PROSPECTUS
[american century logo]
American
Century(sm)
MAY 31, 1997
BENHAM
GROUP(R)
Capital Preservation
[front cover]
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.
American Century Investments
Benham Group American Century Group Twentieth Century(R) Group
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Capital Preservation
PROSPECTUS
MAY 31, 1997
Capital Preservation
AMERICAN CENTURY GOVERNMENT INCOME TRUST
American Century Government Income Trust is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. One of the money market funds
from our Benham Group that invests in U.S. Treasury securities, the Benham
Capital Preservation Fund (the "Fund"), is described in this Prospectus. Its
investment objectives are listed on page 2 of this Prospectus. The other funds
are described in separate prospectuses.
American Century offers investors a full line of no-load funds, investments
that have no sales charges or commissions.
This Prospectus gives you information about the Fund that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated May 31, 1997, and filed with the Securities and Exchange
Commission ("SEC"). It is incorporated into this Prospectus by reference. To
obtain a copy without charge, call or write:
American Century Investments
4500 Main Street o P.O. Box 419200
Kansas City, Missouri 64141-6200 o 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-444-3485
Internet: www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).
INVESTMENTS IN THE FUND ARE NOT INSURED, NOR ARE THEY GUARANTEED BY THE
U.S. GOVERNMENT OR ANY OTHER AGENCY. THERE IS NO ASSURANCE THAT THE FUND WILL BE
ABLE TO MAINTAIN A $1.00 SHARE PRICE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus 1
INVESTMENT OBJECTIVES OF THE FUND
AMERICAN CENTURY--BENHAM CAPITAL
PRESERVATION FUND
Capital Preservation is a money market fund which seeks maximum safety and
liquidity. Its secondary objective is to seek to pay shareholders the highest
rate of return on their investment in the Fund consistent with safety and
liquidity. The Fund intends to pursue its investment objectives by investing
exclusively in short-term U.S. Treasury securities guaranteed by the direct full
faith and credit pledge of the U.S. government and maintaining a dollar-weighted
average portfolio maturity of not more than 90 days.
There is no assurance that the Fund will achieve its investment objectives.
NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
2 Investment Objectives American Century Investments
TABLE OF CONTENTS
Investment Objectives of the Fund ..........................................2
Transaction and Operating Expense Table ....................................4
Financial Highlight ........................................................5
INFORMATION REGARDING THE FUND
Investment Policies of the Fund ............................................6
Risk Factors and Investment Techniques ..................................6
U.S. Treasury Securities ................................................6
Other Investment Practices, Their Characteristics
and Risks ...............................................................6
When-Issued and Forward Commitment Agreements ...........................6
Other Techniques ........................................................7
Performance Advertising ....................................................7
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
American Century Investments ...............................................8
Investing in American Century ..............................................8
How to Open an Account .....................................................8
By Mail ...............................................................8
By Wire ...............................................................8
By Exchange ...........................................................9
In Person .............................................................9
Subsequent Investments ..................................................9
By Mail ...............................................................9
By Telephone ..........................................................9
By Online Access ......................................................9
By Wire ...............................................................9
In Person .............................................................9
Automatic Investment Plan ...............................................9
How to Exchange from One Account to Another ................................9
By Mail ..............................................................10
By Telephone .........................................................10
By Online Access .....................................................10
How to Redeem Shares ......................................................10
By Mail ..............................................................10
By Telephone .........................................................10
By Check-A-Month .....................................................10
Other Automatic Redemptions ..........................................10
Redemption Proceeds ....................................................10
By Check .............................................................10
By Wire and ACH ......................................................10
Redemption of Shares in Low-Balance Accounts ...........................10
Signature Guarantee .......................................................11
Special Shareholder Services ..............................................11
Automated Information Line ...........................................11
Online Account Access ................................................11
CheckWriting .........................................................11
Tax-Qualified Retirement Plans .......................................12
Important Policies Regarding Your Investments .............................12
Reports to Shareholders ...................................................13
Employer-Sponsored Retirement Plans and
Institutional Accounts .................................................13
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price ...............................................................14
When Share Price Is Determined .........................................14
How Share Price Is Determined ..........................................14
Where to Find Yield Information ........................................14
Distributions .............................................................14
Taxes .....................................................................15
Tax-Deferred Accounts ..................................................15
Taxable Accounts .......................................................15
Management ................................................................15
Investment Management ..................................................15
Code of Ethics .........................................................16
Transfer and Administrative Services ...................................16
Distribution of Fund Shares ...............................................17
Further Information About American Century ................................17
Prospectus Table of Contents 3
TRANSACTION AND OPERATING EXPENSE TABLE
Capital Preservation
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases........................... none
Maximum Sales Load Imposed on Reinvested Dividends................ none
Deferred Sales Load............................................... none
Redemption Fee(1)................................................. none
Exchange Fee...................................................... none
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fees(2)............................................... 0.48%
12b-1 Fees........................................................ none
Other Expenses(3)................................................ 0.00%
Total Fund Operating Expenses.................................... 0.48%
EXAMPLE:
You would pay the following expenses on a 1 year $ 5
$1,000 investment, assuming a 5% annual return and 3 years 15
redemption at the end of each time period: 5 years 27
10 years 60
(1) Redemption proceeds sent by wire are subject to a $10 processing fee.
(2) A portion of the management fee may be paid by the funds' manager to
unaffiliated third parties who provide recordkeeping and administrative
services that would otherwise be performed by an affiliate of the manager.
See "Management - Transfer and Administrative Services," page 16.
(3) Other expenses, the fees and expenses (including legal counsel fees) of
those directors who are not "interested persons" as defined in the
Investment Company Act of 1940 are estimated to be 0.0038 of 1% of average
net assets for the most recent fiscal year.
The purpose of the above table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the shares of the funds offered by this
Prospectus. The example set forth above assumes reinvestment of all dividends
and distributions and uses a 5% annual rate of return as required by Securities
and Exchange Commission regulations.
NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
4 Transaction and Operating Expense Table American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CAPITAL PRESERVATION
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors. Their report thereon
appears in the Fund's annual report, which is incorporated by reference into the
Statement of Additional Information. The semiannual and annual reports contain
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended March 31, except as noted.
Sept. 30,
1996
(unaudited) 1996 1995 1994 1993(1) 1992 1991 1990 1989 1988 1987
----------- ---- ---- ---- ------- ---- ---- ---- ---- ---- ----
PER-SHARE DATA
Net Asset Value,
Beginning
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
of Period................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Income From
Investment
Operations
Net Investment
Income .............. 0.02 0.05 0.04 0.03 0.01 0.04 0.06 0.08 0.08 0.06 0.05
Distributions
From Net
Investment
Income............... (0.02) (0.05) (0.04) (0.03) (0.01) (0.04) (0.06) (0.08) (0.08) (0.06) (0.05)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value,
End of Period............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Total Return(2)...... 2.39% 5.21% 4.31% 2.63% 1.35% 3.88% 6.27% 7.77% 8.27% 6.30% 5.48%
RATIOS/SUPPLEMENTAL
DATA
Ratio of Operating
Expenses to Average
Net Assets(3)............. 0.49%(4) 0.51% 0.50% 0.51% 0.50%(4) 0.51% 0.52% 0.56% 0.57% 0.59% 0.63%
Ratio of Net
Investment
Income to Average
Net Assets................ 4.68%(4) 5.07% 4.24% 2.59% 2.68%(4) 3.82% 6.03% 7.50% 8.00% 6.08% 5.31%
Net Assets, End
of Period
(in millions)............. $3,016 $3,078 $2,883 $2,787 $2,943 $3,046 $3,376 $3,099 $2,737 $2,187 $1,793
(1) The Fund's fiscal year-end was changed from September 30 to March 31
beginning with the period ended March 31, 1993, resulting in a six-month
period in 1993.
(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any, and are not annualized.
(3) The ratios for the year ended March 31, 1996, include expenses paid through
expense offset arrangements.
(4) Annualized.
</TABLE>
Prospectus Financial Highlights 5
INFORMATION REGARDING THE FUND
INVESTMENT POLICIES OF THE FUND
The Fund has adopted certain investment restrictions that are set forth in
the Statement of Additional Information. Those restrictions, as well as the
investment objectives of the Fund identified on page 2 of this Prospectus and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The Fund has implemented additional investment policies
and practices to guide its activities in the pursuit of its investment
objectives. These policies and practices, which are described throughout this
Prospectus, are not designated as fundamental policies and may be changed
without shareholder approval.
The Fund seeks to maintain a $1.00 share price, although there is no
guarantee it will be able to do so. Shares of the Fund are neither insured nor
guaranteed by the U.S. government.
The Fund seeks maximum safety and liquidity. Its secondary objective is to
seek to pay its shareholders the highest rate of return on their investment in
the Fund consistent with safety and liquidity. The Fund pursues its investment
objectives by investing exclusively in short-term U.S. Treasury securities
guaranteed by the direct full faith and credit pledge of the U.S. government.
The Funds' dollar-weighted average portfolio maturity will not exceed 90 days.
While the risks associated with investing in short-term U.S. Treasury
securities are very low, an investment in the Fund is not risk-free.
RISK FACTORS AND INVESTMENT TECHNIQUES
The obligations in which the Fund may invest differ from one another in
their interest rates, maturities, dates of issuance and interest payment
schedules. The pertinent features of the types of obligations in which the Fund
may invest are described in this section.
U.S. TREASURY SECURITIES
U.S. Treasury bills, notes, zero-coupon bonds, and other bonds are direct
obligations of the U.S. Treasury, which has never failed to pay interest and
repay principal when due. Treasury bills have initial maturities of one year or
less, Treasury notes from two to ten years, and Treasury bonds more than 10
years. Although U.S. Treasury securities carry little principal risk if held to
maturity, the prices of these securities (like all debt securities) change
between issuance and maturity in response to fluctuating market interest rates.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
For additional information regarding the investment practices of the Fund,
see the Statement of Additional Information.
WHEN-ISSUED AND FORWARD COMMITMENT AGREEMENTS
The Fund may sometimes purchase new issues of securities on a when-issued
or forward commitment basis when, in the opinion of American Century Investment
Management Inc., the Fund's manager, such purchases will further the investment
objectives of the Fund. The price of when-issued securities is established at
the time the commitment to purchase is made. Delivery of and payment for these
securities typically occurs 3 to 11 days after the commitment to purchase.
Market rates of interest on debt securities at the time of delivery may be
higher or lower than those contracted for on the security. Accordingly, the
value of the security may decline prior to delivery, which could result in a
loss to the Fund. A separate account for the Fund consisting of cash or
appropriate liquid securities in an amount at least equal to the when-issued
commitments will be established and maintained with the custodian. No income
will accrue to the Fund prior to delivery.
6 Information Regarding the Fund American Century Investments
OTHER TECHNIQUES
The Manager may buy other types of securities or employ other portfolio
management techniques on behalf of the Fund. When SEC guidelines require it to
do so, the Fund will set aside cash or appropriate liquid assets in a segregated
account to cover the Fund's obligations.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including yield and effective yield.
A quotation of yield reflects the Fund's income over a stated period
expressed as a percentage of its share price. Yield is calculated by measuring
the income generated by an investment in the Fund over a seven-day period (net
of Fund expenses). This income is then annualized, that is, the amount of income
generated by the investment over the seven-day period is assumed to be generated
over each similar period each week throughout a full year and is shown as a
percentage of the investment. The effective yield is calculated in a similar
manner but, when annualized, the income earned by the investment is assumed to
be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect on the assumed reinvestment.
Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules. The SEC yield should be regarded as an estimate of
the Fund's rate of investment income, and it may not equal the Fund's actual
income distribution rate, the income paid to a shareholder's account, or the
income reported in the Fund's financial statements.
The Fund may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services or Donoghue's Money Fund Report) and publications
that monitor the performance of mutual funds. Performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
In addition, Fund performance may be compared to well-known indices of market
performance including the IBC's Money Fund Report and Bank Rate Monitor National
Index of 2 1/2-year CD rates. Fund performance may also be compared, on a
relative basis, to other funds in our fund family. This relative comparison,
which may be based upon historical or expected fund performance, volatility or
other fund characteristics, may be presented numerically, graphically or in
text.
All performance information advertised by the Fund is historical in nature
and is not intended to represent or guarantee future results. The value of Fund
shares when redeemed may be more or less than their original cost.
Prospectus Information Regarding the Fund 7
AMERICAN CENTURY INVESTMENTS
The Fund offered by this Prospectus is a part of the American Century
Investments family of mutual funds. Our family provides a full range of
investment opportunities, from the aggressive equity growth funds in our
Twentieth Century Group, to the fixed income funds in our Benham Group, to the
moderate risk and specialty funds in our American Century Group. Please call
1-800-345-2021 for a brochure or prospectuses for the other funds in the
American Century Investments family.
INVESTING IN AMERICAN CENTURY
The following section explains how to invest in American Century funds,
including purchases, redemptions, exchanges and special services. You will find
more detail about doing business with us by referring to the Investor Services
Guide that you will receive when you open an account.
If you own or are considering purchasing Fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 13.
HOW TO OPEN AN ACCOUNT
To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.
The minimum investment is $2,500 ($1,000 for IRA accounts).
The minimum investment requirements may be different for some types of
retirement accounts. Call one of our Investor Services Representatives for
information on our retirement plans, which are available for individual
investors or for those investing through their employers.
PLEASE NOTE: IF YOU REGISTER YOUR ACCOUNT AS BELONGING TO MULTIPLE OWNERS
(E.G., AS JOINT TENANTS) YOU MUST PROVIDE US WITH SPECIFIC AUTHORIZATION ON YOUR
APPLICATION IN ORDER FOR US TO ACCEPT WRITTEN OR TELEPHONE INSTRUCTIONS FROM A
SINGLE OWNER. OTHERWISE, ALL OWNERS WILL HAVE TO AGREE TO ANY TRANSACTIONS THAT
INVOLVE THE ACCOUNT (WHETHER THE TRANSACTION REQUEST IS IN WRITING OR OVER THE
TELEPHONE).
You may invest in the following ways:
By Mail
Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.
By Wire
You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:
o RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)
o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111
o BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918
o REFERENCE FOR BENEFICIARY (RFB):
American Century account number into which you are investing. If more than
one, leave blank and see "Bank to Bank Information" below.
o ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.
o BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):
o Taxpayer identification or Social Security number
o If more than one account, account numbers and amount to be invested in
each account.
8 How to Invest with American Century Investments American Century Investments
o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA, SARSEP-IRA, SIMPLE Employer or SIMPLE
Employee.
By Exchange
Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.
In Person
If you prefer to work with a representative in person, please visit one of
our Investor Centers, located at:
4500 Main Street
Kansas City, Missouri 64111
4917 Town Center Drive
Leawood, Kansas 66211
1665 Charleston Road
Mountain View, California 94043
2000 S. Colorado Blvd.
Denver, Colorado 80222
SUBSEQUENT INVESTMENTS
Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see "Automatic Investment Plan," on this page) or by
any of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the investment slip portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.
By Mail
When making subsequent investments, enclose your check with the investment
slip portion of the confirmation of a previous investment. If the investment
slip is not available, indicate your name, address and account number on your
check or a separate piece of paper. (Please be aware that the investment minimum
for subsequent investments is higher without an investment slip.)
By Telephone
Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.
By Online Access
Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.
By Wire
You may make subsequent investments by wire. Follow the wire transfer
instructions on page 8 and indicate your account number.
In Person
You may make subsequent investments in person at one of our Investor
Centers. The locations of our four Investor Centers are listed on this page.
AUTOMATIC INVESTMENT PLAN
You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must be
at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application to
receive more information. If you would like to add a direct deposit to an
existing account, please call one of our Investor Services Representatives.
HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER
As long as you meet any minimum investment requirements, you may exchange
your Fund shares to our other funds up to six times per year per account. An
exchange request will be processed the same day it is received if it is received
before the fund's net asset values are calculated, which is one hour prior to
the close of the New York Stock Exchange for the funds in American Century
Target Maturities Trust, and at the close of the Exchange for all of our other
funds. See "When Share Price is Determined," page 14.
For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an
Prospectus How to Invest with American Century Investments 9
Automatic Exchange Plan between any two funds in the amount of at least $50 per
month. See our Investor Services Guide for further information about exchanges.
By Mail
You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.
By Telephone
You can make exchanges over the telephone (either with an Investor Services
Representative or using our Automated Information Line--see page 11) if you have
authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to get the appropriate form.
By Online Access
You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.
HOW TO REDEEM SHARES
We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received.
Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.
By Mail
Your written instructions to redeem shares may be made either by a
redemption form, which we will send to you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 11.
By Telephone
If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.
By Check-A-Month
You may redeem shares by Check-A-Month. A Check-A-Month plan automatically
redeems enough shares each month to provide you with a check in an amount you
choose (minimum $50). To set up a Check-A-Month plan, please call and request
our Check-A-Month brochure.
Other Automatic Redemptions
You may elect to make redemptions automatically by authorizing us to send
funds directly to you or to your account at a bank or other financial
institution. To set up automatic redemptions, call one of our Investor Services
Representatives.
REDEMPTION PROCEEDS
Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up to
15 days or longer to send redemption proceeds (to allow your purchase funds to
clear). No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption proceeds are sent.
Redemption proceeds may be sent to you in one of the following ways:
By Check
Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.
By Wire and ACH
You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.
Your bank will usually receive wired funds within 48 hours of transmission.
Funds transferred by ACH may be received up to seven days after transmission.
Wired funds are subject to a $10 fee to cover bank wire charges, which is
deducted from redemption proceeds. Once the funds are transmitted, the time of
receipt and the funds' availability are not under our control.
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you of the necessity to bring
the value
10 How to Invest with American Century Investments American Century Investments
of the shares held in the account up to the minimum. If action is not taken
within 90 days of the letter's date, the shares held in the account will be
redeemed and the proceeds from the redemption will be sent by check to your
address of record. We reserve the right to increase the investment minimums.
SIGNATURE GUARANTEE
To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee will be required
when:
o redeeming more than $25,000; or
o establishing or increasing a Check-A-Month or automatic transfer on an
existing account.
You may obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.
For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.
We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.
SPECIAL SHAREHOLDER SERVICES
We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.
Our special investor services include:
Automated Information Line
We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
Fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.
Online Account Access
You may contact us 24 hours a day, seven days a week at
www.americancentury.com to access your funds' daily share prices, receive
updates on major market indexes and view historical performance of your funds.
If you select "Full Services" on your application, you can use your personal
access code and Social Security number to view your account balances and account
activity, make subsequent investments from your bank account or exchange shares
from one fund to another.
CheckWriting
We offer CheckWriting as a service option for your account. CheckWriting
allows you to redeem shares in your account by writing a draft ("check") against
your account balance. (Shares held in certificate form may not be redeemed by
check.) There is no limit on the number of checks you can write, but each one
must be for at least $100.
When you write a check, you will continue to receive dividends on all
shares until your check is presented for payment to our clearing bank. If you
redeem all shares in your account by check, any accrued distributions on the
redeemed shares will be paid to you in cash on the next monthly distribution
date.
If you want to add CheckWriting to an existing account that offers
CheckWriting, contact us by telephone or mail for an appropriate form. For a new
account, you may elect CheckWriting on your purchase application by choosing the
"Full Services" option. CheckWriting is not available for any account held in an
IRA or 403(b) plan.
CheckWriting redemptions may only be made on checks provided by us.
Currently, there is no charge for checks or for the CheckWriting service.
We will return checks drawn on insufficient funds or on funds from
investments made by any means
Prospectus How to Invest with American Century Investments 11
other than by wire within the previous 15 days. Neither the company nor our
clearing bank will be liable for any loss or expenses associated with returned
checks. Your account may be assessed a $15 service charge for checks drawn on
insufficient funds.
A stop payment may be ordered on a check written against your account. We
will use reasonable efforts to stop a payment, but we cannot guarantee that we
will be able to do so. If we are successful in fulfilling a stop-payment order,
your account may be assessed a $15 fee.
Tax-Qualified Retirement Plans
The Fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:
o Individual Retirement Accounts (IRAs);
o 403(b) plans for employees of public school systems and non-profit
organizations; or
o Profit sharing plans and pension plans for corporations and other
employers.
If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.
You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.
IMPORTANT POLICIES REGARDING YOUR INVESTMENTS
Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.
(1) We reserve the right for any reason to suspend the offering of shares for
a period of time, or to reject any specific purchase order (including
purchases by exchange). Additionally, purchases may be refused if, in the
opinion of the Manager, they are of a size that would disrupt the
management of the Fund.
(2) We reserve the right to make changes to any stated investment
requirements, including those that relate to purchases, transfers and
redemptions. In addition, we may also alter, add to or terminate any
investor services and privileges. Any changes may affect all shareholders
or only certain series or classes of shareholders.
(3) Shares being acquired must be qualified for sale in your state of
residence.
(4) Transactions requesting a specific price and date will be refused. Once
you have mailed or otherwise transmitted your transaction instructions to
us, they may not be modified or canceled.
(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require evidence
satisfactory to us of the authority of the individual making the request.
(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include requesting
personal identification from callers, recording telephone calls, and
providing written confirmations of telephone transactions. These
procedures are designed to protect shareholders from unauthorized or
fraudulent instructions. If we do not employ reasonable procedures to
confirm the genuineness of instructions, then we may be liable for losses
due to unauthorized or fraudulent instructions. The company, its transfer
agent and investment advisor will not be responsible for any loss due to
instructions they reasonably believe are genuine.
(7) All signatures should be exactly as the name appears in the registration.
If the owner's name appears in the registration as Mary Elizabeth Jones,
she should sign that way and not as Mary E. Jones.
(8) Unusual stock market conditions have in the past resulted in an increase
in the number of shareholder telephone calls. If you experience difficulty
in reaching us during such periods, you may send your transaction
instructions by mail, express mail or courier service, or you may visit
one of our Investor Centers. You may also use our Automated Information
Line if you have requested and received an access code and are not
attempting to redeem shares.
(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to
cover the penalty the IRS will impose on us for
12 How to Invest with American Century Investments American Century Investments
failure to report your correct taxpayer identification number on
information reports.
(10) We will perform special inquiries on shareholder accounts. A research fee
of $15 per hour may be applied.
REPORTS TO SHAREHOLDERS
At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all year-to-date
activity in your account. You may request a statement of your account activity
at any time.
With the exception of most automatic transactions and transactions by
CheckWriting, each time you invest, redeem, transfer or exchange shares, we will
send you a confirmation of the transaction. Transactions initiated by
CheckWriting will be confirmed on a monthly basis. See the Investor Services
Guide for more detail.
CAREFULLY REVIEW ALL THE INFORMATION RELATING TO TRANSACTIONS ON YOUR
STATEMENTS AND CONFIRMATIONS TO ENSURE THAT YOUR INSTRUCTIONS WERE ACTED ON
PROPERLY. PLEASE NOTIFY US IMMEDIATELY IN WRITING IF THERE IS AN ERROR. IF YOU
FAIL TO PROVIDE NOTIFICATION OF AN ERROR WITH REASONABLE PROMPTNESS, I.E.,
WITHIN 30 DAYS OF NON-AUTOMATIC TRANSACTIONS OR WITHIN 30 DAYS OF THE DATE OF
YOUR CONSOLIDATED QUARTERLY STATEMENT, IN THE CASE OF AUTOMATIC TRANSACTIONS, WE
WILL DEEM YOU TO HAVE RATIFIED THE TRANSACTION.
No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.
Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your Fund.
EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS
Information contained in our Investor Services Guide pertains to
shareholders who invest directly with American Century rather than through an
employer-sponsored retirement plan or through a financial intermediary.
If you own or are considering purchasing Fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the Fund,
exchange them for shares of other American Century funds, and redeem them will
depend on the terms of your plan.
If you own or are considering purchasing Fund shares through a bank,
broker-dealer, insurance company or other financial intermediary, your ability
to purchase, exchange and redeem shares will depend on your agreement with, and
the policies of, such financial intermediary.
You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your plan administrator or financial intermediary.
Prospectus How to Invest with American Century Investments 13
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of the Fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds except American Century Target
Maturities Trust, net asset value is determined at the close of regular trading
on each day that the New York Stock Exchange is open, usually 3 p.m. Central
time. Net asset value for Target Maturities is determined one hour prior to the
close of the Exchange.
Investments and requests to redeem or exchange shares will receive the
share price next determined after receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or one of our agents before the net asset value
of the fund is determined, are effective on, and will receive the price
determined, that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined on, the next day
the Exchange is open.
Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the net asset value is determined.
Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.
Investment and transaction instructions received by us on any business day
by mail before the net asset value is determined will receive that day's price.
Investments and instructions received after that time will receive the price
determined on the next business day.
If you invest in Fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the Fund's transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the Fund's procedures or any contractual arrangement with the
Fund or the Fund's distributor in order for you to receive that day's price.
HOW SHARE PRICE IS DETERMINED
Pursuant to a determination by the Fund's Board of Trustees and Rule 2a-7
under the Investment Company Act of 1940, portfolio securities of the Fund are
valued at amortized cost. When a security is valued at amortized cost, it is
valued at its cost when purchased, and thereafter by assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument.
WHERE TO FIND YIELD INFORMATION
The yield of the Fund is published weekly in leading financial publications
and daily in many local newspapers. Yield information may also be obtained by
calling us or by accessing our Web site at www.americancentury.com.
DISTRIBUTIONS
At the close of each day including Saturdays, Sundays and holidays,
dividends are declared and credited (i.e., available for redemption) daily and
distributed monthly on the last Friday of each month.
You will begin to participate in the distributions the day AFTER your
purchase is effective. See "When Share Price is Determined," this page. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed (other than by CheckWriting), the
distribution on the redeemed shares will be included with your redemption
proceeds.
The Fund does not expect to realize any long-term capital gains and,
accordingly, does not expect to make any capital gains distributions.
14 Additional Information You Should Know American Century Investments
Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 59 1/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date. Please consult our Investor Services Guide for
further information regarding your distribution options.
TAXES
The Fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders,
it pays no income taxes.
TAX-DEFERRED ACCOUNTS
If Fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the Fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
TAXABLE ACCOUNTS
If Fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income of the
Fund do not qualify for the 70% dividends-received deduction for corporations
since they are derived from interest income.
Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a capital gain distribution, you must pay income
taxes on the distribution, even though the value of your investment (plus cash
received, if any) will not have increased.
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions may also be subject to state and local taxes, even if all or
a substantial part of such distribution are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, we are required by federal law to withhold and remit to
the IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed. That charge is not refundable.
MANAGEMENT
INVESTMENT MANAGEMENT
American Century-Benham Capital Preservation Fund is a diversified,
open-end series of American Century Government Income Trust (the "Trust"),
organized as a Massachusetts business trust on July 24, 1985, formerly known as
the Benham Government Income Trust. Under the laws of the Commonwealth of
Massachusetts, the Board of Trustees is responsible for managing the business
and affairs of the Trust.
Acting pursuant to an investment management agreement entered into with the
Trust, American
Prospectus Additional Information You Should Know 15
Century Investment Management, Inc. (the "Manager") serves as the investment
manager of the Fund. The Manager pays all the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of the non-interested person
Trustees (including counsel fees) and extraordinary expenses. Its principal
place of business is American Century Tower 4500 Main Street, Kansas City,
Missouri 64111. The Manager has been providing investment advisory services to
investment companies and other clients since 1958.
The Manager supervises and manages the investment portfolio of the Fund and
directs the purchase and sale of its investment securities. It utilizes a team
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the Fund. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. The Fund's team adjusts
holdings in the portfolio as it deems appropriate in pursuit of the Fund's
investment objectives. Individual portfolio manager members of the team may also
adjust portfolio holdings of the Fund as necessary between team meetings.
The portfolio manager members of the team managing the Fund and their work
experience for the last five years are as follows:
AMY O'DONNELL has been primarily responsible for the day-to-day management
of Capital Preservation since May, 1997. Ms. O'Donnell joined Benham Management
Corporation ("BMC"), a predecessor of the Manager, in 1987 as a research analyst
and was promoted to her current position in 1992.
DENISE TABACCO has co-managed Capital Preservation since January, 1996. Ms.
Tabacco joined BMC in 1988, the Portfolio Department in 1991 and was promoted to
her current position in 1995.
The activities of the Manager are subject only to direction of the Board of
Trustees. Each series of the Trust (except Capital Preservation) pays the
Manager a monthly investment advisory fee equal to its pro rata share of the
dollar amount derived from applying the Trust's average daily net assets to an
investment advisory fee schedule.
For the services provided to Capital Preservation, the Manager receives a
monthly fee based on a percentage of the average net assets of the Fund. The
annual rate at which this fee is assessed is determined monthly in a two-step
process: First, a fee rate schedule is applied to the assets of all of the money
market funds managed by the Manager (the "Investment Category Fee"). Second, a
separate fee rate schedule is applied to the assets of all of the mutual funds
managed by the Manager (the "Complex Fee"). The Investment Category Fee and the
Complex Fee are then added to determine the unified management fee payable by
the Fund to the Manager. Currently the Investment Category Fee is an annual rate
of 0.18% of the average net assets of the Fund. The Complex Fee is an annual
rate of 0.30% of the average net assets of the Fund. Further information about
the calculation of the annual management fee is contained in the Statement of
Additional Information.
On the first business day of each month, the Fund pays a management fee to
the Manager for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for the Fund by
the aggregate average daily closing value of the Fund's net assets during the
previous month by a fraction, the numerator of which is the number of days in
the previous month and the denominator of which is 365 (366 in leap years).
CODE OF ETHICS
The Fund and the Manager have adopted a Code of Ethics, which restricts
personal investing practices by employees of the Manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the Fund's portfolio
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of the Fund
shareholders come before the interests of the people who manage the Fund.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri, 64111. It acts as transfer agent and dividend-paying agent for the
Fund. It provides facilities, equipment and personnel to the Fund and is paid
for such services by the Manager.
16 Additional Information You Should Know American Century Investments
Certain recordkeeping and administrative services that would otherwise be
performed by the transfer agent may be performed by an insurance company or
other entity providing similar services for various retirement plans using
shares of the Fund as a funding medium, by broker-dealers and financial advisors
for their customers investing in shares of American Century or by sponsors of
multi mutual fund no- or low-transaction fee programs. The Manager or an
affiliate may enter into contracts to pay them for such recordkeeping and
administrative services out of its management fee.
Although there is no sales charge levied by the Fund, transactions in
shares of the Fund may be executed by brokers or investment advisors who charge
a transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the Fund or the
Manager. You should be aware of the fact that these transactions may be made
directly with American Century without incurring such fees.
From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the Manager
or its affiliates.
The Manager and the transfer agent are both wholly owned by American
Century Companies, Inc. James E. Stowers Jr., Chairman of the Board of Directors
of American Century Companies, Inc. owns a majority of its common stock.
DISTRIBUTION OF FUND SHARES
The Fund's shares are distributed by American Century Investment Services,
Inc. (the "Distributor"), a registered broker-dealer and an affiliate of the
Manager. The Manager pays all expenses for promoting and distributing the Fund's
shares.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
The Trust is an open-end management investment company. Its principal
office is American Century Tower, 4500 Main Street, P.O. Box 419200, Kansas
City, Missouri 64141-6200. All inquiries may be made by mail to that address or
by telephone to 1-800-345-2021 (international calls: 816-531-5575).
The Fund is an individual series of the Trust which issues shares with no
par value. The assets belonging to each series of shares are held separately by
the custodian and in effect each series is a separate fund.
Each share is entitled to one vote. Matters affecting only one series are
voted upon only by that series.
Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of Trustees can elect all of the
Trustees if they choose to do so, and in such event the holders of the remaining
votes will not be able to elect any person or persons to the Board of Trustees.
Unless required by the Investment Company Act, it will not be necessary for
the Trust to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of Trustees or the appointment of auditors.
However, pursuant to the Trust's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request that the Trust hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF THE POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.
THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL SECURITIES OF THE FUND ONLY IN
THOSE STATES WHERE THE FUND'S SHARES HAVE BEEN REGISTERED OR OTHERWISE QUALIFIED
FOR SALE. THE FUND WILL NOT ACCEPT APPLICATIONS FROM PERSONS RESIDING IN STATES
WHERE THE FUND'S SHARES ARE NOT REGISTERED.
Prospectus Additional Information You Should Know 17
NOTES
18 Notes American Century Investments
NOTES
Notes 19
NOTES
20 Notes American Century Investments
NOTES
Notes 21
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-444-3485
Fax: 816-340-7962
Internet: www.americancentury.com
[american century logo]
American
Century(sm)
9705 [recycled logo]
SH-BKT-8647 Recycled
