PROSPECTUS
[American Century Logo]
American
Century (sm)
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997
AMERICAN
CENTURY
GROUP
Capital Manager
[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(R) AMERICAN CENTURY GROUP TWENTIETH CENTURY(R) GROUP
MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Capital Manager
PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997
Capital Manager
AMERICAN CENTURY MANAGER FUNDS
American Century Manager Funds 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 funds that diversifies its investments
among U.S. and foreign stocks, bonds and money market instruments is described
in this Prospectus. Its investment objective is 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 September 3, 1996 and filed with the Securities and Exchange
Commission. 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: 816-753-1865
Internet: www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus 1
INVESTMENT OBJECTIVE OF THE FUND
AMERICAN CENTURY CAPITAL MANAGER FUND
Capital Manager's investment objective is to seek to maximize total return
(capital appreciation plus dividend income) consistent with prudent investment
risk. The Fund seeks to achieve this objective by allocating its assets among
(1) U.S. equity securities, (2) U.S. fixed-income securities, (3) money market
instruments, (4) foreign equity and fixed-income securities, and (5) securities
of companies with substantial gold-related assets and natural resources linked
investments.
There is no assurance that the Fund will achieve its investment objective.
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 Objective American Century Investments
TABLE OF CONTENTS
Transaction and Operating Expense Table .............4
Financial Highlights ................................5
INFORMATION REGARDING THE FUND
Investment Policies of the Fund .....................6
Investment Objective ...........................6
Management Approach ............................6
Investment Categories ..........................7
U.S. Equity Securities .....................7
U.S. Fixed-Income Securities ...............8
Short-Term Instruments .....................8
Foreign Equity and Fixed-Income Securities .8
Gold Companies and Natural Resources-
Linked Investments ................8
Risk Factors and Investment Techniques ..............9
Equity Securities ..............................9
Fixed-Income Securities ........................9
Foreign Securities .............................9
Currency Risk .................................10
Gold Companies and Natural Resources-
Linked Investments ........................10
Other Investment Practices, Their Characteristics
and Risks .....................................10
Portfolio Turnover ............................10
When-Issued and Forward Commitment
Agreements ................................10
Mortgage-Related and Other
Asset-Backed Securities ...................10
Borrowing .....................................11
Portfolio Lending .............................11
Rule 144A Securities ..........................11
Investment Companies ..........................11
Derivative Securities .........................11
Interest Rate Futures Contracts
and Options Thereon .......................12
Forward Foreign Currency Exchange Contracts ...13
Warrants ......................................14
Collateralized Mortgage Obligations ...........14
Structured Notes ..............................14
Cash Management ...............................14
Other Techniques ..............................14
Performance Advertising ............................14
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
American Century Investments .......................16
Investing in American Century ......................16
How to Open an Account .............................16
By Mail ...................................16
By Wire ...................................16
By Exchange ...............................17
In Person .................................17
Subsequent Investments ........................17
By Mail ...................................17
By Telephone ..............................17
By Online Access ..........................17
By Wire ...................................17
In Person .................................17
Automatic Investment Plan .....................17
How to Exchange from One Account to Another ........17
By Mail ...................................18
By Telephone ..............................18
By Online Access ..........................18
How to Redeem Shares ...............................18
By Mail ...................................18
By Telephone ..............................18
By Check-A-Month ..........................18
Other Automatic Redemptions ...............18
Redemption Proceeds ...........................18
By Check ..................................18
By Wire and ACH ...........................18
Redemption of Shares in Low-Balance Accounts ..18
Signature Guarantee ................................19
Special Shareholder Services .......................19
Automated Information Line ................19
Online Account Access .....................19
Open Order Service ........................19
Tax-Qualified Retirement Plans ............20
Important Policies Regarding
Your Investments ..............................20
Reports to Shareholders ............................21
Employer-Sponsored Retirement Plans and
Institutional Accounts ........................21
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price ........................................22
When Share Price is Determined ................22
How Share Price is Determined .................22
Where to Find Information About Share Price ...22
Distributions ......................................23
Taxes ..............................................23
Tax-Deferred Accounts .........................23
Taxable Accounts ..............................23
Management .........................................24
Investment Management .........................24
Code of Ethics ................................25
Transfer and Administrative Services ..........25
Distribution of Fund Shares ........................26
Expenses ...........................................26
Further Information About American Century .........26
Prospectus Table of Contents 3
TRANSACTION AND OPERATING EXPENSE TABLE
Capital Manager
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:(2)
(as a percentage of net assets)
Management Fees ............................................. .44%
12b-1 Fees .................................................. none
Other Expenses .............................................. .57%
Total Fund Operating Expenses ............................... 1.01%
EXAMPLE
You would pay the following expenses on a 1 year $10
$1,000 investment, assuming a 5% annual 3 years 32
return and redemption at the end of each 5 years 56
time period: 10 years 124
(1) Redemption proceeds sent by wire are subject to a $10 processing fee.
(2) Benham Management Corporation (the "manager") has agreed to limit the fund's
total operating expenses to specified percentages of the fund's average daily
net assets. The agreement provides that the manager may recover amounts absorbed
on behalf of the fund during the preceding 11 months if, and to the extent that,
for any given month, fund expenses were less than the expense limit in effect at
that time. The current expense limit for the fund is 1.00%. Amounts paid by
unaffiliated third parties do not apply to this expense limit. This expense
limit is subject to annual renewal in June. If the expense limit was not in
effect, the fund's Management Fee, Other Expenses and Total Fund Operating
Expenses would be as follows, respectively: .65%, .57% and 1.22%.
The fund pays the manager advisory fees equal to an annualized percentage of the
fund's average daily net assets. Other expenses include administrative and
transfer agent fees paid to American Century Services Corporation.
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 fund. The example set forth
above assumes reinvestment of all dividends and distributions and uses a 5%
annual rate of return as required by SEC regulations.
Neither the 5% rate of return nor the expenses shown above should be considered
indications of past or future returns and expenses. Actual returns and expenses
may be greater or less than those shown.
4 Transaction and Operating Expense Table American Century Investments
FINANCIAL HIGHLIGHTS
CAPITAL MANAGER
The Financial Highlights for each of the periods presented have been audited by
KPMG Peat Marwick LLP, independent auditors (except as noted), whose 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 November 30, except as noted.
1996(1) 1995(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period ...................... $11.70 $10.00
------ ------
Income from Investment Operations
Net Investment Income ................................ .20 .36
Net Realized and Unrealized Gains on Investment
and Foreign Currency Transactions .................... .51 1.62
--- ----
Total Income from Investment Operations .............. .71 1.98
--- ----
Distributions
From Net Investment Income ........................... (.24) (.28)
From Net Realized Gains on Investment Transactions ... (.18) --
---- ----
Total Distributions .................................. (.42) (.28)
Net Asset Value, End of Period ............................ $11.99 $11.70
====== ======
Total Return(3) ...................................... 6.22% 20.12%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets(4) ...... 1.01%(5) 1.01%
Ratio of Net Investment Income to Average Net Assets(4) ... 3.44%(5) 3.70%
Portfolio Turnover Rate ................................... 47.71% 100%
Net Assets, End of Period (in thousands of dollars) .......$80,490 $51,157
(1) Six month period ended May 31, 1996 (unaudited).
(2) December 1, 1994 (inception) through November 30, 1995.
(3) The total return figures assume reinvestment of dividend
and capital gain distributions and are not annualized.
(4) The ratios include expenses paid through expense offset
arrangements.
(5) Annualized.
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
objective. These policies and practices, which are described throughout this
Prospectus, are not designated as fundamental policies and may be changed
without shareholder approval.
For an explanation of the securities ratings referred to in the following
discussion, see "Other Information" in the Statement of Additional Information.
INVESTMENT OBJECTIVE
The fund's investment objective is to seek to maximize total return (capital
appreciation plus dividend income) consistent with prudent investment risk. The
fund seeks to achieve this objective by allocating its assets among (1) U.S.
equity securities, (2) U.S. fixed-income securities, (3) money market
instruments, (4) foreign equity and fixed-income securities, and (5) securities
of companies with substantial gold-related assets and natural resources linked
investments. There is no assurance that the fund will achieve its investment
objective.
MANAGEMENT APPROACH
The fund has a neutral mix that represents the way the fund's investments will
be generally allocated over the long term. Working from the neutral mix, the
manager may gradually adjust the fund's investments within their operating
ranges to reflect either growth-oriented or defensive strategies. The fund's
neutral mix and operating range for each asset class are illustrated below.
- --------------------------------------------------------------------------------
Neutral Operating
Asset Class Mix Range
- --------------------------------------------------------------------------------
U.S. Equity
Securities (Stocks) 35% 25-45%
- --------------------------------------------------------------------------------
U.S. Fixed-Income
Securities (Bonds) 35% 25-45%
- --------------------------------------------------------------------------------
Money Market Securities
(Short-Term Instruments) 15% 10-25%
- --------------------------------------------------------------------------------
Foreign Equity and
Fixed-Income Securities
(International) 12% 5-25%
- --------------------------------------------------------------------------------
Gold Companies and
Natural Resources
Linked Investments
(Specialty) 3% 0-10%
- --------------------------------------------------------------------------------
Under extreme market conditions, the fund may adopt broader ranges for its asset
classes as follows: 20-70% in stocks, 20-70% in bonds, 10-40% in short-term
instruments, 0-40% in international securities, and 0-10% in specialty
securities.
This "flexible" investment approach allows the fund to take advantage of
performance opportunities as they occur. Fund performance may be affected by a
variety of factors, such as interest rate changes, market conditions, economic
events, and the manager's skill in allocating assets.
The composition of the asset classes in the neutral mix is designed to create a
diversified portfolio emphasizing total return. The fund's diversification
reduces the potential risks of any one asset class. No single mutual fund,
however, can provide an appropriate balanced investment plan for all investors.
The essence of the fund's diversification strategy is to produce competitive
returns and limit volatility by owning assets that have historically responded
differently under similar market conditions. As opportunities arise or market
conditions warrant, the manager may alter the fund's investment mix and
particular securities within each asset class. The manager makes investment
decisions for the fund in a two-
6 Information Regarding the Fund American Century Investments
tiered process by: (1) determining how the fund's assets should be distributed
among asset classes and (2) deciding which securities should be purchased within
each asset class.
The manager begins the decision making process by using a quantitative asset
allocation model and a market scenario analysis to determine how the fund's
investments should be distributed among its five asset classes, without regard
to specific securities. This analysis includes consideration of the relative
opportunity for capital appreciation of stocks and bonds, dividend yields, and
the level of interest rates paid on debt securities of various maturities.
In determining the allocation of assets among U.S. and foreign capital markets,
the manager also utilizes several analytical techniques, including historical
analyses and projections for economics and markets worldwide.
In selecting securities denominated in foreign currencies, the manager will
consider, among other factors, the impact of foreign exchange rates relative to
the U.S. dollar value of such securities. The manager may use forward exchange
currency contracts or other hedging techniques to seek to minimize foreign
exchange rate risks. See "Currency Risk," page 10.
Periodically, or under extraordinary circumstances, the manager recommends an
asset allocation strategy to a committee of senior officers and portfolio
managers. Subsequently, the manager works with the portfolio management team
within their respective areas of expertise to implement changes to the asset
allocation and portfolio holdings.
INVESTMENT CATEGORIES
The types of securities the fund may buy within each asset class and their
strategic use in pursuing the fund's objective are illustrated in the table
below and are described more fully on the following pages. Risks related to each
asset class and specific types of investments are discussed under "Risk Factors
and Investment Techniques," page 9. See the Statement of Additional Information
for a more detailed discussion of the fund's investment techniques.
- --------------------------------------------------------------------------------
Asset Class Type of Security Strategic Use
- --------------------------------------------------------------------------------
Stocks Large, medium, and Growth;
small capitalization Growth and
stocks traded on Income
U.S. exchanges.
- --------------------------------------------------------------------------------
Bonds Investment grade Income
corporate and U.S
government debt
obligations.
- --------------------------------------------------------------------------------
Short-term High-grade, short- Preservation of
term government Capital; Income;
and corporate Liquidity
debt instruments.
No derivatives.
- --------------------------------------------------------------------------------
International Stocks: Primarily Growth,
EAFE Index countries Currency Hedge;
(Europe, Australia, International
and the Far East). Diversification
Bonds: Investment-
grade corporate and
government debt
obligations.
- --------------------------------------------------------------------------------
Specialty Natural resources Inflation Hedge;
stocks; (including gold) Growth
commodity-linked
or index-linked notes.
- --------------------------------------------------------------------------------
U.S. Equity Securities
The fund will generally invest 25-45% of its total assets in common stocks,
preferred stocks, convertible securities, and warrants. These investments may
include stocks of large, medium, and small capitalization companies located in
the United States. In selecting both U.S. and foreign equity securities, the
manager considers a variety of factors relating to dividend and cash flow
valuation, earnings growth, and the likelihood that earnings will exceed
analysts' estimates.
Convertible securities are bonds, preferred stocks, and other securities that
may be exchanged or converted into shares of the issuer's underlying common
stock at a specific price for a specific time period. The value of convertible
securities is linked to the price of the underlying stock and is sensitive to
interest rate changes and the credit quality of the issuer.
Prospectus Information Regarding the Fund 7
The fund may buy convertible securities rated, at the time of investment, within
the top four rating categories (i.e., investment-grade quality) by a nationally
recognized statistical rating organization (a "rating agency") or, if unrated,
judged by the manager under the supervision of the Board of Trustees to be of
comparable quality.
U.S. Fixed-Income Securities
The fund will generally invest 25-45% of its total assets in securities issued
or guaranteed by the U.S. government and its agencies or instrumentalities and
in debt obligations issued by U.S. corporations. The fund may also invest in
instruments described under "Mortgage-Related and Other Asset-Backed
Securities," page 10.
The fund may buy debt securities rated, at the time of purchase,
investment-grade quality by a rating agency or, if unrated, judged by the
manager, under the supervision of the Board of Trustees, to be of comparable
quality. The maturities of securities included in this portion of the fund's
portfolio will generally range from 2 to 30 years and may be adjusted depending
upon the manager's perception of market and economic conditions.
Short-Term Instruments
The fund will normally invest 10-25% of its total assets in high-quality money
market instruments with remaining maturities of 13 months or less. Such
instruments may include obligations of U.S. or foreign governments, government
agencies, and supranational organizations; commercial paper; short-term
corporate debt obligations; and high-quality certificates of deposit (including
non-U.S. dollar deposits).
The fund may also enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers that are deemed to present
minimal credit risks. Credit risk determinations are made by the manager
pursuant to guidelines established by the Board of Trustees. A repurchase
agreement involves the purchase of a security and a simultaneous agreement to
sell the security back to the seller at a higher price. Delays or losses could
result if the other party to the agreement defaults or becomes bankrupt.
The fund may invest up to 5% of its total assets in money market funds advised
by the manager, provided that the investment is consistent with the fund's
investment policies and restrictions. For temporary defensive purposes, the fund
may invest up to 100% of its assets in short-term instruments.
Foreign Equity and Fixed-Income Securities
The foreign securities segment may consist of equity securities of foreign
issuers (including common stocks, preferred stocks, warrants, and securities
convertible into common stocks) as well as debt securities of foreign issuers
(including bonds, notes and other debt securities, and obligations of foreign
governments and their political subdivisions). The fund's foreign equity
securities are generally issued by developed countries in Europe, Canada,
Mexico, Australia, and the Far East. These countries' stock markets are
represented in the Morgan Stanley Capital International's EAFE Index ("EAFE
Index").
The fund may buy debt securities deemed by a rating agency, at the time of
purchase, to be of investment-grade quality or, if unrated, judged by the
Manager under the supervision of the board of trustees to be of comparable
quality.
The fund does not intend to invest more than 5% of its net assets in securities
of issuers located in developing countries. The fund may also invest in other
investment companies as described under "Investment Companies," page 11. The
fund will not invest more that 25% of its total assets in securities of issuers
located in any one foreign country. The maturities of foreign fixed-income
securities included in the fund's portfolio will range from 2 to 30 years.
The fund may also invest in sponsored or unsponsored American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs"), International Depositary Receipts ("IDRs"), or other similar
securities convertible into securities of foreign issuers.
Gold Companies and Natural Resources-
Linked Investments
The fund will generally invest 0-10% of its total assets in stocks of domestic
and foreign companies that are engaged in exploring for, mining, processing,
fabricating, or otherwise dealing in gold and other precious metals (such as
silver and platinum) or other
8 Information Regarding the Fund American Century Investments
natural resources. Stocks included in this category must be issued by a company
that derives fifty percent or more of its revenue or net profits from one or
more of these activities. This segment may also include structured notes, which
are described on page 14.
RISK FACTORS AND INVESTMENT TECHNIQUES
The fund is a convenient way to diversity while seeking total return. Risk
exposure to any one asset class is limited by the allocation of the fund's
assets among various investment categories. The fund may be appropriate for
investors seeking one-stop diversification across various investment categories,
both in the U.S. and abroad. The fund works best for long-term investors
prepared to ride out the markets' up and downs.
The fund cannot assure that the techniques it uses will be successful.
Diversification among asset classes will not necessarily protect the fund from
loss; it is possible that several of the fund's asset classes will experience
losses simultaneously under certain market conditions.
EQUITY SECURITIES
Equity securities are subject to the risks of stock market investing, including
the possibility of sudden or prolonged market declines as well as the risks
associated with individual companies. The fund may invest in stocks of companies
of large, medium, or small capitalization. Investing in smaller, less seasoned
companies may present greater opportunities for growth but also may involve
greater risks than are customarily associated with more established companies.
FIXED-INCOME SECURITIES
Fixed-income securities are affected primarily by changes in interest rates. The
prices of these securities tend to rise when interest rates fall, and conversely
fall when interest rates rise. Interest rate changes will have a greater effect
on the fund if it is heavily invested in long-term or zero-coupon bonds.
Fixed-income securities may also be affected by changes in the credit quality of
their issuers.
Securities rated in the lowest investment-grade category may have speculative
characteristics. Changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity to make principal and interest payments
than is the case for higher grade bonds. In the event that an existing holding
is downgraded below investment grade, the Fund will seek to dispose of the
security, but its ability to do so may be limited by its intention to qualify as
a regulated investment company for federal tax purposes.
The fund may purchase zero-coupon bonds ("zeros"), which are debt obligations
that do not pay interest periodically. Zeros are issued at a substantial
discount from their maturity value, and this discount is amortized over the life
of the security. Because interest on zeros is not distributed on a current basis
but is, in effect, compounded, zeros tend to be subject to greater market risk
than interest-paying securities with similar maturities.
FOREIGN SECURITIES
Foreign securities may present unique investment opportunities; however,
overseas investing involves risks not associated with domestic investing.
Foreign securities markets are not always as efficient as those in the U.S. and
are often less liquid and more volatile.
Other risks involved in investing in the securities of foreign issuers include
differences in accounting, auditing and financial reporting standards; generally
higher commission rates on foreign portfolio transactions; political
instability, which could affect U.S. investments in foreign countries; and
potential restrictions on the flow of capital.
The extent of the support of foreign government obligations varies. Some foreign
government obligations are direct obligations of the foreign government. The
payment of principal and interest is unconditionally guaranteed on certain other
foreign government securities. Other foreign government obligations are neither
direct obligations of, nor guaranteed by, a foreign government but involve
government sponsorship in one way or another, such as specific collateralization
or support by the credit of the issuing government agency or instrumentality.
Foreign taxes can also affect the fund's performance. For further details, see
"Taxes," page 23 and the Statement of Additional Information.
Prospectus Information Regarding the Fund 9
CURRENCY RISK
Currency risk will affect the value of foreign-currency-denominated securities
when foreign exchange rates fluctuate. Currency risks are generally higher in
lesser developed markets. The fund may, however, engage in foreign currency
transactions to protect its portfolio against fluctuations in currency exchange
rates in relation to the U.S. dollar. Such foreign currency transactions may
include forward foreign currency contracts, currency exchange transactions on a
spot (i.e., cash) basis, put and call options on foreign currencies, and foreign
exchange futures contracts.
GOLD COMPANIES AND NATURAL RESOURCES-
LINKED INVESTMENTS
When the economy is threatened by inflation, the fund may increase its holdings
in gold stocks to benefit from rising commodities prices and offset bond market
declines. Based upon historical experience, during periods of economic or
financial instability, the prices of securities of companies included in this
segment reflect the price volatility of gold and other natural resources.
Instability of prices may affect earnings of such companies and may adversely
affect the financial condition of such companies. In addition, some companies
involved in natural resources businesses may also be subject to the risks
generally associated with extraction of natural resources, such as oil spills
and vulnerable to natural disasters including, but not limited to fire, flood,
and drought.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
For additional information regarding investment practices of the fund, see the
Statement of Additional Information.
PORTFOLIO TURNOVER
The portfolio turnover rate of the fund is shown in the Financial Highlights
table on page 5 of this Prospectus.
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to the fund's objectives.
The manager believes that the rate of portfolio turnover is irrelevant when it
determines a change is in order to achieve those objectives and, accordingly,
the annual portfolio turnover rate cannot be anticipated.
The portfolio turnover of the fund may be higher than other mutual funds with
similar investment objectives. Higher turnover would generate correspondingly
greater brokerage commissions that are borne directly by the fund. Portfolio
turnover may also affect the character of capital gains, if any, realized and
distributed by the fund since short-term capital gains are taxable as ordinary
income.
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 the 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 and payment for these securities typically occurs 15 to 45 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 each security may decline prior to delivery,
which could result in a loss to the fund.
MORTGAGE-RELATED AND OTHER
ASSET-BACKED SECURITIES
The fund may purchase mortgage pass-through securities, subject to the fund's
limits on investments in U.S. fixed-income securities. Mortgage pass-through
securities represent interests in "pools" of mortgages in which payments of both
interest and principal on the securities are generally made monthly. These
monthly mortgage payments are in effect "passed through" to the security holder
(minus fees paid to the security's issuer or guarantor). These securities may be
subject to prepayment risk.
The primary issuers of mortgage securities are the Federal National Mortgage
Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") and
the Government National Mortgage Association ("GNMA"). Payments of principal and
interest on GNMA securities are guaranteed by GNMA and backed by the full faith
and credit of the U.S. government. Because FNMA and FHLMC have close
relationship with the U.S. government, even though their securities are not
backed by the full faith
10 Information Regarding the Fund American Century Investments
and credit of the U.S. government, they are high-quality securities with minimal
credit risks.
The fund may also invest in collateralized mortgage obligations. See "Derivative
Securities" on this page for more details.
BORROWING
The fund may borrow money only for temporary or emergency purposes. Borrowings
are not expected to exceed 5% of the fund's total assets.
PORTFOLIO LENDING
In order to realize additional income, the fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including the
right to call the loan to enable the fund to vote the securities. Such loans may
not exceed one-third of the fund's total assets taken at market value.
RULE 144A SECURITIES
The fund may, from time to time, purchase Rule 144A securities when they present
attractive investment opportunities that otherwise meet established criteria for
selection. Rule 144A securities are securities that are privately placed with
and traded among qualified institutional buyers rather than the general public.
Although Rule 144A securities are considered "restricted securities," they are
not necessarily illiquid.
With respect to securities eligible for resale under Rule 144A, the staff of the
SEC has taken the position that the liquidity of such securities in the
portfolio of a fund offering redeemable securities is a question of fact for the
board of trustees to determine, such determination to be based upon a
consideration of the readily available trading markets and the review of any
contractual restrictions. Accordingly, the Board of Trustees is responsible for
developing and establishing the guidelines and procedures for determining the
liquidity of Rule 144A securities. As allowed by Rule 144A, the Board of
Trustees of the fund has delegated the day-to-day function of determining the
liquidity of Rule 144A securities to the manager. The Board retains the
responsibility to monitor the implementation of the guidelines and procedures it
has adopted.
Since the secondary market for such securities is limited to certain qualified
institutional investors, the liquidity of such securities may be limited
accordingly and a fund may, from time to time, hold a Rule 144A security that is
illiquid. In such an event, the manager will consider appropriate remedies to
minimize the effect on such fund's liquidity. The fund may not invest more than
15% of its net assets in illiquid securities (securities that may not be sold
within seven days at approximately the price used in determining the net asset
value of fund shares).
INVESTMENT COMPANIES
The fund is seeking an exemptive order from the SEC to permit it to invest a
portion of its assets in the American Century--Benham European Government Bond
Fund (the "EuroBond Fund"), a series of the American Century International Bond
Funds, and any future international funds established and managed by the
manager. There is, however, no assurance that the fund will be able to receive
the necessary exemptive order.
The manager believes that by investing in foreign securities through investment
in funds such as the EuroBond Fund, the fund may achieve economies of scale
resulting in lower fees paid to managers skilled in international investing;
lower custodial, brokerage and other transactional costs, and enhanced
diversification of the fund's assets.
The EuroBond Fund's investment objective is to seek over the long term as high a
level of total return as is consistent with investment in the highest-quality
European government debt securities. To avoid paying duplicative fees, the fund
will not pay the manager advisory fees for any portion of its assets invested in
any fund advised by the manager or its affiliates.
DERIVATIVE SECURITIES
The fund may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional
Prospectus Information Regarding the Fund 11
security, asset, or market index. Certain derivative securities are more
accurately described as "index/structured" securities. Index/structured
securities are derivative securities whose value or performance is linked to
other equity securities (such as depositary receipts), currencies, interest
rates, indices or other financial indicators ("reference indices").
Some derivatives such as mortgage-related and other asset-backed securities are
in many respects like any other investment, although they may be more volatile
or less liquid than more traditional debt securities.
There are many different types of derivatives and many different ways to use
them. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a fund from exposure to changing interest rates, securities
prices, or currency exchange rates and for cash management purposes as a
low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.
The fund may not invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the Fund. For
example, a security whose underlying value is linked to the price of oil would
not be a permissible investment since the fund may not invest in oil and gas
leases or futures.
The return on a derivative security may increase or decrease, depending upon
changes in the reference index or instrument to which it relates.
There are a range of risks associated with derivative investments, including:
o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the portfolio manager
anticipates;
o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;
o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and
o the risk that the counterparty will fail to perform its obligations.
The fund may use derivatives to enhance return and for hedging, not leveraging,
purposes. A description of the derivatives that the fund may use and some of
their associated risks follows.
The Board of Trustees has approved the manager's policy regarding investments in
derivative securities. That policy specifies factors that must be considered in
connection with a pruchase of derivative securities. The policy also establishes
a committee that must review certain proposed purchases before the purchases can
be made. The manager will report on fund activity in derivative securities to
the Board of Trustees as necessary. In addition, the Board will review the
manager's policy for investments in derivative securities annually.
INTEREST RATE FUTURES
CONTRACTS AND OPTIONS THEREON
The fund may buy or sell interest rate futures contracts relating to debt
securities ("debt futures," i.e., futures relating to indexes on types or groups
of bonds) and write or buy put and call options relating to interest rate
futures contracts.
For options sold, the fund will segregate cash or high-quality debt securities
equal to the value of securities underlying the option unless the option is
otherwise covered.
The fund will deposit in a segregated account with its custodian bank
high-quality debt obligations maturing in one year or less, or cash, in an
amount equal to the fluctuating market value of long futures contracts it has
purchased, less any margin deposited on its long position. It may hold cash or
acquire such debt obligations for the purpose of making these deposits.
The fund may use futures and options transactions to maintain cash reserves
while remaining fully invested, to facilitate trading, to reduce transaction
costs, or to pursue higher investment returns when a futures contract is priced
more attractively than its underlying security or index.
Since futures contracts and options thereon can replicate movements in the cash
markets for the securities in which a fund invests without the large cash
investments required for dealing in such markets, they may subject a fund to
greater and more volatile risks than might otherwise be the case. The principal
12 Information Regarding the Fund American Century Investments
risks related to the use of such instruments are (1) the offsetting correlation
between movements in the market price of the portfolio investments (held or
intended) being hedged and in the price of the futures contract or option may be
imperfect; (2) possible lack of a liquid secondary market for closing out
futures or option positions; (3) the need of additional portfolio management
skills and techniques; and (4) losses due to unanticipated market price
movements. For a hedge to be completely effective, the price change of the
hedging instrument should equal the price change of the securities being hedged.
Such equal price changes are not always possible because the investment
underlying the hedging instrument may not be the same investment that is being
hedged.
The ordinary spreads between prices in the cash and futures markets, due to the
differences in the nature of those markets, are subject to distortion. Due to
the possibility of distortion, a correct forecast of general interest rate
trends by management may still not result in a successful transaction.
Management may be incorrect in its expectations as to the extent of various
interest rate movements or the time span within which the movements take place.
See the Statement of Additional Information for further information about these
instruments and their risks.
FORWARD FOREIGN CURRENCY
EXCHANGE CONTRACTS
Some of the foreign securities held by the fund may be denominated in foreign
currencies. Other securities, such as ADRs, may be denominated in U.S. dollars,
but have a value that is dependent on the performance of a foreign security, as
valued in the currency of its home country. As a result, the value of the Fund's
portfolio may be affected by changes in the exchange rates between foreign
currencies and the dollar, as well as by changes in the market values of the
securities themselves. The performance of foreign currencies relative to the
dollar may be a factor in the overall performance of the fund.
To protect against adverse movements in exchange rates between currencies, the
fund may, for hedging purposes only, enter into forward foreign currency
exchange contracts. A forward foreign currency exchange contract obligates a
fund to purchase or sell a specific currency at a future date at a specific
price.
The fund may elect to enter into a forward foreign currency exchange contract
with respect to a specific purchase or sale of a security, or with respect to
the fund's portfolio positions generally.
By entering into a forward foreign currency exchange contract with respect to
the specific purchase or sale of a security denominated in a foreign currency,
the fund can "lock in" an exchange rate between the trade and settlement dates
for that purchase or sale. This practice is sometimes referred to as
"transaction hedging." The fund may enter into transaction hedging contracts
with respect to all or a substantial portion of its foreign securities trades.
When the manager believes that a particular currency may decline in value
compared to the dollar, a fund may enter into forward foreign currency exchange
contracts to sell the value of some or all of the fund's portfolio securities
either denominated in, or whose value is tied to, that currency. This practice
is sometimes referred to as "portfolio hedging." The fund may not enter into a
portfolio hedging transaction where it would be obligated to deliver an amount
of foreign currency in excess of the aggregate value of its portfolio securities
or other assets denominated in, or whose value is tied to, that currency.
The fund will make use of the portfolio hedging to the extent deemed appropriate
by the manager. However, it is anticipated that the Fund will enter into
portfolio hedges much less frequently than transaction hedges.
If the fund enters into a forward contract, the fund, when required, will
instruct its custodian bank to segregate cash or liquid high-grade securities in
a separate account in an amount sufficient to cover its obligation under the
contract. Those assets will be valued at market daily, and if the value of the
segregated securities declines, additional cash or securities will be added so
that the value of the account is not less than the amount of the fund's
commitment.
Predicting the relative future values of currencies is very difficult, and there
is no assurance that any attempt to protect a fund against adverse currency
movements through the use of forward foreign currency exchange contracts will be
successful. In addition, the use of forward foreign currency exchange
Prospectus Information Regarding the Fund 13
contracts tends to limit the potential gains that might result from a positive
change in the relationships between the foreign currency and the U.S. dollar.
WARRANTS
Warrants are instruments issued by a corporation that give the holder the right
to subscribe to a specific amount of the corporation's capital stock at a set
price for a specified period of time. The fund may invest up to 10% of its net
assets in warrants, except that this limitation does not apply to warrants
acquired in units or attached to securities.
COLLATERALIZED MORTGAGE OBLIGATIONS
Collateralized mortgage obligations are mortgage-backed securities issued by
government agencies; single-purpose, stand-alone financial subsidiaries; trusts
established by financial institutions; or similar institutions. CMOs are hybrid
instruments with characteristics of both mortgage-backed bonds and mortgage
pass-through securities. Similar to a bond, interest and principal on a CMO are
paid monthly, quarterly, or semiannually. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by GNMA, FHLMC, or FNMA.
CMOs are categorized in multiple classes, or "tranches," with each class bearing
a different stated maturity. Monthly payments of principal, including
prepayments, are returned to investors in ascending order of the maturity class
they hold.
Floating-rate CMO tranches ("floaters") pay a variable rate of interest that is
usually tied to the London Interbank Offered Rate. "Super floaters" (which float
a certain percentage above LIBOR) and "inverse floaters" (which float inversely
to LIBOR) are variations on the floater structure with highly variable cash
flows. The yield of any floater is sensitive to the rate of prepayments as well
as to the level of the applicable index. Low levels of the index will reduce a
floater's yield, while an interest rate cap on the floater will limit the
floater's yield when the level of the index is high. Because the rate of
interest paid on an inverse floater often varies inversely with a multiple of
the index, any change in the index may have an exaggerated effect on the yield
of the inverse floater.
STRUCTURED NOTES
The fund may invest up to 5% of its total assets in structured notes whose
coupons or principal value is linked to the performance of a particular
commodity or index price. Structured notes may have return characteristics
similar to direct investments in the underlying instrument or to one or more
options on the underlying instrument. Structured notes may be more volatile than
the underlying instrument itself and present many of the same risks as investing
in futures and options. Structured notes are also subject to credit risks
associated with the issuer of the security. The fund's investment in structured
notes is subject to the limits of the fund's investment in gold companies and
natural resources-linked investments as well as to considerations related to the
Fund's tax status.
CASH MANAGEMENT
The fund may invest up to 5% of its total assets in any money market fund
advised by the manager, provided that the investment is consistent with the
fund's investment policies and restrictions.
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. See the Statement of Additional
Information for a more detailed discussion of those investments and some of the
risks associated with them.
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
cumulative total return or average annual total return, yield and effective
yield.
Cumulative total return data is computed by considering all elements of return,
including reinvestment of dividends and capital gains distributions, over a
period of time. Average annual total return is determined by computing the
annual compound return over a stated period of time that would have
14 Information Regarding the Fund American Century Investments
produced the fund's cumulative total return over the same period if the fund's
performance had remained constant throughout.
A quotation of yield reflects the fund's income over a stated period expressed
as a percentage of the fund's share price. The effective yield is calculated in
a similar manner, but, when annualized, the income earned by the investment is
assumed to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect on the assumed reinvestment.
Yield is calculated by adding over a 30-day (or one-month) period all interest
and dividend income (net of fund expenses) calculated on each day's market
values, dividing this sum by the average number of fund shares outstanding
during the period, and expressing the result as a percentage of the fund's share
price on the last day of the 30-day (or one month) period. The percentage is
then annualized. Capital gains and losses are not included in the calculation.
Yields are calculated according to accounting methods that are standardized in
accordance with SEC rules for all stock and bond funds. 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) and publications that monitor the performance of mutual
funds. Performance information may be quoted numerically or may be presented in
a table, graph or other illustration. In addition, fund performance may be
compared to well-known indices of market performance. Fund performance may also
be compared, on a relative basis, to the other funds in our fund family. This
relative comparison, which may be based upon historical or expected fund
performance, volatility or other fund characteristics, may be presented
numerically, graphically or in text. Fund performance may also be combined or
blended with other funds in our fund family, and that combined or blended
performance may be compared to the same indices to which individual funds may be
compared.
All performance information advertised by the 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 15
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
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 21.
HOW TO OPEN AN ACCOUNT
To open an account, you must complete and sign an application, furnishing your
taxpayer identification number. (You must also certify whether you are subject
to withholding for failing to report income to the IRS.) Investments received
without a certified taxpayer identification number will be returned.
The minimum investment is $2,500 ($1,000 for IRA accounts). These minimums will
be waived if you establish an automatic investment plan to your account that is
the equivalent of at least $50 per month. See "Automatic Investment Plan," page
17.
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.
16 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 or
SARSEP-IRA.
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
Investors Centers, located at:
4500 Main Street
Kansas City, Missouri 64111
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," this page) or by any of the
methods below. The minimum investment requirement for subsequent investments:
$250 for checks submitted without the remittance 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 remittance
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 16 and indicate your account number.
In Person
You may make subsequent investments in person at one of our Investors Centers.
The locations of our three Investors 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 funds' net asset values are calculated, which is one hour prior to the close
of the New York Stock Exchange for the 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 22.
For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an Automatic
Exchange Plan between any two funds in the amount of at least $50 per month. See
our
Prospectus How to Invest with American Century Investments 17
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 19) 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 19.
By Telephone
If you have authorized us to accept telephone instructions, you may redeem your
shares by calling an Investor Services Representative.
By Check-A-Month
If you have at least a $10,000 balance in your account, you may redeem shares by
Check-A-Month. A Check-A-Month plan automatically redeems enough shares each
month to provide you with a check in an amount you choose (minimum $50). To set
up a Check-A-Month plan, please call to request our Check-A-Month brochure.
Other Automatic Redemptions
If you have at least a $10,000 balance in your account, you may elect to make
redemptions automatically by authorizing us to send funds 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
18 How to Invest with American Century Investments American Century Investments
be sent advising you to either bring the value of the shares held in the account
up to the minimum or to establish an automatic investment that is the equivalent
of at least $50 per month. If action is not taken within 90 days of the letter's
date, the shares held in the account will be redeemed and 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 shareholder services include:
Automated Information Line
We offer an Automated Information Line, 24 hours a day, seven days a week, at
1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.
Online Account Access
You may contact us 24 hours a day, seven days a week, at www.americancentury.com
to access your 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 a
subsequent investments from your bank account or exchange shares from one fund
to another.
Open Order Service
Through our open order service, you may designate a price at which to buy shares
of a variable-priced fund by exchange from one of our money market funds, or a
price at which to sell shares of a variable-priced fund by exchange to one of
our money market funds. The designated purchase price must be equal to or lower,
or the designated sale price equal to or higher, than the variable-priced fund's
net asset value at the time the order is placed. If the designated price is met
within 90 calendar days, we will execute your exchange order automatically at
that price (or better). Open orders not executed within 90 days will be
canceled.
If the fund you have selected deducts a distribution from its share price, your
order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.
Because of their time-sensitive nature, open order transactions are accepted
only by telephone or in person. These transactions are subject to exchange
limita-
Prospectus How to Invest with American Century Investments 19
tions described in each fund's prospectus, except that orders and cancellations
received before 2 p.m. Central time are effective the same day, and orders or
cancellations received after 2 p.m. Central time are effective the next business
day.
Tax-Qualified Retirement Plans
Each fund is available for your tax-deferred retirement plan. Call or write us
and request the appropriate forms for:
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, other than open orders,
will be refused. Once you have mailed or otherwise transmitted your
transaction instructions to us, they may not be modified or canceled.
(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require evidence
satisfactory to us of the authority of the individual making the request.
(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include requesting
personal identification from callers, recording telephone calls, and
providing written confirmations of telephone transactions. These procedures
are designed to protect shareholders from unauthorized or fraudulent
instructions. If we do not employ reasonable procedures to confirm the
genuineness of instructions, then we may be liable for losses due to
unauthorized or fraudulent instructions. The company, its transfer agent
and investment advisor will not be responsible for any loss due to
instructions they reasonably believe are genuine.
(7) All signatures should be exactly as the name appears in the registration.
If the owner's name appears in the registration as Mary Elizabeth Jones,
she should sign that way and not as Mary E. Jones.
(8) Unusual stock market conditions have in the past resulted in an increase in
the number of shareholder telephone calls. If you experience difficulty in
reaching us during such periods, you may send your transaction instructions
by mail, express mail or courier service, or you may visit one of our
Investors 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 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.
20 How to Invest with American Century Investments American Century Investments
REPORTS TO SHAREHOLDERS
At the end of each calendar quarter, we will send you a consolidated statement
that summarizes all of your American Century holdings, as well as an individual
statement for each fund you own that reflects all year-to-date activity in your
account. You may request a statement of your account activity at any time.
With the exception of most automatic transactions, each time you invest, redeem,
transfer or exchange shares, we will send you a confirmation of the
transactions. 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 31st 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 21
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 the 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 the 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
record-keeper 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
The valuation of assets for determining net asset value may be summarized as
follows:
Portfolio securities of the fund, except as otherwise noted, listed or traded on
a domestic securities exchange are valued at the last sale price on that
exchange. Portfolio securities primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities on the
exchange where primarily traded. If no sale is reported, or if local convention
or regulation so provides, the mean of the latest bid and asked prices is used.
Depending on local convention or regulation, securities traded over-the-counter
are priced at the mean of the latest bid and asked prices, or at the last sale
price. When market quotations are not readily available, securities and other
assets are valued at fair value as determined in accordance with procedures
adopted by the Board of Trustees.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the most recent mean
of the bid and asked prices provided by investment dealers in accordance with
procedures established by the Board of Trustees.
WHERE TO FIND INFORMATION ABOUT SHARE PRICE
The net asset value of the fund is published in leading newspapers daily. The
net asset value of, as well as yield information on the fund and other funds in
the American Century family of funds, may be obtained by calling us or by
accessing our Web site at www.americancentury.com.
22 Additional Information You Should Know American Century Investments
DISTRIBUTIONS
Distributions from net investment income are declared and paid quarterly.
Distributions from net realized securities gains, if any, generally are declared
and paid once a year, but the fund may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue Code,
in all events in a manner consistent with the provisions of the 1940 Act.
You will begin to participate in the distributions the day after your purchase
is effective. See "When Share Price is Determined," page 22. If you redeem
shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.
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 591/2 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.
A distribution on shares of a fund does not increase the value of your shares or
your total return. At any given time, the value of your shares includes the
undistributed net gains, if any, realized by the fund on the sale of portfolio
securities and undistributed dividends and interest received, less fund
expenses.
Because undistributed gains and dividends are included in the value of your
shares prior to distribution, when they are distributed, the value of your
shares will be redusced by the amount of the distribution. If you buy your
shares through a taxable account just before the distribution, you will pay the
full price for your shares and then receive a portion of the purchase price back
as a taxable distribution. See "Taxes," this page.
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 from net long-term
capital gains are taxable as long-term capital gains regardless of the length of
time you have held the shares on which such distributions are paid. However, you
should note that any loss realized upon the sale or redemption of shares held
for six months or less will be treated as a long-term capital loss to the extent
of any distribution of long-term capital gain to you with respect to such
shares.
Distributions are taxable to you regardless of whether they are taken in cash or
reinvested, even if the value of your shares is below your cost. If you purchase
shares shortly before a 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 addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
Prospectus Additional Information You Should Know 23
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains.
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions may also be subject to state and local taxes, even if all or a
substantial part of such 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 the 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 its Regulations, we are required by federal law to withhold and remit to the
IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.
Redemption of shares of the fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize a gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Internal Revenue Code, resulting in a postponement of the recognition of
such loss for federal income tax purposes.
MANAGEMENT
INVESTMENT MANAGEMENT
The fund is a series of the American Century Manager Funds (the "Trust"),
organized as a Massachusetts business trust on July 12, 1994. 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
advisory agreement entered into with the Trust, the manager serves as the
investment advisor to the fund. Its principal place of business is 1665
Charleston Road, Mountain View, California 94043. The manager has been providing
investment advisory services to investment companies and other clients since
1971.
In June 1995, American Century Companies, Inc. ("ACC") acquired Benham
Management International, Inc., the then-parent company of the manager. In the
acquisition, the manager became a wholly owned subsidiary of ACC.
The manager supervises and manages the investment portfolio of the fund and
directs the purchase and sale of its investment securities. It utilizes teams of
portfolio managers, assistant portfolio managers and analysts acting together to
manage the assets of the fund. The teams meet regularly to review portfolio
holdings and to discuss purchase and sale activity. The teams adjust holdings in
the funds' portfolios as they deem appropriate in pursuit of the funds'
investment objective. Individual portfolio manager members of the team may also
adjust portfolio holdings of a fund or of sectors of a fund as necessary between
team meetings.
The portfolio manager members of the teams managing the fund described in this
Prospectus and their work experience for the last five years are as follows:
Jeffrey Tyler, Senior Vice President, has been primarily responsible for the
day-to-day management of the fund since December 1994. Mr. Tyler heads the
manager's fixed income portfolio department and joined the manager in 1987. Mr.
Tyler has a bachelor's degree in Business Economics from the University of
24 Additional Information You Should Know American Century Investments
California at Santa Barbara and a Master of Management degree in Finance and
Economics from Northwestern University.
Dong Zhang, Portfolio Manager, has been responsible for the equity investments
of the fund since June 1996. Mr. Zhang joined the manager in 1993 and received
his Ph.D. in Physics from Stanford University.
Brian Howell, Portfolio Manager, has been a member of the portfolio management
team that manages the fund since June 1996. Mr. Howell joined the manager in
1987 as a research analyst and was promoted to his current position in January
1994.
The activities of the manager are subject only to direction of the Trust's Board
of Trustees. For the services provided to the funds, the manager receives an
annual fee which cannot exceed 0.65% of average daily net assets. The manager's
fee drops to a marginal rate of 0.27% of average daily net assets as the Trust's
assets increase.
CODE OF ETHICS
The Trust and the manager have adopted a Code of Ethics, that restricts personal
investing practices by employees of the manager and its affiliates. Among other
provisions, the Code of Ethics requires that employees with access to
information about the purchase or sale of securities in the funds' portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of the fund
shareholders come before the interests of the people who manage those funds.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, 4500 Main Street, Kansas City, Missouri,
64111, (the "transfer agent") 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 fund. For administrative services, the fund pays
the transfer agent a monthly fee equal to its pro rata share of the dollar
amount derived from applying the average daily net assets of all of the funds
managed by the manager. The administrative fee rate ranges from 0.11% to 0.08%
of average daily net assets, dropping as assets managed by the manager increase.
For transfer agent services, the fund pays the transfer agent a monthly fee for
each shareholder account maintained and for each shareholder transaction
executed during that month.
The fund charges no sales commissions, or "loads," of any kind. However,
investors who do not choose to purchase or sell fund shares directly from the
transfer agent may purchase or sell fund shares through registered
broker-dealers and other qualified service providers, who may charge investors
fees for their services. These broker-dealers and service providers generally
provide shareholder, administrative and/or accounting services which would
otherwise be provided by the transfer agent. To accommodate these investors, the
manager and its affiliates have entered into agreements with some broker-dealers
and service providers to provide these services. Fees for such services are
borne normally by the fund at the rates normally paid to the transfer agent,
which would otherwise provide the services. Any distribution expenses associated
with these arrangements are borne by the manager.
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.
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 transfer agent are both wholly owned by ACC. James E. Stowers
Jr., Chairman of the
Prospectus Additional Information You Should Know 25
Board of Directors of ACC, controls ACC by virtue of his ownership of 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 shares
offered by this Prospectus. The fund does not pay any commissions or other fees
to the Distributor or to any other broker-dealers or financial intermediaries in
connection with the distribution of fund shares.
EXPENSES
The fund pays certain operating expenses directly, including, but not limited
to: custodian, audit, and legal fees; fees of the independent trustees; costs of
printing and mailing prospectuses, statements of additional information, proxy
statements, notices, and reports to shareholders; insurance expenses; and costs
of registering the fund's shares for sale under federal and state securities
laws. See the Statement of Additional Information for a more detailed discussion
of independent trustee compensation.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
The Trust is a diversified, open-end management investment company. Its business
and affairs are managed by its officers under the direction of its Board of
Trustees.
The principal office of the Trust 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. Each series is commonly referred to as a fund. Currently, the fund is the
only existing series of the Trust. In the event that additional series of the
Trust are created, the assets belonging to each series of shares will be held
separately by the custodian and in effect each series will be a separate fund.
Each share, irrespective of series, is entitled to one vote for each dollar of
net asset value applicable to such share on all questions, except those matters
which must be voted on separately by the series of shares affected. Matters
affecting only one fund are voted upon only by that fund.
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 1940 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. The Trust will assist in the communication with other
shareholders.
We reserve the right to change any of our policies, practices and procedures
described in this Prospectus, including the Statement of Additional Information,
without shareholder approval except in those instances where shareholder
approval is expressly required.
This Prospectus constitutes an offer to sell securities of 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.
26 Additional Information You Should Know American Century Investments
NOTES
Prospectus Notes 27
NOTES
28 Notes American Century Investments
NOTES
Prospectus Notes 29
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 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
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