UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
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| Investment Company Act file number | 811-04165 |
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| AMERICAN CENTURY TARGET MATURITIES TRUST |
| (Exact name of registrant as specified in charter) |
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| 4500 MAIN STREET, KANSAS CITY, MISSOURI | 64111 |
| (Address of principal executive offices) | (Zip Code) |
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JOHN PAK
4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 |
| (Name and address of agent for service) |
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| Registrant’s telephone number, including area code: | 816-531-5575 |
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| Date of fiscal year end: | 09-30 |
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| Date of reporting period: | 03-31-2022 |
ITEM 1. REPORTS TO STOCKHOLDERS.
(a) Provided under separate cover.
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| Semiannual Report |
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| March 31, 2022 |
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| Zero Coupon 2025 Fund |
| Investor Class (BTTRX) |
| Advisor Class (ACTVX) |
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| President’s Letter | |
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| Fund Characteristics | |
| Shareholder Fee Example | |
| Schedule of Investments | |
| Statement of Assets and Liabilities | |
| Statement of Operations | |
| Statement of Changes in Net Assets | |
| Notes to Financial Statements | |
| Financial Highlights | |
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| Liquidity Risk Management Program | |
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| Additional Information | |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
Jonathan Thomas
Dear Investor:
Thank you for reviewing this semiannual report for the period ended March 31, 2022. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Inflation, Fed Policy Drove Treasury Yields Higher
Investors faced increasingly challenging market conditions as the reporting period progressed. From a Federal Reserve (Fed) policy pivot and soaring inflation to rising interest rates and mounting geopolitical unrest, most asset classes struggled as volatility intensified.
Steady economic gains combined with fiscal and monetary support, escalating energy prices, supply chain breakdowns and labor market shortages pushed annual headline inflation to 6.2% in October. By March, Russia’s invasion of Ukraine sent commodity prices even higher, exacerbating existing inflationary pressures. The annual headline inflation rate reached 8.5%, the highest rate since December 1981.
With price hikes proving to be more lasting than temporary, the Fed tilted toward a hawkish policy outlook in late 2021. By March, the Fed quickly ended its asset purchase program and announced its first rate hike in more than three years. At period-end, market indicators reflected expectations for more aggressive Fed rate hikes along with balance sheet cuts to tame inflation.
The combination of accelerating inflation and a more hawkish Fed fueled a sharp rise in U.S. Treasury yields. The two-year Treasury yield jumped from 0.28% on September 30 to 2.34% on March 31. The 10-year Treasury yield climbed from 1.49% to 2.34%, and the yield curve flattened. Treasuries delivered negative returns, with longer-maturity securities posting larger losses than shorter-maturity securities.
Staying Focused in Uncertain Times
We expect market volatility to linger amid elevated inflation and tighter Fed policy. In addition, Russia’s invasion of Ukraine has led to a devastating humanitarian crisis and further complicated a tense geopolitical backdrop. While the U.S. Treasury market remains somewhat insulated from direct financial market implications, we continue to evaluate the situation and what it means for investors.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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| MARCH 31, 2022 |
| Portfolio at a Glance | |
| Anticipated Annual Growth Rate (Investor Class) | 2.04% |
| Weighted Average Maturity Date | 11/10/25 |
Anticipated Value at Maturity (AVM) (Investor Class)(1) | $116.15 |
(1) See graph below. |
Past performance is no guarantee of future results. Even if class shares are held to maturity, there is no guarantee that the class’s share price will reach its AVM. There is also no guarantee that the AVM will fluctuate as little in the future as it has in the past. For more information, please consult the prospectus. |
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| Types of Investments in Portfolio | % of net assets |
| Zero-Coupon U.S. Treasury Securities and Equivalents | 94.5% |
| Zero-Coupon U.S. Government Agency Securities | 4.7% |
| Short-Term Investments | 0.8% |
| Other Assets and Liabilities | —* |
*Category is less than 0.05% of total net assets.
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| Share Price vs. Anticipated Value at Maturity (Investor Class) |
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| Actual Share Price (Historical) — $107.91 |
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| Anticipated Value at Maturity (Estimated Share Price) — $116.15 |
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The top line in the graph represents the class’s AVM, which fluctuates from day to day based on the fund’s weighted average maturity date. The bottom line represents the class’s historical share price, which is managed to grow over time to reach the class’s AVM. The AVM for other share classes will vary due to differences in fee structure. While this graph demonstrates the class’s expected long-term growth pattern, please keep in mind that the fund may experience significant share-price volatility over the short term. Even if shares are held to maturity, there is no guarantee that the class’s share price will reach its AVM. There is also no guarantee that the AVM will fluctuate as little in the future as it has in the past.
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2021 to March 31, 2022.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| Beginning
Account Value
10/1/21 | Ending
Account Value
3/31/22 | Expenses Paid During Period(1) 10/1/21 - 3/31/22 | Annualized Expense Ratio(1) |
| Actual | | | | |
| Investor Class | $1,000 | $947.30 | $2.62 | 0.54% |
| Advisor Class | $1,000 | $946.10 | $3.83 | 0.79% |
| Hypothetical | | | | |
| Investor Class | $1,000 | $1,022.24 | $2.72 | 0.54% |
| Advisor Class | $1,000 | $1,020.99 | $3.98 | 0.79% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
MARCH 31, 2022 (UNAUDITED)
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| Principal Amount/Shares | Value |
ZERO-COUPON U.S. TREASURY SECURITIES AND EQUIVALENTS(1) — 94.5% |
| REFCORP STRIPS - COUPON, 0.00%, 4/15/24 | $ | 385,000 | | $ | 365,294 | |
| REFCORP STRIPS - COUPON, 0.00%, 1/15/25 | 8,445,000 | | 7,817,779 | |
| REFCORP STRIPS - COUPON, 0.00%, 4/15/25 | 18,013,000 | | 16,533,298 | |
| STRIPS - COUPON, 0.00%, 8/15/25 | 1,000,000 | | 920,973 | |
| STRIPS - COUPON, 0.00%, 11/15/25 | 59,200,000 | | 54,151,499 | |
| STRIPS - PRINCIPAL, 0.00%, 11/15/25 | 1,100,000 | | 1,003,814 | |
| REFCORP STRIPS - COUPON, 0.00%, 1/15/26 | 16,800,000 | | 15,242,412 | |
| STRIPS - COUPON, 0.00%, 2/15/26 | 1,400,000 | | 1,272,688 | |
| REFCORP STRIPS - COUPON, 0.00%, 4/15/26 | 25,000,000 | | 22,509,987 | |
| REFCORP STRIPS - COUPON, 0.00%, 7/15/26 | 7,000,000 | | 6,253,791 | |
| STRIPS - COUPON, 0.00%, 11/15/26 | 5,700,000 | | 5,092,815 | |
TOTAL ZERO-COUPON U.S. TREASURY SECURITIES AND EQUIVALENTS (Cost $122,548,746) | 131,164,350 | |
ZERO-COUPON U.S. GOVERNMENT AGENCY SECURITIES(1) — 4.7% |
| FNMA STRIPS - COUPON, MTN, 0.00%, 4/8/24 | 10,000 | | 9,528 | |
| TVA STRIPS - COUPON, 0.00%, 5/1/24 | 1,000,000 | | 955,332 | |
| FHLMC STRIPS - COUPON, 0.00%, 9/15/24 | 42,000 | | 39,557 | |
| TVA STRIPS - PRINCIPAL, 0.00%, 11/1/25 | 6,000,000 | | 5,465,186 | |
TOTAL ZERO-COUPON U.S. GOVERNMENT AGENCY SECURITIES (Cost $5,799,156) | 6,469,603 | |
SHORT-TERM INVESTMENTS — 0.8% | | |
| Discount Notes — 0.8% | | |
Federal Farm Credit Discount Notes, 0.10%, 4/1/22(2) | 1,169,000 | | 1,169,000 | |
Money Market Funds† | | |
| State Street Institutional U.S. Government Money Market Fund, Premier Class | 376 | | 376 | |
TOTAL SHORT-TERM INVESTMENTS (Cost $1,169,376) | | 1,169,376 | |
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $129,517,278) | | 138,803,329 | |
OTHER ASSETS AND LIABILITIES† | | 1,905 | |
TOTAL NET ASSETS — 100.0% | | $ | 138,805,234 | |
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| NOTES TO SCHEDULE OF INVESTMENTS |
| Equivalent | - | Security whose payments are secured by the U.S. Treasury |
| FHLMC | - | Federal Home Loan Mortgage Corporation |
| FNMA | - | Federal National Mortgage Association |
| MTN | - | Medium Term Note |
| REFCORP | - | Resolution Funding Corporation |
| STRIPS | - | Separate Trading of Registered Interest and Principal of Securities |
| TVA | - | Tennessee Valley Authority |
†Category is less than 0.05% of total net assets.
(1)Security is a zero-coupon bond. Zero-coupon securities may be issued at a substantial discount from their value at maturity.
(2)The rate indicated is the yield to maturity at purchase.
See Notes to Financial Statements.
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| Statement of Assets and Liabilities |
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| MARCH 31, 2022 (UNAUDITED) | |
| Assets | |
| Investment securities, at value (cost of $129,517,278) | $ | 138,803,329 | |
| Receivable for capital shares sold | 147,499 | |
| 138,950,828 | |
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| Liabilities | |
| Payable for capital shares redeemed | 80,915 | |
| Accrued management fees | 64,163 | |
| Distribution and service fees payable | 516 | |
| 145,594 | |
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| Net Assets | $ | 138,805,234 | |
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| Net Assets Consist of: | |
| Capital paid in | $ | 129,136,640 | |
| Distributable earnings | 9,668,594 | |
| $ | 138,805,234 | |
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| Net Assets | Shares Outstanding | Net Asset Value Per Share |
| Investor Class | $136,403,201 | 1,264,065 | $107.91 |
| Advisor Class | $2,402,033 | 23,613 | $101.73 |
See Notes to Financial Statements.
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| FOR THE SIX MONTHS ENDED MARCH 31, 2022 (UNAUDITED) |
Investment Income (Loss) | |
| Income: | |
| Interest | $ | 2,818,516 | |
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| Expenses: | |
| Management fees | 388,673 | |
| Distribution and service fees - Advisor Class | 3,087 | |
| Trustees' fees and expenses | 4,278 | |
| 396,038 | |
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| Net investment income (loss) | 2,422,478 | |
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Realized and Unrealized Gain (Loss) | |
| Net realized gain (loss) on investment transactions | (228,579) | |
| Change in net unrealized appreciation (depreciation) on investments | (9,984,329) | |
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| Net realized and unrealized gain (loss) | (10,212,908) | |
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| Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (7,790,430) | |
See Notes to Financial Statements.
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| Statement of Changes in Net Assets |
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| SIX MONTHS ENDED MARCH 31, 2022 (UNAUDITED) AND YEAR ENDED SEPTEMBER 30, 2021 |
Increase (Decrease) in Net Assets | March 31, 2022 | September 30, 2021 |
Operations | | |
| Net investment income (loss) | $ | 2,422,478 | | $ | 4,638,179 | |
| Net realized gain (loss) | (228,579) | | 391,892 | |
| Change in net unrealized appreciation (depreciation) | (9,984,329) | | (8,072,340) | |
| Net increase (decrease) in net assets resulting from operations | (7,790,430) | | (3,042,269) | |
| | |
Distributions to Shareholders | | |
| From earnings: | | |
| Investor Class | (4,756,259) | | (5,882,218) | |
| Advisor Class | (79,198) | | (93,044) | |
| Decrease in net assets from distributions | (4,835,457) | | (5,975,262) | |
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Capital Share Transactions | | |
| Net increase (decrease) in net assets from capital share transactions (Note 5) | (1,438,888) | | 11,277,374 | |
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| Net increase (decrease) in net assets | (14,064,775) | | 2,259,843 | |
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Net Assets | | |
| Beginning of period | 152,870,009 | | 150,610,166 | |
| End of period | $ | 138,805,234 | | $ | 152,870,009 | |
See Notes to Financial Statements.
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| Notes to Financial Statements |
MARCH 31, 2022 (UNAUDITED)
1. Organization
American Century Target Maturities Trust (the trust) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Massachusetts business trust. Zero Coupon 2025 Fund (the fund) is one fund in a series issued by the trust. The fund’s investment objective is to seek the highest return consistent with investment in U.S. Treasury securities. The fund is managed to mature in the year identified in its name and will be liquidated near the end of its maturity year. The fund offers the Investor Class and Advisor Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value (NAV) per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Trustees has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Fixed income securities are valued at the evaluated bid as provided by independent pricing services or at the most recent bid as provided by investment dealers. U.S. Treasury and Government Agency securities are valued using market models that consider trade data, quotations from dealers and active market makers, relevant yield curve and spread data, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information.
Open-end management investment companies are valued at the reported NAV per share.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Trustees or its delegate, in accordance with policies and procedures adopted by the Board of Trustees. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Interest income is recorded on the accrual basis and includes accretion of discounts.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
Reverse Share Splits — When the fund pays a distribution, the trustees declare a reverse share split that exactly offsets the per-share amount of the distribution. After taking into account the reverse share split, a shareholder reinvesting dividends and capital gain distributions will hold exactly the same number of shares owned prior to the distribution and reverse share split. A shareholder electing to receive dividends in cash will own fewer shares.
Indemnifications — Under the trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and trustees of the trust are also officers and/or directors of American Century Companies, Inc. (ACC). The trust’s investment advisor, American Century Investment Management, Inc. (ACIM), the trust’s distributor, American Century Investment Services, Inc. (ACIS), and the trust’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The trust has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent trustees (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all funds in the American Century Investments family of funds that have the same investment advisor and distributor as the fund. For purposes of determining the Investment Category Fee and Complex Fee, the assets of funds managed by the investment advisor that invest exclusively in the shares of other funds (funds of funds) are not included. The rates for the Investment Category Fee range from 0.2425% to 0.3600% and the rates for the Complex Fee range from 0.2500% to 0.3100%. The effective annual management fee for each class for the period ended March 31, 2022 was 0.53%.
Distribution and Service Fees — The Board of Trustees has adopted a separate Master Distribution and Individual Shareholder Services Plan for the Advisor Class (the plan), pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the Advisor Class will pay ACIS an annual distribution and service fee of 0.25%. The fees are computed and accrued daily based on the Advisor Class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plan during the period ended March 31, 2022 are detailed in the Statement of Operations.
Trustees’ Fees and Expenses — The Board of Trustees is responsible for overseeing the investment advisor’s management and operations of the fund. The trustees receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Trustees. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended March 31, 2022 were $1,403,451 and $8,073,147, respectively, all of which are U.S. Treasury and Government Agency obligations.
5. Capital Share Transactions
Transactions in shares of the fund were as follows (unlimited number of shares authorized):
| | | | | | | | | | | | | | |
| Six months ended
March 31, 2022 | Year ended
September 30, 2021 |
| Shares | Amount | Shares | Amount |
| Investor Class | | | | |
| Sold | 157,106 | | $ | 17,486,109 | | 505,028 | | $ | 58,083,719 | |
| Issued in reinvestment of distributions | 41,682 | | 4,554,200 | | 51,078 | | 5,678,196 | |
| Redeemed | (210,808) | | (23,547,339) | | (458,843) | | (52,659,834) | |
| Reverse share split | (43,471) | | — | | (52,843) | | — | |
| (55,491) | | (1,507,030) | | 44,420 | | 11,102,081 | |
| Advisor Class | | | | |
| Sold | 1,493 | | 155,618 | | 6,729 | | 732,103 | |
| Issued in reinvestment of distributions | 767 | | 79,142 | | 883 | | 92,921 | |
| Redeemed | (1,587) | | (166,618) | | (5,988) | | (649,731) | |
| Reverse share split | (768) | | — | | (884) | | — | |
| (95) | | 68,142 | | 740 | | 175,293 | |
| Net increase (decrease) | (55,586) | | $ | (1,438,888) | | 45,160 | | $ | 11,277,374 | |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
| | | | | | | | | | | |
| Level 1 | Level 2 | Level 3 |
| Assets | | | |
| Investment Securities | | | |
| Zero-Coupon U.S. Treasury Securities and Equivalents | — | | $ | 131,164,350 | | — | |
| Zero-Coupon U.S. Government Agency Securities | — | | 6,469,603 | | — | |
| Short-Term Investments | $ | 376 | | 1,169,000 | | — | |
| $ | 376 | | $ | 138,802,953 | | — | |
7. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, war, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the components of investments for federal income tax purposes were as follows:
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| Federal tax cost of investments | $ | 130,158,101 | |
| Gross tax appreciation of investments | $ | 9,312,945 | |
| Gross tax depreciation of investments | (667,717) |
| Net tax appreciation (depreciation) of investments | $ | 8,645,228 | |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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| For a Share Outstanding Throughout the Years Ended September 30 (except as noted) |
| Per-Share Data | Ratios and Supplemental Data |
| | Income From Investment Operations: | Distributions From: | | | | Ratio to Average Net Assets of: | | |
| Net Asset
Value,
Beginning
of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized
Gain (Loss) | Total From
Investment
Operations | Net
Investment
Income | Net
Realized
Gains | Total
Distributions | Reverse Share Split | Net Asset
Value,
End
of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover
Rate | Net Assets,
End of Period (in thousands) |
| Investor Class | | | | | | | | | | | | |
2022(3) | $113.92 | 1.86 | (7.87) | (6.01) | (3.34) | (0.36) | (3.70) | 3.70 | $107.91 | (5.27)% | 0.54%(4) | 3.34%(4) | 1% | $136,403 | |
| 2021 | $116.13 | 3.40 | (5.61) | (2.21) | (3.03) | (1.42) | (4.45) | 4.45 | $113.92 | (1.91)% | 0.54% | 2.96% | 13% | $150,321 | |
| 2020 | $107.31 | 3.78 | 5.04 | 8.82 | (3.71) | (0.45) | (4.16) | 4.16 | $116.13 | 8.23% | 0.55% | 3.38% | 19% | $148,086 | |
| 2019 | $96.41 | 3.65 | 7.25 | 10.90 | (3.50) | (1.71) | (5.21) | 5.21 | $107.31 | 11.31% | 0.55% | 3.60% | 21% | $133,717 | |
| 2018 | $99.63 | 3.57 | (6.79) | (3.22) | (3.19) | (1.05) | (4.24) | 4.24 | $96.41 | (3.24)% | 0.55% | 3.66% | 15% | $120,676 | |
| 2017 | $101.92 | 3.28 | (5.57) | (2.29) | (3.25) | — | (3.25) | 3.25 | $99.63 | (2.25)% | 0.55% | 3.36% | 13% | $140,516 | |
| Advisor Class | | | | | | | | | | | | |
2022(3) | $107.53 | 1.62 | (7.42) | (5.80) | (3.06) | (0.36) | (3.42) | 3.42 | $101.73 | (5.39)% | 0.79%(4) | 3.09%(4) | 1% | $2,402 | |
| 2021 | $109.89 | 2.94 | (5.30) | (2.36) | (2.74) | (1.42) | (4.16) | 4.16 | $107.53 | (2.15)% | 0.79% | 2.71% | 13% | $2,549 | |
| 2020 | $101.79 | 3.30 | 4.80 | 8.10 | (3.44) | (0.45) | (3.89) | 3.89 | $109.89 | 7.96% | 0.80% | 3.13% | 19% | $2,524 | |
| 2019 | $91.68 | 3.23 | 6.88 | 10.11 | (3.26) | (1.71) | (4.97) | 4.97 | $101.79 | 11.03% | 0.80% | 3.35% | 21% | $1,496 | |
| 2018 | $94.98 | 3.17 | (6.47) | (3.30) | (2.94) | (1.05) | (3.99) | 3.99 | $91.68 | (3.48)% | 0.80% | 3.41% | 15% | $1,297 | |
| 2017 | $97.41 | 2.90 | (5.33) | (2.43) | (3.01) | — | (3.01) | 3.01 | $94.98 | (2.49)% | 0.80% | 3.11% | 13% | $1,604 | |
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| Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized.
(3)Six months ended March 31, 2022 (unaudited).
(4)Annualized.
See Notes to Financial Statements.
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| Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Trustees (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by the Program Administrator, including members of ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of certain Fund’s investments is supported by a third-party liquidity assessment vendor.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period January 1, 2021 through December 31, 2021. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. These portfolio holdings are available on the fund's website at americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov.
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| Contact Us | americancentury.com | |
| Automated Information Line | 1-800-345-8765 | |
| Investor Services Representative | 1-800-345-2021
or 816-531-5575 | |
| Investors Using Advisors | 1-800-378-9878 | |
| Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
| Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
| Telecommunications Relay Service for the Deaf | 711 | |
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| American Century Target Maturities Trust | |
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Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
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| This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | |
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©2022 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-92289 2205 | |
(b) None.
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for semiannual report filings.
ITEM 6. INVESTMENTS.
(a) The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Not applicable for semiannual report filings.
(a)(3) Not applicable.
(a)(4) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| Registrant: | American Century Target Maturities Trust |
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| By: | /s/ Patrick Bannigan |
| Name: | Patrick Bannigan |
| Title: | President |
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| Date: | May 25, 2022 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | | | |
| By: | /s/ Patrick Bannigan |
| Name: | Patrick Bannigan |
| Title: | President |
| | (principal executive officer) |
| | |
| Date: | May 25, 2022 |
| | | | | | | | |
| By: | /s/ R. Wes Campbell |
| Name: | R. Wes Campbell |
| Title: | Treasurer and Chief Financial Officer |
| | (principal financial officer) |
| | |
| Date: | May 25, 2022 |
