N-14/A
Pre-Effective Amendment
As filed with the Securities and Exchange Commission on August 13, 2001
Registration Nos. 333-64140 and 811-4363
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __1__ [X]
Post-Effective Amendment No. _____ [ ]
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AMERICAN CENTURY GOVERNMENT INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
4500 Main Street
P.O. Box 419200
Kansas City, MO 64141-6200
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 816-531-5575
Charles A. Etherington
Vice President and Associate General Counsel
4500 Main Street, P.O. Box 419200, Kansas City, MO 64141-6200
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: August 22, 2001
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is required because an indefinite number of shares have previously been
registered on Form N-1A (Registration Nos. 2-99222 and 811-4363) pursuant to
Rule 24f-2 under the Investment Company Act of 1940. The Registrant is filing as
an exhibit to this Registration Statement an opinion related to the legality of
shares being issued in connection with this Registration Statement. Pursuant to
Rule 429, this Registration Statement relates to the aforesaid Registration
Statement on Form N-1A.
Prospectus and Proxy Statement
August 22, 2001
LIMITED-TERM BOND FUND
IMPORTANT VOTING INFORMATION INSIDE!
[american century logo and text logo (reg. sm)]
TABLE OF CONTENTS
Important Information You Should Consider ................................... 2
Notice of Special Meeting of Shareholders ................................... 5
Combined Prospectus/Proxy Statement ......................................... 6
Comparison of Certain Information Regarding the Funds ....................... 7
Primary Federal Income Tax Consequences ..................................... 8
Risk Factors ................................................................ 8
Transaction and Operating Expense Information ............................... 9
Additional Information About the Proposed Transaction .......................10
Summary of Plan of Reorganization ......................................10
Description of the Securities of Short-Term Government .................11
Reasons Supporting the Reorganization ..................................11
Federal Income Tax Consequences ........................................12
Capitalization .........................................................13
Information About the Funds .................................................13
Fundamental Investment Policies ........................................14
Information Relating to Voting Matters ......................................14
General Information ....................................................14
Voting and Revocation of Proxies .......................................14
Record Date ............................................................14
Quorum .................................................................15
Shareholder Vote Required ..............................................15
Cost of Proxy Solicitation .............................................15
Certain Shareholders ...................................................15
Appraisal Rights .......................................................16
Annual Meetings ........................................................17
Additional Information ......................................................17
Litigation .............................................................17
Other Business .........................................................17
Shareholder Inquiries ..................................................18
Management's Discussion of Fund Performance .................................18
Report Highlights ......................................................18
Our Message to You .....................................................19
Performance and Portfolio Information ..................................20
Management Q&A .........................................................21
American Century Investments
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
August 22, 2001
Dear American Century Limited-Term Bond Fund Shareholder:
I am writing to ask for your support of an important proposal affecting your
fund. The proposal will be voted on at an upcoming Special Meeting of
shareholders to be held on Friday, November 16, 2001. Please take a few minutes
to read the enclosed materials, complete and sign the proxy voting card and mail
it back to us.
As a shareholder of American Century Limited-Term Bond Fund, you are being asked
to approve the combination of your fund with the American Century Short-Term
Government Fund.
The reason for the combination is twofold. First, the reorganization will
combine funds with substantially similar investment objectives and strategies.
Second, management believes it will be more efficient to have the funds'
portfolio management teams focus on larger portfolios of assets than to continue
managing similar, smaller portfolios.
The Board of Directors of your fund has unanimously voted in favor of this
reorganization and believes the combination is in your fund's and your best
interests. We encourage you to vote "FOR" the reorganization. The enclosed
materials give more detailed information about the proposed reorganization and
the reasons why we recommend you vote for it.
Please don't put these materials aside, thinking that you will return to them at
another time. If shareholders don't return their proxies, additional expenses
must be incurred to pay for follow-up mailings and phone calls. PLEASE TAKE A
FEW MINUTES TO REVIEW THE ENCLOSED MATERIALS AND VOTE YOUR SHARES TODAY. If you
have any questions or need any help in voting your shares, please call us at
1-800-331-8331. For business, not-for-profit, and employer-sponsored retirement
accounts, please call 1-800-345-3533, ext. 5004.
To more efficiently handle this proxy solicitation, we have hired Alamo Direct
to act as our proxy solicitor. They might be calling you during the solicitation
process to ask if you have questions or concerns about the voting process and to
assist you with your vote.
Thank you for your time in considering this important proposal. We believe the
reorganization will enable us to better serve your needs. Thank you for
investing with American Century and for your continued support.
Sincerely,
/s/Bill Lyons
William M. Lyons
President
Proxy/Prospectus Statement 1
IMPORTANT INFORMATION YOU SHOULD CONSIDER
The following Q&A is a brief summary of some of the issues that may be important
to you. It may not contain all of the information or topics that you think are
important and, as a result, this Q&A is qualified in its entirety by the more
detailed information contained elsewhere in this document, or incorporated by
reference into this document. Please read all the enclosed proxy materials
before voting. PLEASE REMEMBER TO VOTE YOUR SHARES AS SOON AS POSSIBLE. If
enough shareholders return their proxy cards soon, additional costs for
follow-up mailings and phone calls may be avoided.
WHAT IS THE PURPOSE OF THE UPCOMING MEETING?
Your Board of Directors has recommended combining Limited-Term Bond with
Short-Term Government. This combination requires approval of the Limited-Term
Bond shareholders. The Special Meeting will be held on Friday, November 16,
2001, at 10:00 a.m. (Central time) at American Century Tower I, 4500 Main
Street, Kansas City, Missouri. Shareholders of record as of the close of
business on August 10, 2001, are eligible to vote.
WHY IS THE REORGANIZATION BEING PROPOSED?
The reorganization seeks to improve operational and investment management
efficiencies by combining funds with similar investment objectives and
investment policies, approaches, procedures and portfolio securities. Combining
these similar funds will permit the portfolio management team to focus its
resources on a single, larger fund, rather than divide its time between two
smaller funds.
HOW WILL THE REORGANIZATION BE ACCOMPLISHED?
Shareholders of Limited-Term Bond are being asked to approve the combination of
their fund with Short-Term Government according to the Agreement and Plan of
Reorganization described on page 10. The reorganization will take the form of a
transfer of assets by Limited-Term Bond in exchange for shares of Short-Term
Government. Limited-Term Bond will then make a liquidating distribution to its
shareholders of the Short-Term Government shares received in the exchange.
WHAT WILL SHAREHOLDERS GET IF THE REORGANIZATION IS APPROVED?
As a result of the liquidating distribution, you will receive shares of
Short-Term Government in an amount equal to the value of your Limited-Term Bond
shares on the date the combination takes place (probably December 3, 2001). The
total dollar value of your account after the reorganization will be the same as
the total dollar value of your account before the reorganization. However,
because the net asset value (price per share) of Short-Term Government may be
different from the net asset value of Limited-Term Bond, you may receive a
different number of shares than you have. After the reorganization, you will
own shares of Short-Term Government rather than shares of Limited-Term Bond.
2 American Century Investments
WHY DID THE BOARD OF DIRECTORS APPROVE THE REORGANIZATION?
After reviewing many factors, your Board of Directors unanimously determined
that the reorganization was in the best interests of Limited-Term Bond and its
shareholders. Some of the factors considered include:
* Operational and investment management efficiencies
* Streamlining investment options to eliminate customer confusion
* Combining funds with similar investment objectives, policies, approaches,
procedures and portfolio securities
WILL THE EXCHANGE OF LIMITED-TERM BOND SHARES FOR SHARES OF SHORT-TERM
GOVERNMENT CAUSE SHAREHOLDERS TO REALIZE INCOME OR CAPITAL GAINS FOR TAX
PURPOSES?
No. The exchange of shares in the reorganization will be tax-free. We will
obtain a tax opinion confirming that the reorganization will not be a taxable
event for you for federal income tax purposes. Your tax basis and holding period
for your shares will be unchanged.
HOW DOES THE TOTAL EXPENSE RATIO OF SHORT-TERM GOVERNMENT COMPARE TO THAT OF
LIMITED-TERM BOND?
The total expense ratio of Short-Term Government is lower than the total expense
ratio of Limited-Term Bond. The total expense ratio of Limited-Term Bond
Investor Class is 0.70%, while the total expense ratio of Short-Term Government
Investor Class is 0.59%. The total expense ratio of Limited-Term Bond Advisor
Class is 0.95%, while the total expense ratio of Short-Term Government Advisor
Class is 0.84%.
IS SHORT-TERM GOVERNMENT RISKIER THAN LIMITED-TERM BOND?
No. Short-Term Government invests in short-term securities issued by the U.S.
government, its agencies and instrumentalities, including mortgage-backed
securities and U.S. Treasury securities guaranteed by the full faith and credit
pledge of the U.S. government. These securities are considered some of the
safest securities available. Short-Term Government also may invest up to 20% of
its total assets in high-grade corporate debt securities. Limited-Term Bond
invests in quality debt securities, and may invest up to 15% of its assets in
securities rated in the fifth-highest credit quality category. Overall,
Short-Term Government has a higher credit quality than Limited-Term Bond. This
higher credit quality may lead to lower returns.
IF SHAREHOLDERS SEND THEIR PROXIES IN NOW AS REQUESTED, CAN THEY CHANGE THEIR
VOTE LATER?
Yes! A proxy can be revoked at any time using any of the voting procedures
described on your proxy vote card or by attending the meeting and voting in
person. EVEN IF YOU PLAN TO ATTEND THE MEETING TO VOTE IN PERSON, WE ASK THAT
YOU RETURN THE ENCLOSED PROXY VOTE CARD. DOING SO WILL HELP US ACHIEVE A QUORUM
FOR THE MEETING.
HOW DO SHAREHOLDERS VOTE THEIR SHARES?
We've made it easy for you. You can vote online, by phone, by mail or by fax. To
vote online, access the Web site listed on your proxy card (you will need the
control number that appears on the right-hand side of your proxy card). To vote
by telephone, call the toll-free number listed on your proxy card (you will need
the control number that appears on the right-hand side of your proxy card). To
vote by mail, complete,
Proxy/Prospectus Statement 3
sign and send us the enclosed proxy voting card in the enclosed postage-paid
envelope. To vote by fax, send your fax to the toll-free number listed on your
proxy card.
Your shares will be voted EXACTLY as you tell us. If you simply sign the
enclosed proxy card and return it, we will follow the recommendation of your
Board of Directors and vote it "FOR" the reorganization. You also may vote in
person at the meeting on Friday, November 16, 2001.
WHEN AND HOW WILL THE REORGANIZATION TAKE PLACE?
Subject to receiving shareholder approval, the reorganization is scheduled to
take place on December 3, 2001. After the funds have calculated the value of
their assets and liabilities on November 30, 2001, Limited-Term Bond will
transfer its assets and liabilities to Short-Term Government in exchange for the
appropriate number of Short-Term Government shares. Limited-Term Bond will then
make a liquidating distribution of those Short-Term Government shares pro rata
to its shareholders according to the value of their accounts immediately prior
to the transfer of assets. THE VALUE OF YOUR ACCOUNT WILL NOT CHANGE AS A RESULT
OF THIS REORGANIZATION.
WILL THE REORGANIZATION AFFECT THE MANAGEMENT TEAM OF LIMITED-TERM BOND?
American Century Investment Management, Inc., the investment advisor for
Limited-Term Bond, manages the assets of Short-Term Government. However, because
Limited-Term Bond shareholders will become shareholders of Short-Term Government
after the reorganization, the assets of the fund will be managed by the
Short-Term Government management team. The portfolio managers of Short-Term
Government include:
David Schroeder, Senior Vice President and Senior Portfolio Manager, who
supervises the American Century Government Income Trust team and has been a
member of the Short-Term Government team since 1995. He joined American Century
in 1990. He holds a bachelor of arts from Pomona College.
Michael Shearer, Vice President and Director - Fixed Income Quantitative
Strategies, who has been a member of the Short-Term Government team since
January 2000. He also is responsible for the development and implementation of
all fixed-income quantitative strategies. He joined American Century in February
1998. He holds a bachelor's degree, a master's degree and a doctorate in applied
mathematics from UCLA.
HOW WILL DISTRIBUTION, PURCHASE AND REDEMPTION PROCEDURES AND EXCHANGE RIGHTS
CHANGE AS A RESULT OF THE REORGANIZATION?
They won't. Short-Term Government has the same distribution, purchase and
exchange policies and procedures as Limited-Term Bond.
WHERE CAN SHAREHOLDERS GET MORE INFORMATION ABOUT THE FUNDS?
A copy of Short-Term Government's Prospectus accompanies this proxy statement.
In addition, the Manager's Discussion and Analysis of Fund Performance portion
of Short-Term Government's most recent Annual Report to Shareholders is included
in this document on page 18. If you would like a copy of Limited-Term Bond's
prospectus or either fund's Statement of Additional Information or most recent
annual or semiannual report, please call us at 1-800-331-8331.
4 American Century Investments
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Investments
P. O. Box 419200
Kansas City, Missouri 64141-6200
1-800-331-8331
TO BE HELD ON FRIDAY, NOVEMBER 16, 2001
To American Century Limited-Term Bond Shareholders:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders of the
American Century Limited-Term Bond Fund, a portfolio of American Century Mutual
Funds, Inc. ("Limited-Term Bond") will be held at American Century Tower I, 4500
Main Street, Kansas City, Missouri on Friday, November 16, 2001, at 10:00 a.m.
(Central time) for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement and Plan of
Reorganization and the transactions contemplated thereby, including:
(a) the transfer of substantially all of the assets and liabilities of
Limited-Term Bond to the American Century Short-Term Government Fund, an
investment portfolio of American Century Government Income Trust
("Short-Term Government") in exchange for shares in Short-Term Government;
and
(b) the distribution of Short-Term Government shares to the shareholders of
Limited-Term Bond according to their respective interests.
ITEM 2. To transact such other business as may properly come before the Special
Meeting or any adjournment(s) thereof.
The proposed reorganization, the Agreement and Plan of Reorganization and
related matters are described in the attached Combined Prospectus/Proxy
Statement.
Shareholders of record as of the close of business on August 10, 2001, are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
Please execute and return promptly in the enclosed envelope the accompanying
proxy card, which is being solicited by the Board of Directors of American
Century Mutual Funds, Inc. Please return your proxy card even if you are
planning to attend the meeting. This is important to ensure a quorum at the
meeting. Proxies may be revoked at any time before they are exercised using any
of the voting procedures described on your proxy vote card or by attending the
meeting and voting in person.
/s/David Tucker
David C. Tucker
Senior Vice President
August 22, 2001
Proxy/Prospectus Statement 5
COMBINED PROSPECTUS/PROXY STATEMENT
AMERICAN CENTURY MUTUAL FUNDS, INC. and
AMERICAN CENTURY GOVERNMENT INCOME TRUST
August 22, 2001
This Combined Prospectus/Proxy Statement is furnished in connection with the
solicitation of votes by the Board of Directors of American Century Mutual
Funds, Inc. on behalf of its Limited-Term Bond Fund ("Limited-Term Bond"), in
connection with a Special Meeting of Shareholders to be held on Friday, November
16, 2001.
At the Special Meeting, shareholders of Limited-Term Bond are being asked to
approve the combination of their fund with the American Century Short-Term
Government Fund, a series of American Century Government Income Trust
("Short-Term Government").
The funds are similarly managed, diversified, open-end mutual funds that invest
in a similar mix of fixed-income securities. The purpose of the reorganization
is to streamline American Century's fixed-income lineup and achieve management
and operational efficiencies. Combining these similar funds as described further
in this Combined Prospectus/Proxy Statement will help achieve this objective.
Each fund has shares registered with the Securities and Exchange Commission.
This Combined Prospectus/Proxy Statement constitutes the proxy statement of your
fund for the Special Meeting of Shareholders and a prospectus for the Short-Term
Government shares that are to be issued to you in connection with the
reorganization. It is intended to give you the information you need to consider
and vote on the proposed reorganization. You should retain this document for
future reference. A Statement of Additional Information about Short-Term
Government, dated August 1, 2001, has been filed with the Commission and is
incorporated into this document by reference. A copy of the Statement of
Additional Information may be obtained without charge upon request by calling us
at 1-800-331-8331, or writing to us at American Century Investments, 4500 Main
Street, P. O. Box 419200, Kansas City, Missouri 64141-6200.
The principal executive offices of Limited-Term Bond and Short-Term Government
are located at American Century Investments, 4500 Main Street, P. O. Box 419200,
Kansas City, Missouri 64141-6200. The funds' telephone number is 1-800-345-2021.
The information contained in this Combined Prospectus/Proxy Statement is
required by rules of the Securities and Exchange Commission, and some of it is
highly technical. If you have any questions about these materials or how to vote
your shares, please call us at 1-800-331-8331. For business, not-for-profit, and
employer-sponsored retirement accounts, please call 1-800-345-3533, ext. 5004.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
Combined Prospectus/Proxy Statement is accurate or complete. Any representation
to the contrary is a criminal offense.
6 American Century Investments
No person has been authorized to give any information or to make any
representations other than those contained in this Combined Prospectus/Proxy
Statement and in the materials expressly incorporated herein by reference. If
given or made, such other information or representations must not be relied upon
as having been authorized by Limited-Term Bond, Short-Term Government or anyone
affiliated with American Century Investments.
PLEASE NOTE THAT THE SPECIAL MEETING OF SHAREHOLDERS WILL BE A BUSINESS MEETING
ONLY AND IS NOT A SHAREHOLDER SEMINAR.
COMPARISON OF CERTAIN INFORMATION REGARDING THE FUNDS
The following chart is provided to show a comparison of certain key attributes
of Limited-Term Bond with Short-Term Government. For additional information
about the funds, see the section titled "Information About the Funds" starting
on page 13.
LIMITED-TERM BOND SHORT-TERM GOVERNMENT
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Type of Fund Short Investment Grade Debt Fund Short U.S. Government Fund
Investment Objective The fund seeks income from investments The fund seeks high current income
in corporate bonds and other debt while maintaining safety of principal.
obligations.
Investment Policies Buys quality, short-term corporate bonds Buys short-term securities issued by
and other debt securities. Under normal the U.S. government, its agencies and
market conditions, invests most of its instrumentalities, including
assets in investment-grade securities. mortgage-backed securities. Also
The remainder is invested in short-term buys short-term U.S. Treasury
money market instruments. securities guaranteed by the direct
full faith and credit pledge of the U.S.
government. May also invest up to
20% of net assets in high-grade
corporate securities.
Weighted Average Five years or less Three years or less
Portfolio Maturity
Credit Quality AAA - BB AAA - A
Total Expense Ratio Investor Class 0.70% Investor Class 0.59%
Advisor Class 0.95% Advisor Class 0.84%
Distribution Policy Same as Short-Term Government Distributions from net income
are paid monthly. Capital gains
distributions are paid once a year,
usually in December.
Purchases and Same as Short-Term Government See pages 20-23 of the Investor Class
Exchanges Prospectus and pages 19-21 of the
Advisor Class Prospectus.
Redemption Policies Same as Short-Term Government See pages 20-23 of the Investor Class
Prospectus and pages 19-21 of the
Advisor Class Prospectus.
Investment Advisor Same as Short-Term Government American Century Investment
Management, Inc. ("ACIM")
Proxy/Prospectus Statement 7
LIMITED-TERM BOND SHORT-TERM GOVERNMENT
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Transfer Agent Same as Short-Term Government American Century Services
Corporation ("ACSC")
Distributor Same as Short-Term Government American Century Investment
Services, Inc. ("ACIS")
Custodians Same as Short-Term Government J.P. Morgan Chase and Co. and
Commerce Bank, N.A.
Independent Auditors Deloitte & Touche LLP PricewaterhouseCoopers LLP
PRIMARY FEDERAL INCOME TAX CONSEQUENCES
The exchange of Limited-Term Bond shares for Short-Term Government shares in the
reorganization will be tax-free to shareholders. We will obtain a tax opinion
confirming that the reorganization will not be a taxable event for shareholders
of either fund for federal income tax purposes. A shareholder's aggregate tax
basis and holding period for Short-Term Government shares received in the
reorganization will be identical to the aggregate tax basis and holding period
for the Limited-Term Bond shares exchanged in the transaction. The tax
consequences of the reorganization are described in more detail on page 12 of
this Combined Prospectus/Proxy Statement.
RISK FACTORS
Interest rate changes affect the share value of both Limited-Term Bond and
Short-Term Government. Generally, when interest rates rise, the funds' share
values will decline. The opposite is true when interest rates decline. The
degree to which interest rate changes affect a fund's performance varies and is
related to the weighted average maturity of a particular fund. In general, when
interest rates rise, you can expect the share value of a long-term bond fund to
fall more than that of a short-term bond fund. When rates fall, the opposite is
true. Because Short-Term Government maintains a shorter weighted average
maturity than Limited-Term Bond, its share value is not generally as sensitive
to interest rate fluctuation as Limited-Term Bond.
Short-Term Government also invests in mortgage-backed securities. When
homeowners refinance their mortgages to take advantage of declining interest
rates, their existing mortgages are prepaid. The mortgages, which back the
securities purchased by Short-Term Government, may be prepaid in this fashion.
When this happens, the fund will be required to purchase new securities at
current market rates, which will usually be lower. Because of this prepayment
risk, the fund may benefit less from declining interest rates than other
short-term funds.
8 American Century Investments
TRANSACTION AND OPERATING EXPENSE INFORMATION
The tables below compare various shareholder transaction and annual fund
operating expenses of Limited-Term Bond as of its most recent fiscal year end
(October 31, 2000) and Short-Term Government as of its most recent fiscal year
end (March 31, 2001). After the reorganization, the expense levels of the
surviving fund will be the same as those shown for Short-Term Government (Pro
Forma).
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Distribution Total Annual
Management and Service Other Fund Operating
Fee (12b-1) Fees(1) Expenses(2) Expenses
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Limited-Term Bond (Investor) 0.70% None 0.00% 0.70%
- ---------------------------------------------------------------------------------------------
Short-Term Government (Investor) 0.59%(3) None 0.00% 0.59%
- ---------------------------------------------------------------------------------------------
Short-Term Government
(Investor Pro Forma) 0.59%(3) None 0.00% 0.59%
- ---------------------------------------------------------------------------------------------
Limited-Term Bond (Advisor) 0.45% 0.50% 0.00% 0.95%
- ---------------------------------------------------------------------------------------------
Short-Term Government (Advisor) 0.34%(3) 0.50% 0.00% 0.84%
- ---------------------------------------------------------------------------------------------
Short-Term Government
(Advisor Pro Forma) 0.34%(3) 0.50% 0.00% 0.84%
(1) The 12b-1 fee is designed to permit investors to purchase Advisor Class
shares through broker-dealers, banks, insurance companies and other
financial intermediaries. A portion of the fee is used to compensate them
for ongoing recordkeeping and administrative services that would otherwise
be performed by an affiliate of the advisor, and a portion is used to
compensate them for distribution and other shareholder services.
(2) Other expenses, which include the fees and expenses of the funds'
independent directors and their legal counsel, as well as interest, were
less than 0.005% for the most recent fiscal year.
(3) Based on expenses incurred by all classes of the fund during the fund's
most recent fiscal year. The fund has a stepped-fee schedule. As a result,
the fund's management fee rate generally decreases as fund assets increase.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------------------
Limited-Term Bond (Investor) $71 $224 $389 $868
- -------------------------------------------------------------------------------------
Short-Term Government (Investor) $60 $189 $329 $736
- -------------------------------------------------------------------------------------
Short-Term Government (Investor Pro Forma) $60 $189 $329 $736
- -------------------------------------------------------------------------------------
Limited-Term Bond (Advisor) $97 $302 $524 $1,162
- -------------------------------------------------------------------------------------
Short-Term Government (Advisor) $86 $268 $465 $1,034
- -------------------------------------------------------------------------------------
Short-Term Government (Advisor Pro Forma) $86 $268 $465 $1,034
[left margin]
[graphic of pointing finger]
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
Proxy/Prospectus Statement 9
ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION
SUMMARY OF PLAN OF REORGANIZATION
Subject to receipt of shareholder approval, the reorganization will be carried
out according to the terms of the Agreement and Plan of Reorganization between
the funds. The following is a brief summary of some of the important terms of
that Agreement.
EFFECTIVE TIME OF THE REORGANIZATION. The Agreement requires that the exchange
of assets for stock take place after the close of business on one business day
but before (or as of) the opening of business on the next business day (the
"Effective Time"). It is currently anticipated that the reorganization will take
place after the close of business on November 30, 2001, but before (or as of) the
opening of business on December 3, 2001. However, the Agreement gives the
officers of the funds the flexibility to choose another date.
EXCHANGE OF ASSETS. After the close of business on November 30, 2001, the funds
will determine the value of their assets and liabilities in the same manner as
described on page 24 of the Short-Term Government Fund Investor Class Prospectus
and on page 22 of the Short-Term Government Fund Advisor Class Prospectus. The
assets and liabilities of the Limited-Term Bond Fund will then be transferred to
the Short-Term Government Fund in exchange for that number of full and
fractional shares (rounded to the third decimal place) that have the same
aggregate net asset value as the value of the net assets received in the
exchange.
LIQUIDATING DISTRIBUTIONS AND TERMINATION OF LIMITED-TERM BOND. Immediately
after the exchange of its assets for the Short-Term Government shares,
Limited-Term Bond will distribute pro rata all of the shares received in the
exchange to its shareholders of record at the Effective Time. All of the
outstanding shares of Limited-Term Bond will be redeemed and canceled and its
stock books closed. As a result, Limited-Term Bond shareholders will become
shareholders of Short-Term Government.
SHAREHOLDER APPROVAL. Consummation of the reorganization requires approval of
Limited-Term Bond shareholders.
REPRESENTATIONS AND WARRANTIES. The Agreement contains representations and
warranties made by Limited-Term Bond to Short-Term Government concerning
Limited-Term Bond's formation and existence under applicable state law, its
power to consummate the reorganization, its qualification as a "regulated
investment company" under applicable tax law, the registration of its shares
under federal law and other matters that are customary in a reorganization of
this type. The representations and warranties terminate at the Effective Time.
CONDITIONS TO CLOSING. The Agreement contains conditions to closing the proposed
reorganization that benefit each fund. The conditions include (i) that
Limited-Term Bond shareholders approve the proposed reorganization, (ii) that
all representations of the funds be true in all material respects, (iii) receipt
of the tax opinion described on page 12 under the caption "Federal Income Tax
Consequences," and (iv) such other matters as are customary in a reorganization
of this type.
10 American Century Investments
TERMINATION OF AGREEMENT. The Agreement may be terminated by a fund as a result
of the failure by the other fund to meet one of its conditions to closing, or by
mutual consent.
GOVERNING LAW. The Agreement states that it is to be interpreted under
Massachusetts law, the state of organization of Short-Term Government.
DESCRIPTION OF THE SECURITIES OF SHORT-TERM GOVERNMENT
Short-Term Government is a series of shares offered by American Century
Government Income Trust. Each series is commonly referred to as a mutual fund.
The assets belonging to each series of shares are held separately by the
custodian.
American Century Government Income Trust is a Massachusetts business trust,
which means its activities are overseen by a Board of Trustees rather than a
Board of Directors. The function of a Board of Trustees is the same as the
function of a Board of Directors.
Like Limited-Term Bond, Short-Term Government currently offers two classes of
shares, the Investor Class and the Advisor Class, although it may offer
additional classes in the future. The Investor Class of shares of Short-Term
Government has no up-front charges, commissions or 12b-1 fees. The Advisor Class
of shares has no up-front fees, charges or commissions, but carries a 0.50%
12b-1 fee to pay for shareholder services and distribution costs.
Your Board of Directors believes there are no material differences between the
rights of a Limited-Term Bond shareholder and the rights of a Short-Term
Government shareholder. Each share, irrespective of series or class of a series,
is entitled to one vote for each dollar of net asset value applicable to such
share on all questions, except for those matters that must be voted on
separately by the series or class of a series affected. Matters affecting only
one class of a series are voted upon only by that series or class.
Shares have non-cumulative voting rights, which means that the holders of more
than 50% of the votes cast in an election of trustees can elect all of the
trustees if they choose to do so, and in such event the holders of the remaining
votes will not be able to elect any person or persons to the Board of Trustees.
Unless required by the Investment Company Act of 1940, it is not necessary for
Short-Term Government 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 each fund's bylaws, the holders of
at least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders.
REASONS SUPPORTING THE REORGANIZATION
The Reorganization is part of a broader restructuring program proposed by
American Century Investment Management, Inc. ("ACIM") to respond to changing
industry conditions and investor needs and desires in the fixed-income area. The
mutual fund industry has grown dramatically over the last ten years. During this
period of rapid growth, investment managers have expanded the range of
fixed-income fund offerings that they make available to investors in an effort
to meet and anticipate the growing and changing needs and desires of an
increasingly large and dynamic group of investors. The family of funds advised
by ACIM has followed
Proxy/Prospectus Statement 11
this pattern. With this expansion, however, has come increased complexity and
competition among fixed-income mutual funds, as well as increased confusion
among investors.
As a result, ACIM has sought ways to restructure and streamline the management
and operations of the funds it advises. ACIM believes and has advised the Board
of Directors that the consolidation of certain ACIM-advised funds would benefit
fund shareholders. ACIM has, therefore, proposed the consolidation of a number
of ACIM-advised funds that ACIM believes have similar or compatible investment
objectives and policies. In many cases, the proposed consolidations are designed
to eliminate the substantial overlap in current offerings by the American
Century family of funds. Consolidation plans are proposed for other American
Century funds that have not gathered enough assets to operate efficiently and,
therefore, face the risk of closure and resulting tax liability for many
shareholders. ACIM believes that these consolidations may help to enhance
investment performance and increase efficiency of operations.
ACIM recommended to the Board of Directors that, among other reasons, because
the current market demand for government bond funds is generally weak and
Limited-Term Bond and Short-Term Government are managed very similarly, the
funds should be combined to establish a larger fund that has substantially
similar investment policies. As part of its analysis, the Board of Directors
recognized that a large fund may be able to realize certain potential cost
savings that could benefit the shareholders of the funds if the Reorganization
is completed. The Reorganization was also recommended to combine similar funds
in an effort to eliminate duplication of expenses and internal competition. The
Board of Directors reviewed the expense ratios of both funds and the projected
expenses of the combined fund; the comparative investment performance of the
funds; the compatibility of the investment objectives, policies, restrictions
and investments of the funds; the benefits that may result to ACIM and its
affiliates if the Reorganization is consummated; and the tax consequences of the
Reorganization. During the course of its deliberations, the Board of Directors
noted that the expenses of the Reorganization will be borne by ACIM.
The Board of Directors concluded that the Reorganization is in the best
interests of the shareholders of Limited-Term Bond, and that no dilution of
value would result to the shareholders of the funds from the Reorganization. The
Board of Directors, including those who are not "interested persons" (as defined
in the 1940 Act), approved the Plan and recommended that shareholders of
Limited-Term Bond vote to approve the Reorganization.
FOR THE REASONS DISCUSSED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE PLAN.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the reorganization is subject to the condition that we receive a
tax opinion to the effect that for federal income tax purposes (i) no gain or
loss will be recognized by you, Limited-Term Bond or Short-Term Government, (ii)
your basis in the Short-Term Government shares that you receive will be the same
in the aggregate as your basis in the Limited-Term Bond shares held by you
immediately prior to the reorganization, and (iii) your holding period for the
Short-Term Government shares will include your holding period for your
Limited-Term Bond shares.
We have not sought a tax ruling from the Internal Revenue Service, but are
relying upon the tax opinion referred to above. That opinion is not binding on
the IRS and does not preclude it from taking a contrary position. The opinion
does not
12 American Century Investments
cover state or local taxes and you should consult your own advisers concerning
potential tax consequences.
The Agreement and Plan of Reorganization provides that Limited-Term Bond will
declare and pay dividends prior to the reorganization which, together with all
previous dividends, are intended to have the effect of distributing to the
Limited-Term Bond shareholders all undistributed ordinary income and net
realized capital gains earned up to and including the Effective Time of the
reorganization. The distributions are necessary to ensure that the
reorganization will not create adverse tax consequences to Limited-Term Bond.
The distributions generally will be taxable to shareholders to the extent
ordinary income and capital gains distributions are taxable to such
shareholders.
CAPITALIZATION
Short-Term Limited-Term Short-Term Government
As of March 31, 2001 Government Bond Pro Forma Combined
- ---------------------------------------------------------------------------------------
Investor Class
Net Assets $797,718,169 $11,728,557 $809,446,726
Shares Outstanding 84,243,890 1,182,280 85,482,350
Net Asset Value Per Share $9.47 $9.92 $9.47
- ---------------------------------------------------------------------------------------
Advisor Class
Net Assets $4,334,027 $2,021,731 $6,355,758
Shares Outstanding 457,700 203,799 671,183
Net Asset Value Per Share $9.47 $9.92 $9.47
INFORMATION ABOUT THE FUNDS
Complete information about Short-Term Government and Limited-Term Bond is
contained in their respective Prospectuses. The Short-Term Government Prospectus
dated August 1, 2001, is included with this Prospectus/Proxy Statement, and the
Limited-Term Bond Prospectus dated March 1, 2001, is available to you at no
charge by calling us at 1-800-331-8331. The content of both Prospectuses is
incorporated into this document by reference. Below is a list of types of
information about Short-Term Government and Limited-Term Bond and the pages in
their Prospectuses where the information can be found.
INFORMATION ABOUT THE
FOLLOWING ITEMS CAN BE FOUND ON THE FOLLOWING PAGES
- ------------------------------------------------------------------------------------------
Short-Term Short-Term Limited-Term Limited-Term
Government Government Bond Bond
Investor Advisor Investor Advisor
Class Class Class Class
- ------------------------------------------------------------------------------------------
An Overview of the Funds 2 2 2 2
Fees and Expenses 9 8 4 4
Objectives, Strategies and Risks 13 12 5 5
Management 17-19 16-18 8-9 8-9
Investing with American Century 20-23 19-21 10-13 10-11
Share Price and Distributions 24 22 14 12
Taxes 26-27 23-24 15-16 13-14
Multiple Class Information 28 25 17 15
Financial Highlights 29, 36 26, 32 18-19 16-17
Proxy/Prospectus Statement 13
FUNDAMENTAL INVESTMENT POLICIES
Fundamental investment policies contained in the Short-Term Government Statement
of Additional Information dated August 1, 2001, and the investment objectives of
the fund may not be changed without shareholder approval. The Board of Trustees
may change any other policies and investment strategies.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Combined Prospectus/Proxy Statement is being furnished in connection with
the solicitation of proxies by the Board of Directors of Limited-Term Bond.
Proxies may be solicited by officers and employees of the investment advisor of
the funds, their affiliates and employees. It is anticipated that the
solicitation of proxies will be primarily by mail, telephone, facsimile or other
electronic means or personal interview. Authorizations to execute proxies may be
obtained by telephonic or electronically transmitted instructions in accordance
with procedures designed to authenticate the shareholder's identity and to
confirm that the shareholder has received the Combined Prospectus/Proxy
Statement and proxy card. If you have any questions regarding voting your shares
or the proxy, please call us at 1-800-331-8331. For business, not-for-profit,
and employer-sponsored retirement accounts, please call 1-800-345-3533, ext.
5004.
VOTING AND REVOCATION OF PROXIES
The fastest and most convenient way to vote your shares is to complete, sign and
mail the enclosed proxy voting card to us in the enclosed envelope. If you have
access to the Internet, you can vote online, by accessing the website listed on
the proxy card (you will need the control number that appears on the right-hand
side of your proxy card). You also may vote by telephone by calling the
toll-free number listed on your proxy card. In addition, you may vote by faxing
both sides of the completed proxy card to the toll-free number listed on the
proxy card. Your prompt response will help us obtain a quorum for the meeting
and avoid the cost of additional proxy solicitation efforts. If you return your
proxy to us, we will vote it EXACTLY as you tell us. If you simply sign the card
and return it, we will follow the recommendation of the Board of Directors and
vote "FOR" the reorganization.
Any shareholder giving a proxy may revoke it at any time before it is exercised
using any of the voting procedures described on the proxy vote card or by
attending the meeting and voting in person.
RECORD DATE
Only Limited-Term Bond shareholders of record at the close of business on August
10, 2001, will be entitled to vote at the meeting. The number of outstanding
votes entitled to vote at the meeting or any adjournment of the meeting as of
the close of business on July 13, 2001 is:
Limited-Term Bond 12,833,279
14 American Century Investments
Because the record date is August 10, 2001, the total number of votes at the
meeting may be different.
QUORUM
A quorum is the number of shareholders legally required to be at a meeting in
order to conduct business. The quorum for the Special Shareholders Meeting is
50% of the outstanding shares of Limited-Term Bond entitled to vote at the
meeting. Shares may be represented in person or by proxy. Proxies properly
executed and marked with a negative vote or an abstention will be considered to
be present at the meeting for purposes of determining the existence of a quorum
for the transaction of business. If a quorum is not present at the meeting, or
if a quorum is present at the meeting but sufficient votes are not received to
approve the Agreement and Plan of Reorganization, the persons named as proxies
may propose one or more adjournments of the meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those shares affected by the adjournment that are represented
at the meeting in person or by proxy. If a quorum is not present, the persons
named as proxies will vote those proxies for which they are required to vote FOR
the Agreement and Plan of Reorganization in favor of such adjournments, and will
vote those proxies for which they are required to vote AGAINST such proposals
against any such adjournments.
SHAREHOLDER VOTE REQUIRED
The Agreement and Plan of Reorganization must be approved by the holders of a
majority of the outstanding votes of Limited-Term Bond present at the meeting in
person or by proxy in accordance with the provisions of its Articles of
Incorporation and the requirements of the Investment Company Act of 1940. The
term "majority of the outstanding shares" means more than 50% of its outstanding
shares present at the meeting in person or by proxy.
In tallying shareholder votes, abstentions and broker non-votes (i.e., proxies
sent in by brokers and other nominees that cannot be voted on a proposal because
instructions have not been received from the beneficial owners) will be counted
for purposes of determining whether or not a quorum is present for purposes of
convening the meeting. Abstentions and broker non-votes will, however, be
considered to be a vote against the Agreement and Plan of Reorganization.
Approval of the reorganization by shareholders of Short-Term Government is not
being solicited because their approval is not legally required.
COST OF PROXY SOLICITATION
The cost of the proxy solicitation and shareholder meeting will be borne by
American Century Investment Management, Inc. and NOT by the shareholders of the
funds.
CERTAIN SHAREHOLDERS
The following table lists, as of July 13, 2001, the names, addresses and
percentage of ownership of each person who owned of record or is known by either
fund to own beneficially 5% or more of any class of Limited-Term Bond or
Short-Term
Proxy/Prospectus Statement 15
Government. The percentage of shares to be owned after consummation
of the reorganization is based upon their holdings and the outstanding shares of
both funds as of July 13, 2001. Beneficial ownership information is not required
to be disclosed to the funds, so to the extent that information is provided
below, it is done so using the best information that the funds have been
provided.
Number of Percent of Percent Owned After
Shareholder Name and Address Shares Owned Ownership Reorganization
- ---------------------------------------------------------------------------------------
Limited-Term Bond
Investor
Charles Schwab & Co. 148,948 14% 0%
San Francisco, California
Advisor
UMBSC & Co. 55,851 25% 7%
FBO First American Bank Co.
Kansas City, Missouri
Charles Schwab & Co. 52,710 23% 6%
San Francisco, California
Columbus Circle Trust Company 46,269 21% 5%
Custodian for Garney Holding Co.
Employee Stock Ownership
Plan and Trust
Stamford, Connecticut
Columbus Circle Trust Company 11,731 5% 1%
C/F Madsen Kneppers and Assoc. Inc.
401(k) Profit Sharing Plan
Stamford, Connecticut
- --------------------------------------------------------------------------------
Short-Term Government
Investor
Stowers Institute for
Medical Research 34,496,450 41% 40%
Kansas City, Missouri
Nationwide Insurance Company QPVA 5,241,684 6% 6%
Columbus, Ohio
Advisor
Nationwide Trust Company 361,255 58% 42%
Columbus, Ohio
Circle Trust Company 190,671 31% 22%
Custodian for Kansas Agencies
& Investments Inc. Profit Sharing Plan
Stamford, Connecticut
Fiserv Securities Inc. 43,486 7% 5%
Philadelphia, Pennsylvania
As of July 13, 2001, the directors and officers of the issuer of Limited-Term
Bond, as a group, owned less than 1% of the outstanding shares of Limited-Term
Bond. As of July 13, 2001, the trustees and officers of the issuer of Short-Term
Government, as a group, owned less than 1% of the outstanding shares of
Short-Term Government.
APPRAISAL RIGHTS
Shareholders of Limited-Term Bond are not entitled to any rights of share
appraisal under its Articles of Incorporation, or under the laws of the State of
Maryland.
16 American Century Investments
Shareholders have, however, the right to redeem their fund shares until the
reorganization. Thereafter, shareholders may redeem the Short-Term Government
shares received in the reorganization at Short-Term Government's net asset value
as determined in accordance with its then-current prospectus.
ANNUAL MEETINGS
Short-Term Government does not intend to hold annual meetings of shareholders.
Shareholders of Short-Term Government have the right to call a special meeting
of shareholders and such meeting will be called when requested in writing by the
shareholders of record of 10% or more of the fund's votes. To the extent
required by law, American Century Government Income Trust will assist in
shareholder communications on such matters.
Limited-Term Bond does not intend to hold an annual meeting of shareholders this
year for the election of directors or the ratification of the appointment of
auditors.
ADDITIONAL INFORMATION
Information about Limited-Term Bond is incorporated into this document by
reference from its Prospectus dated March 1, 2001, and from its Statement of
Additional Information dated May 1, 2001, and information about Short-Term
Government is incorporated herein by reference from its Prospectus and Statement
of Additional Information, each dated August 1, 2001. A copy of the Short-Term
Government Prospectus accompanies this document, and a copy of the Limited-Term
Bond Prospectus or the funds' Statements of Additional Information or most
recent annual or semiannual reports may be obtained without charge by calling us
at 1-800-331-8331.
Reports and other information filed by Limited-Term Bond and Short-Term
Government may be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of such materials may be obtained by mail from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, Washington, D.C. 20549, at prescribed rates. This
information may also be obtained from the EDGAR database at www.sec.gov, or by
email request at publicinfo@sec.gov.
LITIGATION
Neither Limited-Term Bond nor Short-Term Government is involved in any
litigation or proceeding.
OTHER BUSINESS
The Board of Directors is not aware of any other business to be brought before
the meeting. However, if any other matters come before the meeting, it is the
intention that proxies that do not contain specific restrictions to the contrary
will be voted on such matters in accordance with the judgment of the persons
named in the enclosed form of proxy.
Proxy/Prospectus Statement 17
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to us at the address or telephone number
set forth on the cover page of this Combined Prospectus/Proxy Statement.
SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN EACH ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED ENVELOPE. PLEASE RETURN YOUR PROXY CARD EVEN IF YOU ARE PLANNING TO
ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE - SHORT-TERM GOVERNMENT
The following are excerpts of management's discussion of fund performance from
the Annual Report of Short-Term Government dated March 31, 2001. For a complete
copy of the report, please call us at 1-800-331-8331.
REPORT HIGHLIGHTS
* For the year ended March 31, 2001, Short-Term Government posted its highest
annual return in 10 years, and returned more than the average of the 71
"Short U.S. Government" funds tracked by Lipper Inc.
* Healthy returns from government-agency and mortgage-backed securities boosted
the fund's performance relative to the peer group.
* We added value in the mortgage-backed sector by anticipating the wave of
refinancing activity.
* The management team under-weighted two-year Treasurys; that position dragged
on the fund's otherwise strong performance.
* Management of the fund's duration or sensitivity to interest rates, slightly
weighed on the fund's performance, though a weighting in intermediate-term
agencys helped.
* We think the Federal Reserve is nearing the end of its current rate-cutting
campaign, making stable to higher yields more probable in the near term.
SHORT-TERM GOVERNMENT
Total Returns: AS OF 3/31/01
6 Months 5.12%(1)
1 Year 9.25%
30-Day SEC Yield: 4.69%
Inception Date: 12/15/82
Net Assets: $802.1 million(2)
Ticker Symbol: TWUSX
(1) Not annualized.
(2) Includes Investor and Advisor classes.
18 American Century Investments
OUR MESSAGE TO YOU
The fiscal year ended March 31, 2001, saw the economy and financial markets do a
remarkable about-face. For much of 2000, the U.S. economy was strong, while
interest rates and bond yields rose. But the Federal Reserve cut interest rates
dramatically after stocks and economic growth dropped off sharply late last
year.
This sharp volatility provides an excellent reminder of the value of portfolio
diversification over time. For the last several years, diversification hasn't
seemed to pay. And with nearly minute-by-minute market analysis available to
investors, it's easy to lose sight of the fact that investing is an exercise
measured in years, even decades. But historically, investors who take this
diversified, long-term approach have been well rewarded for their patience
through all types of markets.
And just as we hoped our shareholders follow their investing blueprint even in
trying times, we continue to stick to our disciplines in all our funds here at
American Century. This consistent management approach helped the Short-Term
Government fund provide shareholders better-than-average yields and returns last
year.
Turning to corporate matters, we're proud to announce that for the second
consecutive year, American Century's fund performance reports, like this one,
earned the Communications Seal from DALBAR, Inc., an independent financial
services research firm. The Seal recognizes communications demonstrating a level
of excellence in the industry.
What's more, American Century made Fortune Magazine's list of the "100 Best
Companies to Work for in America" for the second year in a row. This is an
important designation for us, because we think it demonstrates how far we go to
attract and retain the best people to serve our shareholders. We believe that
ultimately our success, and that of our investors, is based on the quality of
our "intellectual capital" - the collective wisdom of our investment and service
professionals.
As always, we appreciate your continued confidence in American Century.
Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Co-Chairman of the Board
Proxy/Prospectus Statement 19
PERFORMANCE & PORTFOLIO INFORMATION
TOTAL RETURNS AS OF MARCH 31, 2001
INVESTOR CLASS (INCEPTION 12/15/82) ADVISOR CLASS (INCEPTION 7/8/98)
SHORT-TERM SALOMON 1- TO 3-YR. SHORT U.S. GOVERNMENT FUNDS(2) SHORT-TERM SALOMON 1- TO 3-YR.
GOVERNMENT TREAS./AGENCY INDEX AVERAGE RETURN FUND'S RANKING GOVERNMENT TREAS./AGENCY INDEX
========================================================================================================================
6 MONTHS(1) 5.12% 5.57% 5.35% -- 4.99% 5.57%
1 YEAR 9.25% 9.77% 9.16% 28 OUT OF 71 8.98% 9.77%
========================================================================================================================
AVERAGE ANNUAL RETURNS
3 YEARS 5.68% 6.50% 5.85% 38 OUT OF 64 -- --
5 YEARS 5.68% 6.47% 5.69% 27 OUT OF 50 -- --
10 YEARS 5.63% 6.47% 5.87% 12 OUT OF 16 -- --
LIFE OF FUND 6.94% 8.04%(3) 7.31%(3) 2 OUT OF 2(3) 5.32% 6.52%(4)
(1) Returns for periods less than one year are not annualized.
(2) According to Lipper Inc., an independent mutual fund ranking service.
(3) Since 12/31/82, the date nearest the class's inception for which data are
available.
(4) Since 6/30/98, the date nearest the class's inception for which data are
available.
[mountain graph - data below]
GROWTH OF $10,000 OVER 10 YEARS
Value on 3/31/01
Salomon 1- to 3-Year
Treasury/Agency Index $18,723
Short-Term Government $17,300
Short-Term Salomon 1- to 3-Year
Government Treasury/Agency Index
DATE VALUE VALUE
3/31/1991 $10,000 $10,000
3/31/1992 $10,891 $10,940
3/31/1993 $11,683 $11,862
3/31/1994 $11,821 $12,178
3/31/1995 $12,263 $12,708
3/31/1996 $13,127 $13,683
3/31/1997 $13,743 $14,421
3/31/1998 $14,658 $15,501
3/31/1999 $15,448 $16,445
3/31/2000 $15,836 $17,057
3/31/2001 $17,300 $18,723
$10,000 investment made 3/31/91
The graph at left shows the growth of a $10,000 investment in the fund over 10
years, while the graph below shows the fund's year-by-year performance. The
Salomon 1- to 3-Year Treasury/Agency Index is provided for comparison in each
graph. Short-Term Government's total returns include operating expenses (such as
transaction costs and management fees) that reduce returns, while the total
returns of the index do not. The graphs are based on Investor Class shares only;
performance for other classes will vary due to differences in fee structures
(see the Total Returns table above). Past performance does not guarantee future
results. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost.
[bar graph - data below]
ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDED MARCH 31)
Short-Term Salomon 1- to 3-Year
Government Treasury/Agency Index
DATE RETURN RETURN
3/31/1992 8.91% 9.37%
3/31/1993 7.27% 8.44%
3/31/1994 1.18% 2.67%
3/31/1995 3.74% 4.35%
3/31/1996 7.05% 7.66%
3/31/1997 4.69% 5.34%
3/31/1998 6.66% 7.47%
3/31/1999 5.39% 6.10%
3/31/2000 2.51% 3.72%
3/31/2001 9.25% 9.77%
20 American Century Investments
MANAGEMENT Q&A
An interview with Dave Schroeder and Michael Shearer, portfolio managers on the
Short-Term Government fund investment team.
HOW DID THE FUND PERFORM DURING THE YEAR ENDED MARCH 31, 2001?
Short-Term Government returned 9.25%, its highest annual return in more than 10
years.(1) The fund also outperformed the majority of the 71 "Short U.S.
Government" funds tracked by Lipper Inc. Investing heavily in mortgage-backed
and government agency securities, as well as our selection within those sectors,
helped boost performance relative to the peer group.
LET'S START WITH MORTGAGE BONDS. WHAT DID YOU DO THERE?
Our mortgage bond trades contributed positively to the fund's performance. We
anticipated the refinancing frenzy that began when interest rates fell and
homeowners rushed to lock in lower rates with new loans. For some mortgage
bonds, refinancing limits returns by causing the bond to "pre-pay" - investors
receive cash ahead of schedule, and must reinvest at lower interest rates.
We reduced the portfolio's exposure to refinancing activity by overweighting
mortgage-backed securities with discount prices - mortgages with interest
coupons below the current market rate. Because of their lower coupon, these
mortgages are less likely to be refinanced. As a result, they tend to perform
better when rates fall.
We added lower-coupon mortgages when they were still relatively inexpensive
compared with higher-coupon mortgages. Our discount bonds increased in value as
other market participants started to buy discount bonds in response to
refinancing activity.
WHAT ABOUT AGENCY DEBENTURES?
We added agency debentures when our analysis indicated they were undervalued.
Agencys were the top-performing bond sector last year, so adding agencys boosted
the fund's return.
WHAT DETRACTED FROM PERFORMANCE?
One factor was that we underweighted two-year Treasurys over the last several
months. That decision limited returns because short-term Treasury yields fell
sharply as investors bet on Fed rate cuts by buying short-term securities. Other
investors saw short-term Treasurys as a safe haven from falling stock prices.
WHY DID YOU UNDERWEIGHT TWO-YEAR TREASURYS?
We thought they were significantly overvalued relative to non-Treasury market
sectors and longer-term Treasurys.
Our investment process seeks consistent excess returns by identifying
fundamental values in the Treasury yield curve, government bond sectors, and
individual bonds. We focus on relatively undervalued sectors in hopes of
anticipating a return to fair value. Non-Treasury sectors offered significantly
more yield, and in our opinion, less downside risk if the rally in short-term
Treasury yields lost steam.
Proxy/Prospectus Statement 21
WHAT ABOUT DURATION?
The fund's duration, or price sensitivity to interest rate changes, naturally
shortened throughout the period as a result of refinancing activity. While we
only make small adjustments to duration, the fund's overall duration was
slightly short relative to the benchmark. Having a shorter duration weighed on
performance somewhat as interest rates fell throughout the period.
However, most of the fund's duration came from intermediate-term agency
debentures. Having a longer duration within that sector helped because agency
yields fell most during the period.
WHAT'S YOUR NEAR-TERM OUTLOOK FOR INTEREST RATES AND BONDS?
The economy's better-than-expected performance in the first quarter of 2001
suggests that sluggish growth is more likely than an all-out recession. As a
result, our belief is that the Fed is 80% done with the current easing cycle. In
addition, bond prices seem to be reflecting expectations of only about another
half percent decline in rates. We interpret those conditions to mean that the
Treasury rally is nearing its end, making stable to higher yields more probable
in the coming months.
IN THAT ENVIRONMENT, HOW DO YOU PLAN TO POSITION THE FUND?
We'll probably maintain a conservative weighting and a neutral to short duration
in Treasurys, while seeking to add value in agencys by occasionally
overweighting the sector when we think yields are favorable. We will likely
adjust Treasury duration as the yield on two-year notes changes - lengthening if
note yields rise to the 4.50 - 4.62% range and shortening if yields drop to
around 4.0%.
We are considering adding a small position in Treasury inflation-indexed
securities (TIIS), which appear to hold a significant yield advantage over
nominal Treasurys. Unlike other bonds, the principal value of TIIS is adjusted
up for inflation. If annual inflation measured by the consumer price index runs
at least 1.8%, the income from TIIS will exceed that of nominal Treasurys. We're
expecting at least 3% inflation this year.
We're looking at TIIS maturing in 2007 - that maturity will soon become the
shortest inflation-indexed Treasury issue, which could boost their prices as
investors move from TIIS maturing in 2002 into the next-shortest issue.
And of course, we'll continue to monitor mortgage refinancing, and the relative
values of different coupon mortgages. The dramatic spike in refinancing
applications could cause investors to overpay for discount mortgages. The demand
for lower-coupon mortgages could create values in higher coupon mortgages. If
that occurs, we may book gains in our discount bonds and trade up for higher
yields.
PLEASE EXPLAIN THE PROSPECTUS SUPPLEMENT INCLUDED WITH THIS REPORT.
The supplement updates the fund's prospectus to reflect one important change.
Effective August 1, 2001, the fund can hold up to 20% of assets in
investment-grade U.S. corporate securities. This change gives us more
flexibility to remain competitive for shareholders - many of the industry's most
recognized government bond funds hold investment-grade corporate bonds. The
change frees us to look for the best relative values, yields, and appreciation
potential throughout the investment-grade market. We'll still use the same
disciplined investment approach, but now we can apply it more broadly.
(1) All fund returns and yields referenced in this interview are for Investor
Class shares.
22 American Century Investments
TYPES OF INVESTMENTS IN THE PORTFOLIO
(as of 3/31/01)
U.S. Treasury Securities 49%
Mortgage-Backed Securities 32%
U.S. Government Agency Securities 18%
Temporary Cash Investments 1%
TYPES OF INVESTMENTS IN THE PORTFOLIO
(as of 9/30/00)
U.S. Treasury Securities 49%
Mortgage-Backed Securities 36%
U.S. Government Agency Securities 14%
Temporary Cash Investments 1%
Proxy/Prospectus Statement 23
Notes
24 American Century Investments
Notes
Proxy/Prospectus Statement 25
SH-BKT-26479 0108
PART B
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Investments
4500 Main Street
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-331-8331
AMERICAN CENTURY GOVERNMENT INCOME TRUST
American Century Investments
4500 Main Street
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-331-8331
Statement of Additional Information
2001 Special Meeting of Shareholders of American Century Mutual Funds, Inc.
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the Combined Proxy Statement/Prospectus dated August 22,
2001 for the Special Meeting of Shareholders to be held on November 16, 2001.
Copies of the Combined Proxy Statement/Prospectus may be obtained at no charge
by calling 1-800-331-8331.
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Combined Proxy
Statement/Prospectus.
Further information about Short-Term Government is contained in and incorporated
herein by reference to its Statement of Additional Information dated August 1,
2001. The audited financial statements and related independent accountant's
report for Short-Term Government contained in the Annual Report dated March 31,
2001 are incorporated herein by reference. No other parts of the Annual Report
are incorporated by reference herein.
Further information about Limited-Term Bond is contained in and incorporated
herein by reference to its Statement of Additional Information dated May 1,
2001. The audited financial statements and related independent accountant's
report for Limited-Term Bond contained in the Annual Report dated October 31,
2000 are incorporated herein by reference. No other parts of the Annual Report
are incorporated by reference herein.
The date of this Statement of Additional Information is August 22, 2001.
TABLE OF CONTENTS
General Information
Pro Forma Financial Statements
GENERAL INFORMATION
The shareholders of Limited-Term Bond are being asked to approve or disapprove
an Agreement and Plan of Reorganization (the "Reorganization Agreement") dated
as of August 8, 2001 between American Century Mutual Funds, Inc. and American
Century Government Income Trust and the transactions contemplated thereby. The
Reorganization Agreement contemplates the transfer of substantially all of the
assets and liabilities of Limited-Term Bond to Short-Term Government in exchange
for full and fractional shares representing interests in Short-Term Government.
The shares issued by Short-Term Government will have an aggregate net asset
value equal to the aggregate net asset value of the shares of Limited-Term Bond
that are outstanding immediately before the effective time of the
Reorganization.
Following the exchange, Limited-Term Bond will make a liquidating distribution
to its shareholders of the Short-Term Government shares received in the
exchange. Each shareholder owning shares of Limited-Term Bond at the Effective
Time of the reorganization will receive shares of Short-Term Government of equal
value, plus the right to receive any unpaid dividends that were declared before
the Effective Time of the Reorganization on the Limited-Term Bond shares
exchanged.
The Special Meeting of Shareholders to consider the Reorganization Agreement and
the related transactions will be held at 10:00 a.m. Central time on November 16,
2001 at American Century Tower I, 4500 Main Street, Kansas City, Missouri. For
further information about the transaction, see the Combined Proxy
Statement/Prospectus.
Pro Forma Combining
American Century Limited-Term Bond Fund and
American Century Short-Term Government Fund
The pro forma financial statements required by Rule 11-01 of Regulation S-X are
not included because the net asset value of Limited-Term Bond does not exceed
ten percent of the net asset value of Short-Term Government, as measured as of
June 20, 2001.
PART C OTHER INFORMATION
Item 15 Indemnification.
As stated in Article VII, Section 3 of the Amended and Restated Agreement and
Declaration of Trust, incorporated herein by reference to Exhibit (a) to the
Registration Statement, "The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase insurance for and to provide by
resolution or in the Bylaws for indemnification out of Trust assets for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit, or
proceeding in which he or she becomes involved by virtue of his or her capacity
or former capacity with the Trust. The provisions, including any exceptions and
limitations concerning indemnification, may be set forth in detail in the Bylaws
or in a resolution adopted by the Board of Trustees."
Registrant hereby incorporates by reference, as though set forth fully herein,
Article VI of the Registrant's Amended and Restated Bylaws, dated March 9, 1998,
appearing as Exhibit 2b to Post-Effective Amendment No. 23 to the Registration
Statement on Form N-1A of American Century Municipal Trust filed March 26, 1998.
The Registrant has purchased an insurance policy insuring its officers and
directors against certain liabilities which such officers and directors may
incur while acting in such capacities and providing reimbursement to the
Registrant for sums which it may be permitted or required to pay to its officers
and directors by way of indemnification against such liabilities, subject in
either case to clauses respecting deductibility and participation.
Item 16 Exhibits (all exhibits not filed herewith are being incorporated
herein by reference).
(1) (a) Amended and Restated Agreement and Declaration of Trust, dated
March 9, 1998 and amended March 1, 1999 (filed electronically as
Exhibit a to Post-Effective Amendment No. 37 to the Registration
Statement of the Registrant on May 7, 1999, File No. 2-99222).
(b) Amendment No. 1 to the Amended and Restated Agreement and
Declaration of Trust (filed electronically as
Exhibit a2 to Post-Effective Amendment No. 42 to the Registration
Statement of the Registrant on April 19, 2001, File No. 2-99222).
(c) Amendment No. 2 to the Amended and Restated Agreement dated August
1, 2001 (filed electronically as Exhibit a3 to Post-Effective
Amendment No. 44 to the Registration Statement of the Registrant, on
July 31, 2001, File No. 2-99222).
(2) Amended and Restated Bylaws, dated March 9, 1998 (filed electronically
as Exhibit 2b to Post-Effective Amendment No. 23 to the Registration
Statement of American Century Municipal Trust on March 26, 1998, File
No. 2-91229).
(3) Not applicable
(4) Agreement and Plan of Reorganization is included herein.
(5) Not applicable
(6) (a) Management Agreement (Investor Class) between American Century
Government Income Trust and American Century Investment Management,
Inc., dated August 1, 1997 (filed electronically as Exhibit 5 to
Post-Effective Amendment No. 33 to the Registration Statement of the
Registrant on July 31, 1997, File No. 2-99222).
(b) Amendment to the Management Agreement (Investor Class) between
American Century Government Income Trust and American Century
Investment Management, Inc., dated March 31, 1998 (filed
electronically as Exhibit 5b to Post-Effective Amendment No. 23 to the
Registration Statement of American Century Municipal Trust on March
26, 1998, File No. 2-91229).
(c) Amendment to the Management Agreement (Investor Class) between
American Century Government Income Trust and American Century
Investment Management, Inc., dated July 1, 1998 (filed electronically
as Exhibit d3 to Post-Effective Amendment No 39 to the Registration
Statement of the Registrant on July 28, 1999, File No. 2-99222).
(d) Amendment No. 1 to the Management Agreement (Investor Class)
between American Century Government Income Trust and American Century
Investment Management, Inc., dated September 16, 2000 (filed
electronically as Exhibit d4 to Post-Effective Amendment No. 30 to the
Registration Statement of American Century California Tax-Free and
Municipal Funds on December 29, 2000, File No. 2-82734).
(e) Amendment No. 2 to the Management Agreement (Investor Class)
between American Century Government Income Trust and American Century
Investment Management, Inc., dated August 1, 2001 (filed
electronically as Exhibit d5 to Post-Effective Amendment No. 44 to the
Registration Statement of the Registrant, on July 31, 2001, File No.
2-99222).
(f) Management Agreement (Advisor Class) between American Century
Government Income Trust and American Century Investment Management,
Inc., dated August 1, 1997 and amended as of June 1, 1998 (filed
electronically as Exhibit 5b to Post-Effective Amendment No. 9 to the
Registration Statement of American Century Investment Trust on June
30, 1999, File No. 33-65170).
(g) Amendment No. 1 to the Management Agreement (Advisor Class)
between American Century Government Income Trust and American Century
Investment Management, Inc., dated September 16, 2000 (filed
electronically as Exhibit d6 to Post-Effective Amendment No. 36 to the
Registration Statement of American Century Target Maturities Trust on
April 18, 2001, File No. 2-94608).
(h) Amendment No. 2 to the Management Agreement (Advisor Class)
between American Century Government Income Trust and American Century
Investment Management, Inc. dated August 1, 2001 (filed electronically
as Exhibit d8 to Post-Effective Amendment No. 44 to the Registration
Statement of the Registrant, on July 31, 2001, File No. 2-99222).
(i) Management Agreement (C Class) between American Century Target
Maturities Trust, American Century California Tax-Free and Municipal
Funds, American Century Government Income Trust, American Century
Investment Trust, American Century Quantitative Equity Funds, American
Century Municipal Trust and American Century Investment Management
Inc., dated September 16, 2000 (filed electronically as Exhibit d6 to
Post-Effective Amendment No. 35 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).
(j) Amendment No. 1 to the Management Agreement (C Class) between
American Century Target Maturities Trust, American Century California
Tax-Free and Municipal Funds, American Century Government Income
Trust, American Century Investment Trust, American Century
Quantitative Equity Funds, American Century Municipal Trust and
American Century Investment Management Inc., dated August 1, 2001
(filed electronically as Exhibit d10 to Post-Effective Amendment No.
44 to the Registration Statement of the Registrant, on July 31, 2001,
File no. 2-99222).
(7) (a) Distribution Agreement between American Century Government Income
Trust and American Century Investment Services, Inc., dated March 13,
2000 (filed electronically as Exhibit e7 to Post-Effective Amendment
No. 17 to the Registration Statement of American Century World Mutual
Funds, Inc. on March 30, 2000, File No. 33-39242).
(b) Amendment No. 1 to the Distribution Agreement between American
Century Investment Trust and American Century Investment Services,
Inc., dated June 1, 2000 (filed electronically as Exhibit e9 to
Post-Effective Amendment No. 19 to the Registration Statement of
American Century World Mutual Funds, Inc. on May 24, 2000, File No.
33-39242).
(c) Amendment No. 2 to the Distribution Agreement between American
Century Government Income Trust and American Century Investment
Services, Inc., dated November 20, 2000 (filed electronically as
Exhibit e10 to Post-Effective Amendment No. 29 to the Registration
Statement of American Century Variable Portfolios, Inc. on December 1,
2000, File No. 33-14567).
(d) Amendment No. 3 to the Distribution Agreement between American
Century Government Income Trust and American Century Investment
Services, Inc., dated March 1, 2001 (filed electronically as Exhibit
e4 to Post-Effective Amendment No. 35 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).
(e) Amendment No. 4 to the Distribution Agreement between American
Century Government Income Trust and American Century Investment
Services, Inc., dated April 30, 2001 (filed electronically as Exhibit
e5 to Post-Effective Amendment No. 35 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).
(f) Amendment No. 5 to the Distribution Agreement between American
Century Government Income Trust and American Century Investment
Services, Inc. (filed as Exhibit e6 to Post-Effective Amendment No. 21
to the Registration Statement of American Century Capital Portfolios,
Inc., on July 30, 2001, File No. 33-64872).
(g) Amendment No. 6 to the Distribution Agreement between American
Century Government Income Trust and American Century Investment
Services, Inc. (filed as Exhibit e7 to Post-Effective Amendment No. 21
to the Registration Statement of American Century Capital Portfolios,
Inc., on July 30, 2001, File No. 33-64872).
(8) Not applicable.
(9) (a) Master Agreement by and between Commerce Bank N.A. and Twentieth
Century Services, Inc., dated January 22, 1997 (filed electronically
as Exhibit g2 to Post-Effective Amendment No. 76 to the Registration
Statement of American Century Mutual Funds, Inc. on February 28, 1997,
File No. 2-14213).
(b) Global Custody Agreement between American Century Investments and
The Chase Manhattan Bank, dated August 9, 1996 (filed electronically
as Exhibit 8 to Post-Effective Amendment No. 31 to the Registration
Statement of the Registrant on February 7, 1997, File No. 2-99222).
(c) Amendment to the Global Custody Agreement between American Century
Investments and The Chase Manhattan Bank dated December 9, 2000 (filed
electronically as Exhibit g2 to Pre-Effective Amendment No. 2 to the
Registration Statement of American Century Variable Portfolios II,
Inc. on January 9, 2001, File No. 333-46922).
(10) (a) Master Distribution and Shareholder Services Plan of American
Century Government Income Trust, American Century Investment Trust,
American Century International Bond Fund, American Century Target
Maturities Trust and American Century Quantitative Equity Funds
(Advisor Class), dated August 1, 1997 (filed electronically as Exhibit
m1 of Post-Effective Amendment No. 32 to the Registration Statement of
American Century Target Maturities Trust on January 31, 2000, File No.
2-94608).
(b) Amendment to the Master Distribution and Shareholder
Services Plan of American Century Government Income Trust, American
Century Investment Trust, American Century International Bond Fund,
American Century Target Maturities Trust and American Century
Quantitative Equity Funds (Advisor Class), dated June 29, 1998 (filed
electronically as Exhibit m2 to Post-Effective Amendment No. 23 to the
Registration Statement of American Century Target Maturities Trust on
January 31, 2000, File No. 33-19589).
(c) Amendment No. 1 to Master Distribution and Shareholder Services
Plan of American Century Government Income Trust, American Century
Investment Trust, American Century International Bond Fund, American
Century Target Maturities Trust and American Century Quantitative
Equity Funds (Advisor Class) dated August 1, 2001 (filed
electronically as Exhibit m3 to Post-Effective Amendment No. 44 to the
Registration Statement of the Registrant, on July 31, 2001, File No.
2-99222).
(d) Master Distribution and Individual Shareholder Services Plan of
American Century Government Income Trust, American Century Investment
Trust, American Century California Tax-Free and Municipal Funds,
American Century Municipal Trust, American Century Target Maturities
Trust and American Century Quantitative Equity Funds (C Class), dated
September 16, 2000 (filed electronically as Exhibit m3 to
Post-Effective Amendment No. 35 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).
(e) Amendment No. 1 to Master Distribution and Individual Shareholder
Services Plan of American Century Government Income Trust, American
Century Investment Trust, American Century California Tax-Free and
Municipal Funds, American Century Municipal Trust, American Century
Target Maturities Trust and American Century Quantitative Equity Funds
(C Class), dated August 1, 2001 (filed electronically as Exhibit m5 to
Post-Effective Amendment No. 44 to the Registration Statement of the
Registrant, on July 31, 2001, File No. 2-99222).
(f) Amended and Restated Multiple Class Plan of American Century
California Tax-Free and Municipal Funds, American Century Government
Income Trust, American Century International Bond Fund, American
Century Investment Trust, American Century Municipal Trust, American
Century Target Maturities Trust and American Century Quantitative
Equity Funds, dated November 20, 2000 (filed electronically as Exhibit
n to Post-Effective Amendment No. 35 to the Registration Statement of
American Century Target Maturities Trust on April 17, 2001, File No.
2-94608).
(g) Amendment No. 1 to the Amended and Restated Multiple Class Plan of
American Century California Tax-Free and Municipal Funds, American
Century Government Income Trust, American Century International Bond
Fund, American Century Investment Trust, American Century Municipal
Trust, American Century Target Maturities Trust and American Century
Quantitative Equity Funds, dated August 1, 2001 (filed electronically
as Exhibit n2 to Post-Effective Amendment No. 44 to the Registration
Statement of the Registrant, on July 31, 2001, File No. 2-99222).
(11) Opinion and Consent of Counsel as to the legality of the securities
being registered (filed electronically as Exhibit i to Post-Effective
Amendment No. 37 to the Registration Statement of the Registrant on
May 7, 1999, File No. 2-99222).
(12) Opinion and Consent as to the tax matters and consequences to
shareholders (filed electronically as Exhibit 12 on Form N-14 to the
Registration Statement, on June 29, 2001, File No. 2-99222).
(13) (a) Transfer Agency Agreement between American Century Government
Income Trust and American Century Services Corporation, dated August
1, 1997 (filed electronically as Exhibit 9 to Post-Effective Amendment
No. 33 to the Registration Statement of the Registrant on July 31,
1997, File No. 2-99222).
(b) Amendment to the Transfer Agency Agreement between American
Century Government Income Trust and American Century Services
Corporation, dated March 9, 1998 (filed electronically as Exhibit 9b
to Post-Effective Amendment No. 23 to the Registration Statement of
American Century Municipal Trust on March 26, 1998, File No. 2-91229).
(c) Amendment No. 1 to the Transfer Agency Agreement between American
Century Government Income Trust and American Century Services
Corporation, dated June 29, 1998 (filed electronically as Exhibit 9b
to Post-Effective Amendment No. 23 to the Registration Statement of
American Century Quantitative Equity Funds on June 29, 1998, File No.
33-19589).
(d) Amendment No. 2 to the Transfer Agency Agreement between American
Century Government Income Trust and American Century Services
Corporation, dated November 20, 2000 (filed electronically as Exhibit
h4 to Post-Effective Amendment No. 30 to the Registration Statement of
American Century California Tax-Free and Municipal Funds on December
29, 2000, File No. 2-82734).
(e) Amendment No. 3 to the Transfer Agency Agreement between American
Century Government Income Trust and American Century Services
Corporation dated August 1, 2001 (filed electronically as Exhibit h5
to Post-Effective Amendment No. 44 to the Registration Statement of
the Registrant, on July 31, 2001, File No. 2-99222).
(f) Credit Agreement between American Century Funds and The Chase
Manhattan Bank, as Administrative Agent, dated as of December 19, 2000
(filed electronically as Exhibit h5 to Post-Effective Amendment No. 33
to the Registration Statement of American Century Target Maturities
Trust on January 31, 2001, File No. 2-94608).
(14) (a) Consent of PricewaterhouseCoopers LLP, independent accountants
(filed electronically as Exhibit 14b on Form N-14 of the Registration
Statement, on August 8, 2001, File No. 333-64152).
(b) Consent of Deloitte & Touche LLP, independent auditors.
(c) Consent of KPMG Peat Marwick, LLP, independent auditors (filed
electronically as Exhibit 11 to Post-Effective Amendment No. 33 to the
Registration Statement of the Registrant on July 31, 1997, File No.
2-99222).
(15) Not applicable.
(16) (a) Power of Attorney, dated September 16, 2000 (filed electronically
as Exhibit j3 to Post-Effective Amendment No. 41 to the Registration
Statement of the Registrant on February 22, 2001, File No. 2-99222).
(17) (a) Form of proxy vote card is filed herein.
(b) Short-Term Government (Investor and Advisor Class) Prospectuses
dated August 1, 2001 (filed electronically on July 31, 2001).
(c) Statement of Additional Information dated August 1, 2001 (filed
electronically on July 31, 2001).
(d) Short-Term Government Annual Report dated March 31, 2001 (filed
electronically on May 31, 2001).
(e) Limited-Term Bond (Investor and Advisor) Prospectuses dated March
1, 2001 (filed electronically as part of Post-Effective Amendment No.
92 to the Registration Statement of American Century Mutual Funds,
Inc. on February 28, 2001, File No. 2-14213).
(f) Statement of Additional Information dated May 1, 2001 (filed
electronically as part of Post-Effective Amendment No. 93 to the
Registration Statement of American Century Mutual Funds, Inc. on April
20, 2001, File No. 2-14213).
(g) Limited-Term Bond Annual Report (filed electronically on December
29, 2000).
Item 17. Undertakings.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on behalf of the Registrant, in the
City of Kansas City, and State of Missouri, on the 13th day of August, 2001.
AMERICAN CENTURY GOVERNMENT INCOME TRUST
By: /*/William M. Lyons
William M. Lyons
President and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
*William M. Lyons President and August 13, 2001
- --------------------------------- Principal Executive
William M. Lyons Officer
*Maryanne Roepke Senior Vice President, August 13, 2001
- --------------------------------- Treasurer and Chief
Maryanne Roepke Accounting Officer
*James E. Stowers III Director and August 13, 2001
- --------------------------------- Chairman of the Board
James E. Stowers III
*Albert A. Eisenstat Director August 13, 2001
- ---------------------------------
Albert A. Eisenstat
*Ronald J. Gilson Director August 13, 2001
- ---------------------------------
Ronald J. Gilson
*Myron S. Scholes Director August 13, 2001
- ---------------------------------
Myron S. Scholes
*Kenneth E. Scott Director August 13, 2001
- ---------------------------------
Kenneth E. Scott
*Jeanne D. Wohlers Director August 13, 2001
- ---------------------------------
Jeanne D. Wohlers
/s/Janet A. Nash
*by Janet A. Nash, Attorney in Fact (pursuant to a Power of Attorney dated
September 16, 2000).
American Century Government Income Trust
Filed: 13 Aug 01, 12:00am