwise indicated, with the exception of the percentage limitations on
borrowing, the restrictions described below apply at the time a fund enters into
a transaction. Accordingly, any later increase or decrease beyond the specified
limitation resulting from a change in a fund's net assets will not be considered
in determining whether it has complied with its investment restrictions.
Fundamental Investment Policies
The funds' fundamental investment restrictions are set forth below. These
investment restrictions may not be changed without approval of a majority of the
outstanding votes of shareholders of a fund, as determined in accordance with
the Investment Company Act.
6 American Century Investments 1-800-345-2021
Subject Policy
--------------------------------------------------------------------------------
Senior Securities A fund may not issue senior securities, except as permitted
under the Investment Company Act.
--------------------------------------------------------------------------------
Borrowing A fund may not borrow money, except for temporary or
emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of the fund's total assets.
--------------------------------------------------------------------------------
Lending A fund may not lend any security or make any other loan if,
as a result, more than 33 1/3% of the fund's total assets
would be lent to other parties, except (i) through the
purchase of debt securities in accordance with its investment
objective, policies and limitations or (ii) by engaging in
repurchase agreements with respect to portfolio securities.
--------------------------------------------------------------------------------
Real Estate A fund may not purchase or sell real estate unless acquired
as a result of ownership of securities or other instruments.
This policy shall not prevent a fund from investing in
securities or other instruments backed by real estate or
securities of companies that deal in real estate or are
engaged in the real estate business.
--------------------------------------------------------------------------------
Concentration A fund may not concentrate its investments in securities of
issuers in a particular industry (other than securities
issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities).
--------------------------------------------------------------------------------
Underwriting A fund may not act as an underwriter of securities issued by
others, except to the extent that the fund may be considered
an underwriter within the meaning of the Securities Act of
1933 in the disposition of restricted securities.
--------------------------------------------------------------------------------
Commodities A fund may not purchase or sell physical commodities unless
acquired as a result of ownership of securities or other
instruments, provided that this limitation shall not prohibit
the fund from purchasing or selling options and futures
contracts or from investing in securities or other
instruments backed by physical commodities.
--------------------------------------------------------------------------------
Control A fund may not invest for purposes of exercising control
over management.
--------------------------------------------------------------------------------
For purposes of the investment restrictions relating to lending and borrowing,
the funds have received an exemptive order from the SEC regarding interfund
lending. Under the terms of the exemptive order, the funds may borrow money from
or lend money to other funds, advised by ACIM, that permit such transactions.
All such transactions will be subject to the limits set above for borrowing and
lending. The funds will borrow money through the program only when the costs are
equal to or lower than the cost of short-term bank loans. Interfund loans and
borrowings normally extend only overnight, but can have a maximum duration of
seven days. The funds will lend through the program only when the returns are
higher than those available from other short-term instruments (such as
repurchase agreements). The funds may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional borrowing costs.
For purposes of the investment restriction relating to concentration, a fund
shall not purchase any securities that would cause 25% or more of the value of
the fund's total assets at the time of purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry, provided that (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government, any state, territory or
possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions and
repurchase agreements secured by such instruments, (b) wholly owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents,
(c) utilities will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric, and telephone will each be considered
a separate industry, and (d) personal credit and business credit businesses will
be considered separate industries.
www.americancentury.com American Century Investments 7
Nonfundamental Investment Policies
In addition, the funds are subject to the following additional investment
restrictions that are not fundamental and may be changed by the Board of
Trustees.
Subject Policy
--------------------------------------------------------------------------------
Leveraging A fund may not purchase additional investment securities at any
time during which outstanding borrowings exceed 5% of the total
assets of the fund.
--------------------------------------------------------------------------------
Liquidity A fund may not purchase any security or enter into a repurchase
agreement if, as a result, more than 15% of its net assets would
be invested in repurchase agreements not entitling the holder
to payment of principal and interest within seven days and in
securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available
market.
--------------------------------------------------------------------------------
Short Sales A fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the
securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling
securities short.
--------------------------------------------------------------------------------
Margin A fund may not purchase securities on margin, except to obtain
such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection
with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
--------------------------------------------------------------------------------
The Investment Company Act imposes certain additional restrictions upon
acquisition by the corporation of securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership. Neither the SEC nor any other agency of the
federal or state agency participates in or supervises the management of the
funds or their investment practices or policies.
TEMPORARY DEFENSIVE MEASURES
For temporary defensive purposes, a fund may invest in securities that may not
fit its investment objective or its stated market. During a temporary defensive
period, a fund may direct its assets to the following investment vehicles: (1)
interest-bearing bank accounts or certificates of deposit; (2) U.S. government
securities and repurchase agreements collateralized by U.S. government
securities; and (3) money market funds.
PORTFOLIO TURNOVER
Under normal conditions, the funds' annual portfolio turnover rates are not
expected to exceed 100%. Because a higher turnover rate increases transaction
costs and may increase taxable capital gains, the funds' managers carefully
weigh the potential benefits of short-term investing against these
considerations.
The funds' portfolio turnover rates are listed in the Financial Highlights
tables in the Prospectus.
8 American Century Investments 1-800-345-2021
MANAGEMENT
THE BOARD OF TRUSTEES
The Board of Trustees oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Trustees does not manage the funds, it has hired the advisor to do so.
Two-thirds of the trustees are independent of the funds' advisor; that is, they
are not employed by and have no financial interest in the advisor.
The individuals listed in the following table whose names are marked by an
asterisk (*) are interested persons of the funds (as defined in the Investment
Company Act) by virtue of, among other considerations, their affiliation with
either the advisor, American Century Investment Management, Inc. (ACIM); the
funds' agent for transfer and administrative services, American Century Services
Corporation (ACSC); the parent corporation, American Century Companies, Inc.
(ACC) or ACC's subsidiaries (including ACIM and ACSC); the funds' distribution
agent and co-administrator, Funds Distributor, Inc. (FDI); or other funds
advised by the advisor. Each trustee listed below serves as a trustee or
director of seven registered investment companies in the American Century family
of funds, which are also advised by the advisor.
Position(s)
Name (Age) Held Principal Occupation(s)
Address With Funds During Past Five Years
--------------------------------------------------------------------------------
Albert A. Eisenstat (69) Trustee Independent Director, Commercial Metals
1665 Charleston Road Co. (1982 to present)
Mountain View, CA 94043 Independent Director, Sungard Data
Systems (1991 to present)
General Partner, Discovery Ventures
(venture capital firm,1996 to 1998)
Independent Director, Business Objects
S/A (software & programming, 1994
to present)
--------------------------------------------------------------------------------
Ronald J. Gilson (53) Trustee Charles J. Meyers Professor of Law and
1665 Charleston Road Business, Stanford Law School (1979 to
Mountain View, CA 94043 present)
Marck and Eva Stern Professor of Law and
Business, Columbia University School of
Law (1992 to present)
Counsel, Marron, Reid & Sheehy (a San
Francisco law firm, 1984 to present)
--------------------------------------------------------------------------------
William M. Lyons* (44) Trustee President, Chief Operating Officer and
4500 Main St. Assistant Secretary, ACC
Kansas City, MO 64111 Executive Vice President, Chief
Operating Officer, ACIM, ACSC and 11
other ACC subsidiaries
Director, ACIM, ACSC and 15 other ACC
subsidiaries
Secretary, ACIM, ACSC and six other ACC
subsidiaries
--------------------------------------------------------------------------------
Myron S. Scholes (58) Trustee Limited Partner, Long-Term Capital
1665 Charleston Road Management (February 1999 to present)
Mountain View, CA 94043 Principal, Long-Term Capital Management
(investment advisor, 1993 to
January 1999)
Frank E. Buck Professor of Finance,
Stanford Graduate School of Business
(1981 to present)
Director, Dimensional Fund Advisors
(investment advisor, 1982 to present)
Director, Smith Breeden Family of Funds
(1992 to present)
--------------------------------------------------------------------------------
Kenneth E. Scott (71) Trustee Ralph M. Parsons Professor of Law and
1665 Charleston Road Business, Stanford Law School (1972 to
Mountain View, CA 94043 present)
Director, RCM Capital Funds, Inc. (1994
to present)
--------------------------------------------------------------------------------
www.americancentury.com American Century Investments 9
Position(s)
Name (Age) Held Principal Occupation(s)
Address With Funds During Past Five Years
--------------------------------------------------------------------------------
Isaac Stein (53) Trustee Director, Raychem Corporation
1665 Charleston Road (electrical equipment, 1993 to present)
Mountain View, CA 94043 President, Waverley Associates, Inc.
(private investment firm, 1983 to
present)
Director, ALZA Corporation
(pharmaceuticals, 1987 to present)
Trustee, Stanford University (1994 to
present)
Chairman, Stanford Health Services (1994
to present)
--------------------------------------------------------------------------------
James E. Stowers III* (40) Trustee, Chief Executive Officer and Director, ACC
4500 Main St. Chairman Chief Executive Officer, ACIM, ACSC and
Kansas City, MO 64111 of the seven other ACC subsidiaries
Board Director, ACIM, ACSC and 12 other ACC
subsidiaries
--------------------------------------------------------------------------------
Jeanne D. Wohlers (54) Trustee Director, Indus International (software
1665 Charleston Road solutions, January 1999 to present)
Mountain View, CA 94043 Director and Partner, Windy Hill
Productions, LP (educational software,
1994 to 1998)
Director, Quintus Corporation
(automation solutions, 1995 to present)
--------------------------------------------------------------------------------
Committees
The Board has four committees to oversee specific functions of the funds'
operations. Information about these committees appears in the table below. The
trustee first named serves as chairman of the committee:
Committee Members Function of Committee
--------------------------------------------------------------------------------
Audit Kenneth E. Scott The Audit Committee selects and oversees the
Albert A. Eisenstat activities of the Trust's independent
Jeanne D. Wohlers Trust's independent auditor. The committee
receives reports from the advisor's Internal
Audit Department, which is accountable solely
to the committee. The committee also receives
reporting about compliance matters affecting
the Trust.
--------------------------------------------------------------------------------
Nominating Kenneth E. Scott The Nominating Committee primarily considers
Myron S. Scholes and recommends individuals for nomination as
Albert A. Eisenstat trustees. The names of potential trustee
Ronald J. Gilson candidates are drawn from a number of
Isaac Stein sources, including recommendations from
Jeanne D. Wohlers members of the Board, management and
shareholders. This committee also reviews
and makes recommendations to the Board with
respect to the composition of Board
committees and other Board-related matters,
including its organization, size, composition,
responsibilities, functions and compensation.
--------------------------------------------------------------------------------
Portfolio Myron S. Scholes The Portfolio Committee reviews quarterly the
Ronald J. Gilson investment activities and strategies used to
Isaac Stein manage fund assets. The committee regularly
receives reports from portfolio managers,
credit analysts and other investment
personnel concerning the funds' investments.
--------------------------------------------------------------------------------
Quality of Isaac Stein The Quality of Service Committee reviews the
Service William M. Lyons level and quality of transfer agent and
Ronald J. Gilson administrative services provided to the funds
Myron S. Scholes and their shareholders. It receives and
reviews reports comparing those services to
fund competitors' services and seeks to
improve such services where feasible
and appropriate.
--------------------------------------------------------------------------------
10 American Century Investments 1-800-345-2021
Compensation of Trustees
The trustees also serve as trustees for six American Century investment
companies other than American Century Target Maturities Trust. Each trustee who
is not an interested person as defined in the Investment Company Act receives
compensation for service as a member of the Board of all seven such companies
based on a schedule that takes into account the number of meetings attended and
the assets of the funds for which the meetings are held. These fees and expenses
are divided among the seven investment companies based, in part, upon their
relative net assets. Under the terms of the management agreement with the
advisor, the funds are responsible for paying such fees and expenses.
The following table shows the aggregate compensation paid by the Trust for the
periods indicated and by the seven investment companies served by this Board to
each trustee who is not an interested person as defined in the Investment
Company Act.
AGGREGATE TRUSTEE COMPENSATION FOR FISCAL YEAR ENDED SEPTEMBER 30, 1999
--------------------------------------------------------------------------------
Total Compensation Total Compensation from the
Name of Trustee from the Funds(1) American Century Family of Funds(2)
--------------------------------------------------------------------------------
Albert A. Eisenstat $8,124 $71,250
Ronald J. Gilson $9,734 $81,750
Myron S. Scholes $8,749 $70,500
Kenneth E. Scott $9,773 $82,250
Isaac Stein $9,303 $77,000
Jeanne D. Wohlers $9,467 $78,750
--------------------------------------------------------------------------------
(1) Includes compensation paid to the trustees during the fiscal year ended
September 30, 1999, and also includes amounts deferred at the election of the
trustees under the Amended and Restated American Century Mutual Funds Deferred
Compensation Plan for Non-Interested Directors. The total amount of deferred
compensation included in the preceding table is as follows: Mr. Eisenstat,
$8,124; Mr. Gilson, $9,734; Mr. Scholes, $8,749 and Mr. Scott, $4,887.
(2) Includes compensation paid by the seven investment company members of the
American Century family of funds served by this Board.
The funds have adopted the Amended and Restated American Century Deferred
Compensation Plan for Non-Interested Directors. Under the plan, the independent
trustees may defer receipt of all or any part of the fees to be paid to them for
serving as trustees of the funds.
All deferred fees are credited to an account established in the name of the
trustees. The amounts credited to the account then increase or decrease, as the
case may be, in accordance with the performance of one or more of the American
Century funds that are selected by the trustee. The account balance continues to
fluctuate in accordance with the performance of the selected fund or funds until
final payment of all amounts is credited to the account. Trustees are allowed to
change their designation of mutual funds from time to time.
No deferred fees are payable until such time as a trustee resigns, retires or
otherwise ceases to be a member of the Board of Trustees. Trustees may receive
deferred fee account balances either in a lump sum payment or in substantially
equal installment payments to be made over a period not to exceed 10 years. Upon
the death of a trustee, all remaining deferred fee account balances are paid to
the trustee's beneficiary or, if none, to the trustee's estate.
The plan is an unfunded plan and, accordingly, the funds have no obligation to
segregate assets to secure or fund the deferred fees. The rights of trustees to
receive their deferred fee account balances are the same as the rights of a
general unsecured creditor of the funds. The plan may be terminated at any time
by the administrative committee of the plan. If terminated, all deferred fee
account balances will be paid in a lump sum.
No deferred fees were paid to any trustee under the plan during the fiscal year
ended September 30, 1999.
www.americancentury.com American Century Investments 11
OFFICERS
Background information about the officers of the funds is provided in the table
below. All persons named as officers of the funds also serve in similar
capacities for the 12 other investment companies advised by ACIM. Not all
officers of the funds are listed; only those officers with policy-making
functions for the funds are listed. No officer is compensated for his or her
service as an officer of the funds. The individuals listed in this table are
interested persons of the funds (as defined in the Investment Company Act) by
virtue of, among other considerations, their affiliation with either the funds;
ACC; ACC's subsidiaries (including ACIM and ACSC) or the funds' distributor
(FDI), as specified in the following table.
Position(s)
Name (Age) Held Principal Occupation(s)
Address With Funds During Past Five Years
--------------------------------------------------------------------------------
George A. Rio (45) President Executive Vice President and Director
60 State St. of Client Services, FDI (March 1998
Boston, MA 02109 to present)
Senior Vice President and Senior Key
Account Manager, Putnam Mutual Funds
(June 1995 to March 1998)
Director Business Development, First
Data Corporation (May 1994 to
June 1995)
--------------------------------------------------------------------------------
Christopher J. Vice President Vice President and Associate General
Kelley (35) Counsel, FDI
60 State St. (July 1996 to present)
Boston, MA 02109 Assistant Counsel, Forum Financial
Group (April 1994 to July 1996)
--------------------------------------------------------------------------------
Mary A. Nelson (35) Vice President Vice President and Manager of
60 State St. Treasury Services and Administration,
Boston, MA 02109 FDI (1994to present)
Assistant Vice President and Client
Manager, The Boston Company, Inc.
(1989 to 1994)
--------------------------------------------------------------------------------
Maryanne Roepke, Vice President Senior Vice President and Assistant
CPA (43) and Treasurer Treasurer, ACSC
4500 Main St.
Kansas City, MO 64111
--------------------------------------------------------------------------------
David Tucker (41) Vice President Senior Vice President, ACSC, ACIM
4500 Main St. and four other ACC subsidiaries
Kansas City, MO 64111 (June 1998 to present)
General Counsel, ACC and nine ACC
subsidiaries (June 1998 to present)
Vice President and Secretary,
American Century Ventures, Inc.
(December 1999 to present)
Consultant to mutual fund industry
(May 1997 to April 1998)
Vice President and General Counsel,
Janus Companies (1990 to 1997)
--------------------------------------------------------------------------------
Douglas A. Paul (53) Secretary and Vice President and Associate General
1665 Charleston Road Vice President Counsel, ACSC
Mountain View, CA 94043
--------------------------------------------------------------------------------
C. Jean Wade (35) Controller Controller -- Fund Accounting,
4500 Main St. ACSC
Kansas City, MO 64111
--------------------------------------------------------------------------------
Jon Zindel (32) Tax Officer Vice President and Director of
4500 Main St. Taxation, ACSC (1996 to present)
Kansas City, MO 64111 Vice President, ACIM and 15 other
ACC subsidiaries (1999 to present)
Treasurer, American Century Ventures,
Inc. (December 1999 to present)
Tax Manager, Price Waterhouse LLP
(1989 to 1996)
--------------------------------------------------------------------------------
12 American Century Investments 1-800-345-2021
THE FUNDS' PRINCIPAL SHAREHOLDERS
As of December 31, 1999, the following companies were the record owners of more
than 5% of the outstanding shares of any class of a fund.
Investor Class
Fund Shareholder and Percentage of Shares Outstanding
--------------------------------------------------------------------------------
Target 2000 Charles Schwab & Co.
San Francisco, CA - 17%
--------------------------------------------------------------------------------
Target 2005 MLPF&S
Jacksonville, FL - 36%
Charles Schwab & Co.
San Francisco, CA - 11%
--------------------------------------------------------------------------------
Target 2010 Charles Schwab & Co.
San Francisco, CA - 22%
Pershing Division of Donaldson Lufkin & Jenrette
Jersey City, NJ - 6%
National Financial Services Corp.
New York NY - 6%
--------------------------------------------------------------------------------
Target 2015 MLPF&S
Jacksonville, FL - 41%
Charles Schwab & Co.
San Francisco, CA - 14%
--------------------------------------------------------------------------------
Target 2020 Charles Schwab & Co.
San Francisco, CA - 31%
National Financial Services Corp.
New York, NY - 8%
--------------------------------------------------------------------------------
Target 2025 Charles Schwab & Co.
San Francisco, CA - 35%
National Financial Services Corp.
New York, NY - 11%
National Investors Services Corp.
New York, NY - 9%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Advisor Class
Fund Shareholder and Percentage of Shares Outstanding
--------------------------------------------------------------------------------
Target 2000 Donaldson Lufkin Jenrette Securities Corporation Inc.
Jersey City, NJ - 44%
--------------------------------------------------------------------------------
Target 2005 Donaldson Lufkin Jenrette Securities Corporation Inc.
Jersey City, NJ - 9%
--------------------------------------------------------------------------------
Target 2010 Donaldson Lufkin Jenrette Securities Corporation Inc.
Jersey City, NJ - 42%
--------------------------------------------------------------------------------
Target 2015 Donaldson Lufkin Jenrette Securities Corporation Inc.
Jersey City, NJ - 100%
--------------------------------------------------------------------------------
Target 2020 Donaldson Lufkin Jenrette Securities Corporation Inc.
Jersey City, NJ - 24%
National Financial Services Corp. FBO Virginia K. Doorley
New York, NY - 8%
AG Edwards & Sons C/F Joy A. Morgan IRA Account
St. Louis, MO - 8%
--------------------------------------------------------------------------------
Target 2025 Donaldson Lufkin Jenrette Securities Corporation Inc.
Jersey City, NJ - 6%
AG Edwards & Sons Inc. FBO Meyer B. Cohen Trustee
St. Louis, MO -- 5%
--------------------------------------------------------------------------------
www.americancentury.com American Century Investments 13
The funds are unaware of any other shareholders, beneficial or of record, who
own more than 5% of any class of a fund's outstanding shares. As of December 31,
1999, the officers and trustees of the funds, as a group, owned less than 1% of
any class of a fund's outstanding shares.
SERVICE PROVIDERS
The funds have no employees. To conduct the funds' day-to-day activities, the
funds have hired a number of service providers. Each service provider has a
specific function to fill on behalf of the Trust and is described below.
ACIM and ACSC are both wholly owned by ACC. James E. Stowers Jr., Chairman of
ACC, controls ACC by virtue of his ownership of a majority of its common stock.
INVESTMENT ADVISOR
American Century Investment Management, Inc. (ACIM) serves as the investment
advisor for each of the funds. A description of the responsibilities of the
advisor appears in the Prospectus under the heading, "Management."
For the services provided to the funds, the advisor receives a monthly fee based
on a percentage of the average net assets of the fund. The annual rate at which
this fee is assessed is determined monthly in a two-step process. First, a fee
rate schedule is applied to the assets of all the funds in a fund's investment
category which are managed by the advisor (the Investment Category Fee). For
example, when calculating the fee for a money market fund, all the assets of the
money market funds managed by the advisor are aggregated. The three investment
categories are money market funds, bond funds and equity funds. Second, a
separate fee rate schedule is applied to the assets of all the funds managed by
the advisor (the Complex Fee). The Investment Category Fee and the Complex Fee
are then added to determine the unified management fee payable by the fund to
the advisor.
The schedules by which the unified management fee is determined are shown below.
The Investment Category Fees are determined according to the schedule below.
INVESTMENT CATEGORY FEE SCHEDULE FOR TARGET 2000, TARGET 2005, TARGET 2010,
TARGET 2015, TARGET 2020 AND TARGET 2025
--------------------------------------------------------------------------------
Category Assets Fee Rate
--------------------------------------------------------------------------------
First $1 billion 0.3600%
Next $1 billion 0.3080%
Next $3 billion 0.2780%
Next $5 billion 0.2580%
Next $15 billion 0.2450%
Next $25 billion 0.2430%
Thereafter 0.2425%
--------------------------------------------------------------------------------
14 American Century Investments 1-800-345-2021
The Complex Fee is determined according to the schedule below.
COMPLEX FEE SCHEDULE
--------------------------------------------------------------------------------
Complex Assets Fee Rate Fee Rate
Investor Class Advisor Class
--------------------------------------------------------------------------------
First $2.5 billion 0.3100% 0.0600%
Next $7.5 billion 0.3000% 0.0500%
Next $15 billion 0.2985% 0.0485%
Next $25 billion 0.2970% 0.0470%
Next $50 billion 0.2960% 0.0460%
Next $100 billion 0.2950% 0.0450%
Next $100 billion 0.2940% 0.0440%
Next $200 billion 0.2930% 0.0430%
Next $250 billion 0.2920% 0.0420%
Next $500 billion 0.2910% 0.0410%
Thereafter 0.2900% 0.0400%
--------------------------------------------------------------------------------
On the first business day of each month, the funds pay a management fee to the
advisor for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of a fund's net assets during the previous
month. This number is then multiplied by a fraction, the numerator of which is
the number of days in the previous month and the denominator of which is 365
(366 in leap years).
The management agreement between the Trust and the advisor shall continue in
effect until the earlier of the expiration of two years from the date of its
execution or until the first meeting of shareholders following such execution
and for as long thereafter as its continuance is specifically approved at least
annually, by (1) the funds' Board of Trustees, or by the vote of a majority of
outstanding votes (as defined in the Investment Company Act) and (2) the vote of
a majority of the trustees of the funds who are not parties to the agreement or
interested persons of the advisor, cast in person at a meeting called for the
purpose of voting on such approval.
The management agreement provides that it may be terminated at any time without
payment of any penalty by the funds' Board of Trustees, or by a vote of a
majority of outstanding votes, on 60 days' written notice to the advisor, and
that it shall be automatically terminated if it is assigned.
The management agreement provides that the advisor shall not be liable to the
funds or their shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties.
The management agreement also provides that the advisor and its officers,
trustees and employees may engage in other business, devote time and attention
to any other business whether of a similar or dissimilar nature, and render
services to others.
Certain investments may be appropriate for the funds and also for other clients
advised by the advisor. Investment decisions for the funds and other clients are
made with a view to achieving their respective investment objectives after
consideration of such factors as their current holdings, availability of cash
for investment and the size of their investment generally. A particular security
may be bought or sold for only one client or fund, or in different amounts and
at different times for more than one but less than all clients or funds. In
addition, purchases or sales of the same security may be made for two or more
clients or funds on the same date. Such transactions will be allocated among
clients in a manner believed by the advisor to be equitable to each. In some
cases this procedure could have an adverse effect on the price or amount of the
securities purchased or sold by a fund.
www.americancentury.com American Century Investments 15
The advisor may aggregate purchase and sale orders of the funds with purchase
and sale orders of its other clients when the advisor believes that such
aggregation provides the best execution for the funds. The Board of Trustees has
approved the policy of the advisor with respect to the aggregation of portfolio
transactions. Where portfolio transactions have been aggregated, the funds
participate at the average share price for all transactions in that security on
a given day and share transaction costs on a pro rata basis. The advisor will
not aggregate portfolio transactions of the funds unless it believes such
aggregation is consistent with its duty to seek best execution on behalf of the
funds and the terms of the management agreement. The advisor receives no
additional compensation or remuneration as a result of such aggregation.
Prior to August 1, 1997, Benham Management Corporation served as the investment
advisor to the funds. Benham Management Corporation was merged into the advisor
in late 1997.
Unified management fees incurred by each fund by class for the fiscal periods
ended September 30, 1999, 1998, and 1997, are indicated in the following tables.
UNIFIED MANAGEMENT FEES()
--------------------------------------------------------------------------------
Fund 1999 1998 1997(1)
--------------------------------------------------------------------------------
Target 2000
Investor $1,256,327 $1,410,842 $253,016
Advisor $1,692 $24 N/A
--------------------------------------------------------------------------------
Target 2005
Investor $3,086,606 $2,246,808 $273,493
Advisor $3,088 $50 N/A
--------------------------------------------------------------------------------
Target 2010
Investor $1,433,295 $1,092,458 $118,549
Advisor $1,854 N/A N/A
--------------------------------------------------------------------------------
Target 2015
Investor $1,225,466 $845,121 $112,978
Advisor $5 N/A N/A
--------------------------------------------------------------------------------
Target 2020
Investor $2,195,363 $3,309,715 $551,748
Advisor $731 N/A N/A
--------------------------------------------------------------------------------
Target 2025
Investor $2,074,030 $1,240,026 $67,035
Advisor $1,572 $121 N/A
--------------------------------------------------------------------------------
INVESTMENT ADVISORY FEES(2)
--------------------------------------------------------------------------------
Fund Fiscal 1997(3)
--------------------------------------------------------------------------------
Target 2000 $902,194
Target 2005 $875,825
Target 2010 $380,066
Target 2015 $386,638
Target 2020 $2,691,970
Target 2025 $181,630
--------------------------------------------------------------------------------
(1) For the period August 1, 1997 to September 30, 1997. Fees paid during this
period were paid under the Management Agreement with American Century
Investment Management, Inc.
(2) Fee amounts are net of amounts reimbursed or recouped under the funds'
previous investment advisory agreement with Benham Management Corporation.
(3) For the period October 1, 1996 to July 31, 1997. Fees paid during this
period were paid under the Investment Advisory Agreement with Benham
Management Corporation.
16 American Century Investments 1-800-345-2021
TRANSFER AGENT AND ADMINISTRATOR
American Century Services Corporation, 4500 Main Street, Kansas City, Missouri
64111, serves as transfer agent and dividend-paying agent for the funds. It
provides physical facilities, computer hardware and software, and personnel for
the day-to-day administration of the funds and the advisor. The advisor pays
ACSC for these services.
From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the advisor.
Pursuant to a Sub-Administration Agreement with the advisor, Funds Distributor,
Inc. (FDI) serves as the Co-Administrator for the funds. FDI is responsible for
(1) providing certain officers of the funds and (2) reviewing and filing
marketing and sales literature on behalf of the funds. The fees and expenses of
FDI are paid by the advisor out of its unified fee.
Prior to August 1, 1997, the funds paid ACSC directly for its services as
transfer agent and administrative services agent.
Administrative service and transfer agent fees paid by each fund for the fiscal
years ended September 30, 1997, are indicated in the table below. Fee amounts
are net of expense limitations.
ADMINISTRATIVE FEES
--------------------------------------------------------------------------------
Fund Fiscal 1997(1)
--------------------------------------------------------------------------------
Target 2000 $207,663
Target 2005 $193,216
Target 2010 $85,820
Target 2015 $89,672
Target 2020 $685,160
Target 2025 $42,716
--------------------------------------------------------------------------------
TRANSFER AGENT FEES
--------------------------------------------------------------------------------
Fund Fiscal 1997(1)
--------------------------------------------------------------------------------
Target 2000 $196,492
Target 2005 $213,613
Target 2010 $131,294
Target 2015 $132,040
Target 2020 $618,798
Target 2025 $57,380
--------------------------------------------------------------------------------
(1) For the period October 1, 1996 to July 31, 1997. Fees paid during this
period were paid under the Investment Advisory Agreement with Benham
Management Corporation.
DISTRIBUTOR
The funds' shares are distributed by FDI, a registered broker-dealer. The
distributor is a wholly owned, indirect subsidiary of Boston Institutional
Group, Inc. The distributor's principal business address is 60 State Street,
Suite 1300, Boston, Massachusetts 02109.
The distributor is the principal underwriter of the funds' shares. The
distributor makes a continuous, best-efforts underwriting of the funds' shares.
This means the distributor has no liability for unsold shares.
www.americancentury.com American Century Investments 17
OTHER SERVICE PROVIDERS
CUSTODIAN BANKS
Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New York 10003-9598,
and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, each serves
as custodian of the assets of the funds. The custodians take no part in
determining the investment policies of the funds or in deciding which securities
are purchased or sold by the funds. The funds, however, may invest in certain
obligations of the custodians and may purchase or sell certain securities from
or to the custodians.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP are the independent accountants of the funds. The
address of PricewaterhouseCoopers LLP is 1055 Broadway, 10th floor, Kansas City,
Missouri 64105. As the independent accountants of the funds,
PricewaterhouseCoopers LLP provides services including (1) audit of the annual
financial statements for each fund, (2) assistance and consultation in
connection with SEC filings, and (3) review of the annual federal income tax
return filed for each fund.
BROKERAGE ALLOCATION
The funds generally purchase and sell debt securities through principal
transactions, meaning the funds normally purchase securities directly from the
issuer or a primary market-maker acting as principal for the securities on a net
basis. The funds do not pay brokerage commissions on these transactions,
although the purchase price for debt securities usually includes an undisclosed
compensation. Purchases from underwriters or securities typically include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market-makers typically include a dealer's mark-up
(i.e., a spread between the bid and asked prices). During the fiscal years
ended September 30, 1997, 1998, and 1999, the funds did not pay any brokerage
commissions.
INFORMATION ABOUT FUND SHARES
Each of the funds named on the front of this Statement of Additional Information
is a series of shares issued by the Trust, and shares of each fund have equal
voting rights.
Each fund votes separately on matters affecting that fund exclusively. Voting
rights are not cumulative, so that investors holding more than 50% of the
Trust's (i.e., all funds') outstanding shares may be able to elect a Board of
Trustees. The Trust undertakes dollar-based voting, meaning that the number of
votes you are entitled to is based upon the dollar amount of the shareholder's
investment. The election of trustees is determined by the votes received from
all Trust shareholders without regard to whether a majority of shares of any one
fund voted in favor of a particular nominee or all nominees as a group.
Each shareholder has rights to dividends and distributions declared by the fund
he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.
18 American Century Investments 1-800-345-2021
Shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable for its obligations. However, the
Declaration of Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust. The Declaration of Trust also provides for
indemnification and reimbursement of expenses of any shareholder held
personally liable for obligations of the Trust. The Declaration of Trust
provides that the Trust will, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Trust and satisfy any
judgment thereon. The Declaration of Trust further provides that the Trust may
maintain appropriate insurance (for example, fidelity, bonding, and errors and
omissions insurance) for the protection of the Trust, its shareholders,
trustees, officers, employees and agents to cover possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss as a
result of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Trust is unable to meet its obligations.
FUND LIQUIDATIONS
Shortly after the conclusion of each fund's target maturity year, its
Investments will be sold or allowed to mature; its liabilities will be
discharged, or a provision will be made for their discharge, and its accounts
will be closed. A shareholder may choose to redeem his or her shares in one of
the following ways: (1) by receiving redemption proceeds or (2) by exchanging
shares for shares of another American Century fund. If the fund receives no
instructions from a shareholder, his or her shares will be exchanged for shares
of American Century Capital Preservation Fund (or a similar fund if Capital
Preservation Fund is not available). The estimated expenses of terminating and
liquidating a fund will be accrued ratably over its target maturity year. These
expenses, which are charged to income (as are all expenses), are not expected
to exceed significantly the ordinary annual expenses incurred by a fund and,
therefore, should have little or no effect on the maturity value of the fund.
MULTIPLE CLASS STRUCTURE
The funds' Board of Trustees has adopted a multiple class plan (the Multiclass
Plan) pursuant to Rule 18f-3 adopted by the SEC. Pursuant to such plan, the
funds may issue up to two classes of shares: an Investor Class and an Advisor
Class.
The Investor Class is made available to investors directly without any load or
commission, for a single unified management fee. The Advisor Class is made
available to institutional shareholders or through financial intermediaries that
do not require the same level of shareholder and administrative services from
the advisor as Investor Class shareholders. As a result, the advisor is able to
charge these classes a lower unified management fee. In addition to the
management fee, however, the Advisor Class shares are subject to a Master
Distribution and Shareholder Services Plan. The plan has been adopted by the
funds' Board of Trustees and initial shareholder in accordance with Rule 12b-1
adopted by the SEC under the Investment Company Act.
www.americancentury.com American Century Investments 19
Rule 12b-1
Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by the investment
company's Board of Trustees and approved by its shareholders. Pursuant to such
rule, the Board of Trustees and initial shareholder of the funds' Advisor Class
have approved and entered into a Master Distribution and Shareholder Services
Plan (the Plan).
In adopting the Plan, the Board of Trustees [including a majority who are not
interested persons of the funds (as defined in the Investment Company Act),
hereafter referred to as the independent trustees] determined that there was a
reasonable likelihood that the Plan would benefit the funds and the shareholders
of the affected class. Pursuant to Rule 12b-1, information with respect to
revenues and expenses under the Plan is presented to the Board of Trustees
quarterly for its consideration in connection with its deliberations as to the
continuance of the Plan. Continuance of the Plan must be approved by the Board
of Trustees (including a majority of the independent trustees) annually. The
Plan may be amended by a vote of the Board of Trustees (including a majority of
the independent trustees), except that the Plan may not be amended to materially
increase the amount to be spent for distribution without majority approval of
the shareholders of the affected class. The Plan terminates automatically in the
event of an assignment and may be terminated upon a vote of a majority of the
independent trustees or by vote of a majority of the outstanding voting
securities of the affected class.
All fees paid under the Plan will be made in accordance with Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers (NASD)
Master Distribution and Shareholder Services Plan
As described in the Prospectus, the funds' Advisor Class shares are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through financial intermediaries, such as banks,
broker-dealers and insurance companies. The funds' distributor enters into
contracts with various banks, broker-dealers, insurance companies and other
financial intermediaries, with respect to the sale of the funds' shares and/or
the use of the funds' shares in various investment products or in connection
with various financial services.
Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for shareholders in
the Advisor Class. In addition to such services, the financial intermediaries
provide various distribution services.
To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
advisor has reduced its management fee by 0.25% per annum with respect to the
Advisor Class shares, and the funds' Board of Trustees has adopted a Master
Distribution and Shareholder Services Plan (the Distribution Plan). Pursuant to
such Plan, the Advisor Class shares pay the distributor a fee of 0.50% annually
of the aggregate average daily assets of the funds' Advisor Class shares, 0.25%
of which is paid for shareholder services (described below) and 0.25% of which
is paid for distribution services. During the fiscal year ended September 30,
1999, the aggregate amount of fees paid by the funds under the Plan were:
Target 2000 $2,536
Target 2005 $4,622
Target 2010 $2,782
Target 2015 $6
Target 2020 $1,096
Target 2025 $2,358
20 American Century Investments 1-800-345-2021
Payments may be made for a variety of shareholder services, including, but are
not limited to, (a) receiving, aggregating and processing purchase, exchange and
redemption requests from beneficial owners (including contract owners of
insurance products that utilize the funds as underlying investment media) of
shares and placing purchase, exchange and redemption orders with the funds'
distributor; (b) providing shareholders with a service that invests the assets
of their accounts in shares pursuant to specific or pre-authorized instructions;
(c) processing dividend payments from a fund on behalf of shareholders and
assisting shareholders in changing dividend options, account designations and
addresses; (d) providing and maintaining elective services such as check writing
and wire transfer services; (e) acting as shareholder of record and nominee for
beneficial owners; (f) maintaining account records for shareholders and/or other
beneficial owners; (g) issuing confirmations of transactions; (h) providing
subaccounting with respect to shares beneficially owned by customers of third
parties or providing the information to a fund as necessary for such
subaccounting; (i) preparing and forwarding shareholder communications from the
funds (such as proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) to shareholders and/or
other beneficial owners; (j) providing other similar administrative and
sub-transfer agency services; and (k) paying "service fees" for the
provision of personal, continuing services to investors, as contemplated by the
Rules of Fair Practice of the NASD (collectively referred to as "Shareholder
Services"). Shareholder services do not include those activities and
expenses that are primarily intended to result in the sale of additional shares
of the funds. During the fiscal year ended September 30, 1999, the amount of
fees paid under the Plan by the funds for shareholder services were:
Target 2000 $1,268
Target 2005 $2,311
Target 2010 $1,391
Target 2015 $3
Target 2020 $548
Target 2025 $1,179
Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of Advisor Class shares, which
services may include but are not limited to, (a) the payment of sales
commission, ongoing commissions and other payments to brokers, dealers,
financial institutions or others who sell Advisor Class shares pursuant to
selling agreements; (b) compensation to registered representatives or other
employees of distributor who engage in or support distribution of the funds'
Advisor Class shares; (c) compensation to, and expenses (including overhead and
telephone expenses) of the distributor; (d) the printing of prospectuses,
statements of additional information and reports for other than existing
shareholders; (e) the preparation, printing and distribution of sales literature
and advertising materials provided to the funds' shareholders and prospective
shareholders; (f) receiving and answering correspondence from prospective
shareholders, including distributing prospectuses, statements of additional
information, and shareholder reports; (g) the providing of facilities to answer
questions from prospective investors about fund shares; (h) complying with
federal and state securities laws pertaining to the sale of fund shares; (i)
assisting investors in completing application forms and selecting dividend and
other account options; (j) the providing of other reasonable assistance in
connection with the distribution of fund shares; (k) the organizing and
conducting of sales seminars and payments in the form of transactional
compensation or promotional incentives; (l) profit on the foregoing; (m) the
payment of service fees for the provision of personal, continuing services to
investors, as
www.americancentury.com American Century Investments 21
contemplated by the Rules of Fair Practice of the NASD, and (n) such other
distribution and services activities as the advisor determines may be paid for
by the funds pursuant to the terms of this Agreement and in accordance with Rule
12b-1 of the Investment Company Act. During the fiscal year ended September 30,
1999, the amount of fees paid under the Plan by the funds for distribution
services were:
Target 2000 $1,268
Target 2005 $2,311
Target 2010 $1,391
Target 2015 $3
Target 2020 $548
Target 2025 $1,179
BUYING AND SELLING FUND SHARES
Information about buying, selling and exchanging fund shares is contained in the
funds' Prospectus and in Your Guide to American Century Services. The Prospectus
and guide are available to investors without charge and may be obtained by
calling us.
VALUATION OF A FUND'S SECURITIES
Each fund's net asset value per share (NAV) is calculated as of ONE HOUR BEFORE
the close of regular trading of the New York Stock Exchange (usually 4 p.m.
Eastern time) on each day the Exchange is open. The Exchange typically observes
the following holidays: New Year's Day, Martin Luther King Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Although the funds expect the same holiday schedule to be
observed in the future, the Exchange may modify its holiday schedule at any
time.
Each fund's NAV is calculated by adding the value of all portfolio securities
and other assets, deducting liabilities and dividing the result by the number of
shares outstanding. Expenses and interest earned on portfolio securities are
accrued daily.
Securities held by the funds normally are priced using data provided by an
independent pricing service, provided that such prices are believed by the
advisor to reflect the fair market value of portfolio securities.
Securities maturing within 60 days of the valuation date may be valued at cost,
plus or minus any amortized discount or premium, unless the trustees determine
that this would not result in fair valuation of a given security. Other assets
and securities for which quotations are not readily available are valued in good
faith at their fair value using methods approved by the Board of Trustees.
22 American Century Investments 1-800-345-2021
TAXES
FEDERAL INCOME TAX
Each fund intends to qualify annually as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). By so
qualifying, a fund will be exempt from federal income taxes to the extent that
it distributes substantially all of its net investment income and net realized
capital gains (if any) to shareholders. If a fund fails to qualify as a
regulated investment company, it will be liable for taxes, significantly
reducing its distributions to shareholders and eliminating shareholders' ability
to treat distributions of the funds in the manner they were realized by the
funds.
Certain bonds purchased by the funds may be treated as bonds that were
originally issued at a discount. Original issue discount represents interest for
federal income tax purposes and can generally be defined as the difference
between the price at which a security was issued and its stated redemption price
at maturity. Although no cash is actually received by a fund until the maturity
of the bond, original issue discount is treated for federal income tax purposes
as income earned by a fund over the term of the bond, and therefore is subject
to the distribution requirements of the Code. The annual amount of income earned
on such a bond by a fund generally is determined on the basis of a constant
yield to maturity that takes into account the semiannual compounding of accrued
interest. Original issue discount on an obligation with interest exempt from
federal income tax will constitute tax-exempt interest income to the fund.
In addition, some of the bonds may be purchased by a fund at a discount that
exceeds the original issue discount on such bonds, if any. This additional
discount represents market discount for federal income tax purposes. The gain
realized on the disposition of any bond having market discount generally will be
treated as taxable ordinary income to the extent it does not exceed the accrued
market discount on such bond (unless a fund elects to include market discount in
income in tax years to which it is attributable or if the amount is considered
de minimis). Generally, if the fund elects to include the discount in income,
market discount accrues on a daily basis for each day the bond is held by a fund
on a constant yield to maturity basis. In the case of any debt security having a
fixed maturity date of not more than one year from date of issue, the gain
realized on disposition generally will be treated as a short-term capital gain.
In general, gain realized on disposition of a security held less than one year
is treated as a short-term capital gain taxable to the shareholder as ordinary
income.
Under the Code, any distribution of a fund's net realized long-term capital
gains that is designated by the fund as a capital gains dividend is taxable to
shareholders as long-term capital gains, regardless of the length of time shares
are held. If a capital gains dividend is paid with respect to any shares of a
fund sold at a loss after being held for six months or less, the loss will be
treated as a long-term capital loss to the extent of any distribution of
long-term capital gain. The Code also provides that if a shareholder holds
shares of a fund for six months or less, the deduction of any loss on the sale
or exchange of those shares is disallowed to the extent that the shareholder
received exempt-interest dividends with respect to those shares.
When a fund has a capital loss carryover, it does not make capital gain
distributions until the loss has been offset or expired.
The information above is only a summary of some of the tax considerations
affecting the funds and their shareholders. No attempt has been made to discuss
individual tax consequences. A prospective investor should consult with his or
her tax advisor or state or local tax authorities to determine whether the funds
are suitable investments.
www.americancentury.com American Century Investments 23
HOW FUND PERFORMANCE INFORMATION IS CALCULATED
The funds may quote performance in various ways. Historical performance
information will be used in advertising and sales literature.
Thirty-day SEC yield quotations are based on the investment income per share
earned during a particular 30-day period, less expenses accrued during the
period (net investment income), and are computed by dividing the fund's net
investment income by its share price on the last day of the period according to
the following formula:
YIELD = (2 [(a - b + 1)(6) - 1])
------
cd
where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends, and d =
the maximum offering price per share on the last day of the period.
FUND YIELDS
(30-day period ended September 30, 1999)
--------------------------------------------------------------------------------
Investor Class Advisor Class
Fund 30-Day SEC Yield 30-Day SEC Yield
--------------------------------------------------------------------------------
Target 2000 5.08% 4.83%
Target 2005 5.73% 5.48%
Target 2010 6.05% 5.80%
Target 2015 6.16% 5.91%
Target 2020 6.23% 5.98%
Target 2025 5.87% 5.62%
--------------------------------------------------------------------------------
Total returns quoted in advertising and sales literature reflect all aspects of
a fund's return, including the effect of reinvesting dividends and capital gains
distributions (if any) and any change in the fund's NAV during the period.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a fund during a stated
period and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant throughout the period. For example, a cumulative total return of 100%
over 10 years would produce an average annual return of 7.18%, which is the
steady annual rate that would equal 100% growth on a compounded basis in 10
years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that the funds' performance is
not constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.
In addition to average annual total returns, each fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period, including periods other than one, five and 10 years.
Average annual and cumulative total returns may be quoted as percentages or as
dollar amounts and may be calculated for a single investment, a series of
investments, or a series of redemptions over any time period. Total returns may
be broken down into their components of income and capital (including capital
gains and changes in share price) to illustrate the relationship of these
factors and their contributions to total return.
24 American Century Investments 1-800-345-2021
AVERAGE ANNUAL TOTAL RETURNS - INVESTOR CLASS
(Fiscal Year Ended September 30, 1999)
--------------------------------------------------------------------------------
Fund One year Five years Ten years Life of fund
--------------------------------------------------------------------------------
Target 2000 2.48% 7.51% 8.43% 11.61%(1)
Target 2005 -5.44% 9.91% 9.75% 13.27%(1)
Target 2010 -11.10% 11.71% 10.34% 14.37%(1)
Target 2015 -13.70% 13.56% 10.66% 9.87%(2)
Target 2020 -17.16% 14.91% N/A 10.08%(3)
Target 2025 -17.21% N/A N/A 7.99%(4)
--------------------------------------------------------------------------------
(1) Commenced operations on March 25, 1985.
(2) Commenced operations on September 1, 1986.
(3) Commenced operations on December 29, 1989.
(4) Commenced operations on February 15, 1996.
AVERAGE ANNUAL TOTAL RETURNS - ADVISOR CLASS
(Fiscal Year Ended September 30, 1999)
--------------------------------------------------------------------------------
Fund One Year Life of fund
--------------------------------------------------------------------------------
Target 2000 2.23% 4.36%(1)
Target 2005 -5.67% 1.74%(2)
Target 2010 N/A -8.58%(3)
Target 2015 N/A -1.44%(4)
Target 2020 N/A -13.94%(5)
Target 2025 -17.41% -3.16%(6)
--------------------------------------------------------------------------------
(1) Commenced operations on August 20, 1998.
(2) Commenced operations on August 3, 1998.
(3) Commenced operations on October 20, 1998.
(4) Commenced operations on July 23, 1999.
(5) Commenced operations on October 19, 1998.
(6) Commenced operations on June 1, 1998.
www.americancentury.com American Century Investments 25
PERFORMANCE COMPARISONS
The funds' performance may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indices of market
performance. This may include comparisons with funds that, unlike the American
Century funds, are sold with a sales charge or deferred sales charge. Sources of
economic data that may be used for such comparisons may include, but are not
limited to: U.S. Treasury bill, note and bond yields, money market fund yields,
U.S. government debt and percentage held by foreigners, the U.S. money supply,
net free reserves, and yields on current-coupon GNMAs (source: Board of
Governors of the Federal Reserve System); the federal funds and discount rates
(source: Federal Reserve Bank of New York); yield curves for U.S. Treasury
securities and AA/AAA-rated corporate securities (source: Bloomberg Financial
Markets); yield curves for AAA-rated tax-free municipal securities (source:
Telerate); yield curves for foreign government securities (sources: Bloomberg
Financial Markets and Data Resources, Inc.); total returns on foreign bonds
(source: J.P. Morgan Securities Inc.); various U.S. and foreign government
reports; the junk bond market (source: Data Resources, Inc.); the CRB Futures
Index (source: Commodity Index Report); the price of gold (sources: London
a.m./p.m. fixing and New York Comex Spot Price); rankings of any mutual fund or
mutual fund category tracked by Lipper, Inc. or Morningstar, Inc.; mutual fund
rankings published in major, nationally distributed periodicals; data provided
by the Investment Company Institute; Ibbotson Associates, Stocks, Bonds, Bills,
and Inflation; major indices of stock market performance; and indices and
historical data supplied by major securities brokerage or investment advisory
firms. The funds also may utilize reprints from newspapers and magazines
furnished by third parties to illustrate historical performance or to provide
general information about the funds.
MULTIPLE CLASS PERFORMANCE ADVERTISING
Pursuant to the Multiple Class Plan, the Trust may issue additional classes of
existing funds or introduce new funds with multiple classes available for
purchase. To the extent a new class is added to an existing fund, the advisor
may, in compliance with SEC and NASD rules, regulations and guidelines, market
the new class of shares using the historical performance information of the
original class of shares. When quoting performance information for the new class
of shares for periods prior to the first full quarter after inception, the
original class's performance will be restated to reflect the expenses of the new
class. For periods after the first full quarter after inception, actual
performance of the new class will be used.
FINANCIAL STATEMENTS
The financial statements of the funds are included in the annual report to
shareholders for the fiscal year ended September 30, 1999. The annual report is
incorporated herein by reference. You may receive copies of the report without
charge upon request to American Century at the address and telephone number on
the back cover of this Statement of Additional Information.
26 American Century Investments 1-800-345-2021
EXPLANATION OF FIXED-INCOME SECURITIES RATINGS
As described in the Prospectus, the funds may invest in fixed-income securities.
Those investments, however, are subject to certain credit quality restrictions,
as noted in the Prospectus. The following is a summary of the rating categories
referenced in the prospectus disclosure.
BOND RATINGS
--------------------------------------------------------------------------------
S&P Moody's Description
--------------------------------------------------------------------------------
AAA Aaa These are the highest ratings assigned by S&P and Moody's to
a debt obligation. They indicate an extremely strong
capacity to pay interest and repay principal.
--------------------------------------------------------------------------------
AA Aa Debt rated in this category is considered to have a very
strong capacity to pay interest and repay principal and
differs from AAA/Aaa issues only in a small degree.
--------------------------------------------------------------------------------
A A Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.
--------------------------------------------------------------------------------
BBB Baa Debt rated BBB/Baa is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in
higher-rated categories.
--------------------------------------------------------------------------------
BB Ba Debt rated BB/Ba has less near-term vulnerability to default
than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business,
financial or economic conditions that could lead to
inadequate capacity to meet timely interest and principal
payments. The BB rating category also is used for debt
subordinated to senior debt that is assigned an actual
or implied BBB-rating.
--------------------------------------------------------------------------------
B B Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial or
economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB/Ba or
BB-/Ba3 rating.
--------------------------------------------------------------------------------
CCC Caa Debt rated CCC/Caa has a currently identifiable
vulnerability to default and is dependent upon favorable
business, financial and economic conditions to meet timely
payment of interest and repayment of principal. In the event
of adverse business, financial or economic conditions, it is
not likely to have the capacity to pay interest and repay
principal. The CCC/Caa rating category is also used for
debt subordinated to senior debt that is assigned an actual
or implied B or B-/B3 rating.
--------------------------------------------------------------------------------
CC Ca The rating CC/Ca typically is applied to debt subordinated
to senior debt that is assigned an actual or implied
CCC/Caa rating.
--------------------------------------------------------------------------------
C C The rating C typically is applied to debt subordinated to
senior debt, which is assigned an actual or implied
CCC-/Caa3 debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but
debt service payments are continued.
--------------------------------------------------------------------------------
CI -- The rating CI is reserved for income bonds on which no
interest is being paid.
--------------------------------------------------------------------------------
D D Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not
made on the date due even if the applicable grace period
has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also
will be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
--------------------------------------------------------------------------------
www.americancentury.com American Century Investments 27
To provide more detailed indications of credit quality, the Standard & Poor's
ratings from AA to CCC may be modified by the addition of a plus or minus sign
to show relative standing within these major rating categories. Similarly,
Moody's adds numerical modifiers (1,2,3) to designate relative standing within
its major bond rating categories. Fitch Investors Service, Inc. also rates bonds
and uses a ratings system that is substantially similar to that used by Standard
& Poor's.
COMMERCIAL PAPER RATINGS
--------------------------------------------------------------------------------
S&P Moody's Description
--------------------------------------------------------------------------------
A-1 Prime-1 This indicates that the degree of safety regarding timely
(P-1) payment is strong. Standard & Poor's rates those issues
determined to possess extremely strong safety
characteristics as A-1+.
--------------------------------------------------------------------------------
A-2 Prime-2 Capacity for timely payment on commercial paper is
(P-2) satisfactory, but the relative degree of safety is not as
high as for issues designated A-1. Earnings trends and
coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriated, may be more affected by external conditions.
Ample alternate liquidity is maintained.
--------------------------------------------------------------------------------
A-3 Prime-3 Satisfactory capacity for timely repayment. Issues that
(P-3) carry this rating are somewhat more vulnerable to the
adverse changes in circumstances than obligations carrying
the higher designations.
--------------------------------------------------------------------------------
NOTE RATINGS
--------------------------------------------------------------------------------
S&P Moody's Description
--------------------------------------------------------------------------------
SP-1 MIG-1; VMIG-1 Notes are of the highest quality enjoying strong
protection from established cash flows of funds for
their servicing or from established and broad-based
access to the market for refinancing, or both.
--------------------------------------------------------------------------------
SP-2 MIG-2; VMIG-2 Notes are of high quality with margins of
protection ample, although not so large as in the
preceding group.
--------------------------------------------------------------------------------
SP-3 MIG-3; VMIG-3 Notes are of favorable quality with all security
elements accounted for, but lacking the undeniable
strength of the preceding grades. Market access for
refinancing, in particular, is likely to be less
well established.
--------------------------------------------------------------------------------
SP-4 MIG-4; VMIG-4 Notes are of adequate quality, carrying specific
risk but having protection and not distinctly or
predominantly speculative.
--------------------------------------------------------------------------------
28 American Century Investments 1-800-345-2021
MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS
Annual and Semiannual Reports
These contain more information about the funds' investments and the market
conditions and investment strategies that significantly affected the funds'
performance during the most recent fiscal period. The annual and semiannual
reports are incorporated by reference into this Statement of Additional
Information (SAI). This means that these are legally part of this SAI.
You can receive a free copy of the annual and semiannual reports, and ask any
questions about the funds, by contacting us at the address or one of the
telephone numbers listed below.
If you own or are considering purchasing fund shares through
* an employer-sponsored retirement plan
* a bank
* a broker-dealer
* an insurance company
* another financial intermediary
you can receive the annual and semiannual reports directly from them.
You also can get information about the funds from the Securities
and Exchange Commission (SEC). The SEC charges a duplicating fee to provide
copies of this information.
* In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.
* On the Internet EDGAR database at www.sec.gov
By email request at [email protected]
* By mail SEC Public Reference Section
Washington, D.C. 20549-0102
Investment Company Act File No. 811-4165
-------------------------------------------------------------------------------
[american century logo(reg.sm)]
American
Century
AMERICAN CENTURY INVESTMENTS
P.O. Box 419200
Kansas City, Missouri 64141-6200
INVESTOR RELATIONS
1-800-345-2021 or 816-531-5575
AUTOMATED INFORMATION LINE
1-800-345-8765
WWW.AMERICANCENTURY.COM
FAX
816-340-7962
TELECOMMUNICATIONS DEVICE FOR THE DEAF
1-800-634-4113 or 816-444-3485
BUSINESS, NOT-FOR-PROFIT AND EMPLOYER-
SPONSORED RETIREMENT PLANS 1-800-345-3533
SH-SAI-18754 0002
AMERICAN CENTURY TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 32
1940 Act Amendment No. 34
--------------------------------------------------------------------------------
PART C OTHER INFORMATION
ITEM 23 EXHIBITS (all exhibits not filed herewith are being incorporated
herein by reference).
(a) (1) Agreement and Declaration of Trust dated May 31, 1995 (filed
electronically as Exhibit 1(b) to Post-Effective Amendment No. 24
to the Registration Statement on November 29, 1995, File No.
2-94608).
(2) Amendment to the Declaration of Trust dated October 21, 1996
(filed electronically as Exhibit 1 to Post-Effective Amendment
No. 27 to the Registration Statement on August 28, 1997, File No.
2-94608).
(3) Amendment to the Declaration of Trust dated August 1, 1997
(filed electronically as Exhibit 1 to Post-Effective Amendment
No. 27 to the Registration Statement on August 28, 1997, File No.
2-94608).
(b) Amended and Restated Bylaws, dated May 17, 1995 (filed
electronically as Exhibit 2 to Post-Effective Amendment No. 24 to
the Registration Statement on November 29, 1995, File No.
2-94608).
(c) Registrant hereby incorporates by reference, as though set forth
fully herein, Article III, Article VIII, Article X, Article XI
and Article XII of Registrant's Declaration of Trust , appearing
as Exhibit (1)(b) to Post-Effective Amendment No. 24 and Exhibit
(1) to Post-Effective Amendment No. 27 to the Registration
Statements on Form N-1A of the Registrant; and Article II,
Article VII and Article VIII of Registrant's Amended and Restated
Bylaws, appearing as Exhibit (b) to Post-Effective Amendment No.
24 to the Registration Statement on Form N-1A of the Registrant.
(d) (1) Investor Class Investment Management Agreement between
American Century Target Maturities Trust and American Century
Investment Management, Inc., dated August 1, 1997 (filed
electronically as Exhibit 5 of Post-Effective Amendment No. 33 to
the Registration Statement of American Century Government Income
Trust on July 31, 1997, File No. 2-99222).
(2) Advisor Class Investment Management Agreement between
American Century Target Maturities Trust, American Century
Government Income Trust, American Century International Bond
Funds, and American Century Quantitative Equity Funds, dated
August 1, 1997 (filed electronically as Exhibit 5 of
Post-Effective Amendment No. 27 to the Registration Statement on
August 28, 1997, File No. 2-94608).
(e) (1) Distribution Agreement between American Century Target
Maturities Trust and Funds Distributor, Inc., dated January 15,
1998 (filed electronically as Exhibit 6 to Post-Effective
Amendment No. 28 to the Registration Statement on January 30,
1998, File No. 2-94608).
(2) Amendment No. 1 to the Distribution Agreement between
American Century Target Maturities Trust and Funds Distributor,
Inc., dated June 1, 1998 (filed electronically as Exhibit 6b to
Post-Effective Amendment No. 11 to the Registration Statement of
American Century Capital Portfolios, Inc. on June 26, 1998, File
No. 33-64872).
(3) Amendment No. 2 to Distribution Agreement between American
Century Target Maturities Trust and Funds Distributor, Inc.,
dated December 1, 1998 (filed electronically as Exhibit (e)(3) to
Post-Effective Amendment No. 12 to the Registration Statement of
American Century World Mutual Funds, Inc., on November 13, 1998,
File No. 33-39242).
(4) Amendment No. 3 to Distribution Agreement between American
Century Target Maturities Trust and Funds Distributor, Inc.,
dated January 29, 1999 (filed electronically as Exhibit (e)(4) to
Post-Effective Amendment No. 24 to the Registration Statement of
American Century Variable Portfolios, Inc., on January 15, 1999,
File No. 811-5188).
(5) Amendment No. 4 to the Distribution Agreement between
American Century Target Maturities Trust and Funds Distributor,
Inc., dated July 30, 1999 (filed electronically as Exhibit e5 to
Post-Effective Amendment No. 16 to the Registration Statement of
American Century Capital Portfolios, Inc., on July 29, 1999, File
No. 33-64872).
(6) Amendment No. 5 to the Distribution Agreement between
American Century Target Maturities Trust and Funds Distributor,
Inc., dated November 19, 1999 (filed electronically as Exhibit e6
to Post-Effective Amendment No. 87 to the Registration Statement
of American Century Mutual Funds, Inc., on November 29, 1999,
File No. 811-0816).
(f) Not applicable.
(g) Global Custody Agreement between American Century Investments
(including American Century Target Maturities Trust), and The
Chase Manhattan Bank, dated August 9, 1996 (filed electronically
as Exhibit 8 of Post-Effective Amendment No. 31 to the
Registration Statement of American Century Government Income
Trust on February 7, 1997, File No. 2-99222).
(h) (1) Transfer Agency Agreement between American Century Target
Maturities Trust and American Century Services Corporation, dated
August 1, 1997 (filed electronically as Exhibit 9 of
Post-Effective Amendment No. 33 to the Registration Statement of
American Century Government Income Trust on July 31, 1997, File
No. 2-99222).
(2) Amendment to Transfer Agency Agreement between American
Century Target Maturities Trust and American Century Services
Corporation, dated June 29, 1998 (filed electronically as Exhibit
9b to Post-Effective Amendment No. 23 to the Registration
Statement of American Century Quantitative Equity Funds on June
29, 1998, File No. 33-19589).
(3) Credit Agreement between American Century Funds and The Chase
Manhattan Bank, as Administrative Agent, dated as of December 21,
1999 (filed electronically as Exhibit h3 to Post-Effective
Amendment No. 29 to the Registration Statement of American
Century California Tax-Free and Municipal Funds on December 29,
1999, File No. 2-82734).
(i) Opinion and consent of counsel (filed electronically as Exhibit i
to Post-Effective Amendment No. 31 to the Registration Statement
filed on January 29, 1999, File No. 2-94608).
(j) (1) Consent of PricewaterhouseCoopers, LLP, independent
accountants, is included herein.
(2) Consent of KPMG Peat Marwick, LLP, independent auditors
(filed electronically as Exhibit j2 to Post-Effective Amendment
No. 31 to the Registration Statement filed on January 29, 1999,
File No. 2-94608).
(3) Power of Attorney dated December 18, 1998 (filed
electronically as Exhibit (j)(3) to Post-Effective Amendment No.
30 to the Registration Statement on January 8, 1999, File No.
2-94608).
(k) Not applicable.
(l) Not applicable.
(m) (1) Master Distribution and Shareholder Services Plan of American
Century Government Income Trust, American Century International
Bond Fund, American Century Target Maturities Trust and American
Century Quantitative Equity Funds (Advisor Class) dated August 1,
1997, is included herein.
(2) Amendment No. 1 to Master Distribution and Shareholder
Services Plan of American Century Government Income Trust,
American Century International Bond Fund, American Century Target
Maturities Trust and American Century Quantitative Equity Funds
(Advisor Class) dated June 29, 1998, is included herein.
(n) Not applicable.
(o) (1) Multiple Class Plan of American Century California Tax-Free
and Municipal Funds, American Century Government Income Trust,
American Century International Bond Funds, American Century
Investment Trust, American Century Municipal Trust, American
Century Target Maturities Trust and American Century Quantitative
Equity Funds dated August 1, 1997, is included herein.
(2) Amendment to Multiple Class Plan of American Century Target
Maturities Trust dated June 29, 1998, is included herein.
Item 24. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 25. Indemnification.
As stated in Article VII, Section 3 of the Declaration of Trust, incorporated
herein by reference to Exhibit 1 to the Registration Statement, "The Trustees
shall be entitled and empowered to the fullest extent permitted by law to
purchase insurance for and to provide by resolution or in the Bylaws for
indemnification out of Trust assets for liability and for all expenses
reasonably incurred or paid or expected to be paid by a Trustee or officer in
connection with any claim, action, suit, or proceeding in which he or she
becomes involved by virtue of his or her capacity or former capacity with the
Trust. The provisions, including any exceptions and limitations concerning
indemnification, may be set forth in detail in the Bylaws or in a resolution
adopted by the Board of Trustees."
Registrant hereby incorporates by reference, as though set forth fully herein,
Article VI of the Registrant's Bylaws, amended on May 17, 1995 (filed
electronically as Exhibit 2(b) of Post-Effective Amendment No. 24 to the
Registration Statement on November 29, 1995, File No. 2-94608).
Item 26. Business and Other Connections of Investment Advisor.
None.
Item 27. Principal Underwriters.
(a) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following investment companies.
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT + Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Merrimac Series
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
The Saratoga Advantage Trust
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
The Skyline Funds
SoGen Funds, Inc.
SoGen Variable Funds, Inc.
St. Clair Funds, Inc.
TD Waterhouse Trust
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
The Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National
Association of Securities Dealers. The Distributor is located at 60
State Street, Suite 1300, Boston, Massachusetts 02109. The Distributor
is an indirect wholly-owned subsidiary of Boston Institutional Group,
Inc., a holding company all of whose outstanding shares are owned by
key employees.
(b) The following is a list of the executive officers, directors and
partners of the Distributor:
Name and Principal Business Positions and Offices with Positions and Offices with
Address* Underwriter Registrant
Marie E. Connolly Director, President and Chief None
Executive Officer
George A. Rio Executive Vice President President, Principal Executive
and Principal Financial Officer
Donald R. Roberson Executive Vice President None
William S. Nichols Executive Vice President None
Margaret W. Chambers Senior Vice President, General None
Counsel, Chief Compliance
Officer, Secretary and Clerk
Joseph F. Tower, III Director, Senior Vice President None
and Treasurer
Paula R. David Senior Vice President None
Gary S. MacDonald Senior Vice President None
Judith K. Benson Senior Vice President None
William J. Nutt Chairman and Director None
William J. Stetter Vice President and Chief None
Financial Officer
--------------------
* All addresses are 60 State Street, Suite 1300, Boston, Massachusetts 02109
(c) Not applicable.
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act, and the rules promulgated thereunder, are in the
possession of Registrant, American Century Services Corporation and American
Century Investment Management, Inc., all located at 4500 Main Street, Kansas
City, Missouri 64111.
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all the requirements
for effectiveness of this 1933 Post-Effective Amendment No. 32 and 1940 Act
Amendment No. 34 to its Registration Statement pursuant to Rule 485(b)
promogulated under the Securities Act of 1933, as amended, and has duly caused
this Post-Effective Amendment No. 32/Amendment No. 34 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Kansas City, and
State of Missouri, on the 31st day of January, 2000.
AMERICAN CENTURY TARGET MATURITIES TRUST
By: /*/George A. Rio
George A. Rio
President and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 32/Amendment No. 34 has been signed below by the following persons
in the capacities and on the dates indicated.
Date
* President, Principal Executive and January 31, 2000
--------------------------------- Principal Financial Officer
George A. Rio
* Vice President and Treasurer January 31, 2000
---------------------------------
Maryanne Roepke
* Chairman of the Board and Trustee January 31, 2000
---------------------------------
James E. Stowers III
* Trustee January 31, 2000
---------------------------------
William M. Lyons
* Trustee January 31, 2000
---------------------------------
Albert A. Eisenstat
* Trustee January 31, 2000
---------------------------------
Ronald J. Gilson
* Trustee January 31, 2000
---------------------------------
Myron S. Scholes
* Trustee January 31, 2000
---------------------------------
Kenneth E. Scott
* Trustee January 31, 2000
---------------------------------
Isaac Stein
* Trustee January 31, 2000
---------------------------------
Jeanne D. Wohlers
/s/David H. Reinmiller
*by David H. Reinmiller, Attorney in Fact (pursuant to a Power of Attorney dated
December 18, 1998).
