MANAGEMENT AGREEMENT
A Class
This MANAGEMENT AGREEMENT is made and entered into by and between the
registered investment companies listed on Exhibit A to this Agreement (the
"Companies"), as of the dates noted on such Exhibit A, and American Century
Investment Management, Inc., a Delaware corporation (the "Investment Manager").
WHEREAS, the Companies have adopted an Amended and Restated Multiple
Class Plan dated as of September 3, 2002, (as the same may be amended from time
to time, the "Multiple Class Plan"), pursuant to Rule 18f-3 of the Investment
Company Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Multiple Class Plan establishes seven classes of shares of
certain series of shares of the Companies: the Investor Class, the Institutional
Class, the Advisor Class , the C Class, the A Class, the B Class and the C Class
II; and
IN CONSIDERATION of the mutual promises and agreements herein
contained, the parties agree as follows:
1. Investment Management Services. The Investment Manager shall supervise the
investments of the A Class of each series of shares of the Companies
contemplated as of the date hereof, and the A Class of such subsequent
series of shares as the Companies shall select the Investment Manager to
manage. In such capacity, the Investment Manager shall maintain a continuous
investment program for the A Class of each such series, determine what
securities shall be purchased or sold by each series, secure and evaluate
such information as it deems proper and take whatever action is necessary or
convenient to perform its functions, including the placing of purchase and
sale orders. In performing its duties hereunder, the Investment Manager will
manage the portfolio of all classes of a particular series as a single
portfolio.
2. Compliance With Laws. All functions undertaken by the Investment Manager
hereunder shall at all times conform to, and be in accordance with, any
requirements imposed by:
(a) the Investment Company Act of 1940, as amended (the "1940 Act"), and any
rules and regulations promulgated thereunder;
(b) any other applicable provisions of law;
(c) the Declaration of Trust or Articles of Incorporation applicable to each
of the Companies as amended from time to time;
(d) the By-Laws of the Companies as amended from time to time;
(e) The Amended and Restated Multiple Class Plan; and
(f) the registration statement of the Companies, as amended from time to
time, filed under the Securities Act of 1933 and the 1940 Act.
3. Board Supervision. All of the functions undertaken by the Investment Manager
hereunder shall at all times be subject to the direction of the Board of
Trustees or Board of Directors (collectively, the "Board of Directors") of
the Companies, its executive committee, or any committee or officers of the
Companies acting under the authority of the Board of Directors.
4. Payment Of Expenses. The Investment Manager will pay all of the expenses of
the A Class of each series of the Companies' shares that it shall manage,
other than interest, taxes, brokerage commissions, portfolio insurance,
extraordinary expenses and the fees and expenses of those Directors who are
not "interested persons" as defined in 1940 Act (hereinafter referred to as
the "Independent Directors") (including counsel fees) and expenses incurred
in connection with the provision of shareholder services and distribution
services under the Master Distribution and Individual Shareholder Services
Plan dated September 3, 2002. The Investment Manager will provide the
Companies with all physical facilities and personnel required to carry on
the business of the A Class of each series that the Investment Manager shall
manage, including but not limited to office space, office furniture,
fixtures and equipment, office supplies, computer hardware and software and
salaried and hourly paid personnel. The Investment Manager may at its
expense employ others to provide all or any part of such facilities and
personnel.
5. Account Fees. The Board of Directors may impose fees for various account
services, proceeds of which may be remitted to the appropriate Fund or the
Investment Manager at the discretion of the Board. At least 60 days' prior
written notice of the intent to impose such fee must be given to the
shareholders of the affected series.
6. Management Fees.
(a) In consideration of the services provided by the Investment Manager, the
A Class of each series of shares of the Companies managed by the
Investment Manager shall pay to the Investment Manager a per annum
management fee (hereinafter, the "Applicable Fee"). The calculation of
the Applicable Fee for the A Class of a series is performed as follows:
(i) Each series is assigned to one of three categories based on
its overall investment objective ("Investment Category"). The
Investment Category assignments appear in Exhibit B to this
Agreement.
(ii) Each series is assigned a fee schedule within its Investment
Category in Exhibit C to this Agreement. The Investment
Category assets managed by the Investment Manager determines
the first component of a series' fee. This fee is referred to
as the "Investment Category Fee". The determination of the
Investment Category assets is as follows:
a) Money Market Fund Category. The assets which are used
to determine the fee for this Investment Category is
the sum of the assets of all of the open-end
investment company series which invest primarily in
debt securities, are subject to Rule 2a-7 under the
1940 Act, managed by the Investment Manager and
distributed to the public by American Century
Investment Services, Inc.
b) Bond Fund Category. The assets which are used to
determine the fee for this Investment Category is the
sum the assets of all of the open-end investment
company series which invest primarily in debt
securities, are not subject to Rule 2a-7 under the
1940 Act, are managed by the Investment Manager and
are distributed to the public by American Century
Investment Services, Inc.
c) Equity Fund Category. The assets which are used to
determine the fee for this Investment Category is the
sum the assets of all of the open-end investment
company series which invest primarily in equity
securities, are managed by the Investment Manager and
are distributed to the public by American Century
Investment Services, Inc.
(iii) A fee which is based on the total assets in all of
the Investment Categories is determined by the
schedule which appears in Exhibit D. This fee is
referred to as the series' "Complex Fee".
(iv) The Applicable Fee for a series is the sum of the
Investment Category Fee and the Complex Fee.
(v) The assets which are used to compute the Applicable
Fee shall be the assets of all of the open-end
investment companies managed by the Investment
Manager. Any exceptions to this requirement shall be
approved by the Board of Directors of the Companies.
(b) On the first business day of each month, the A Class of each series of
shares shall pay the management fee at the rate specified by
subparagraph (a) of this paragraph 6 to the Investment Manager for the
previous month. The fee for the previous month shall be calculated by
multiplying the Applicable Fee for such series by the aggregate average
daily closing value of the series' net assets during the previous month,
and further multiplying that product by a fraction, the numerator of
which shall be the number of days in the previous month, and the
denominator of which shall be 365 (366 in leap years).
(c) In the event that the Board of Directors of a Company shall determine to
issue a A Class of any additional series of shares for which it is
proposed that the Investment Manager serve as investment manager, the
Company and the Investment Manager shall enter into an Addendum to this
Agreement setting forth the name of the series, the Applicable Fee and
such other terms and conditions as are applicable to the management of
such series of shares.
7. Continuation Of Agreement. This Agreement shall continue in effect, unless
sooner terminated as hereinafter provided, for a period of two years from
the execution hereof, and for as long thereafter as its continuance is
specifically approved, as to each series of the Companies, at least annually
(i) by the Board of Directors of the Companies or by the vote of a majority
of the outstanding A Class voting securities of the Companies, and (ii) by
the vote of a majority of the Directors of the Companies, who are not
parties to the agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
8. Termination. This Agreement may be terminated, with respect to any series,
by the Investment Manager at any time without penalty upon giving the
appropriate Company 60 days' written notice, and may be terminated, with
respect to any series, at any time without penalty by the Board of Directors
of a Company or by vote of a majority of the outstanding A Class voting
securities of such series on 60 days' written notice to the Investment
Manager.
9. Effect Of Assignment. This Agreement shall automatically terminate in the
event of assignment by the Investment Manager, the term "assignment" for
this purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
10. Other Activities. Nothing herein shall be deemed to limit or restrict the
right of the Investment Manager, or the right of any of its officers,
directors or employees (who may also be a trustee, officer or employee of a
Company), to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar
or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
11. Standard Of Care. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or duties hereunder on
the part of the Investment Manager, it, as an inducement to it to enter into
this Agreement, shall not be subject to liability to the Companies or to any
shareholder of the Companies for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
12. Separate Agreement. The parties hereto acknowledge that certain provisions
of the 1940 Act, in effect, treat each series of shares of a registered
investment company as a separate investment company. Accordingly, the
parties hereto hereby acknowledge and agree that, to the extent deemed
appropriate and consistent with the 1940 Act, this Agreement shall be deemed
to constitute a separate agreement between the Investment Manager and each
series of shares of the Companies managed by the Investment Manager.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
indicated on Exhibit A.
American Century California Tax-Free and Municipal Funds
American Century Government Income Trust
American Century Investment Trust
American Century Municipal Trust
American Century Quantitative Equity Funds
American Century Target Maturities Trust
Attest:
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Assistant Secretary Vice President
Attest: American Century Investment Management, Inc.
/s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Assistant Secretary Senior Vice President
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Exhibit A
Registered Investment Companies Subject to Management Agreement
Registered Investment Company and Funds Date
--------------------------------------- ----
American Century California Tax-Free and Municipal Funds
California High-Yield Municipal Fund September 3, 2002
American Century Investment Trust
Prime Money Market Fund September 3, 2002
Diversified Bond Fund September 3, 2002
High-Yield Fund September 3, 2002
American Century Municipal Trust
High-Yield Municipal Fund September 3, 2002
Dated: September 3, 2002
Exhibit B
Series Investment Categories
Investment Category Series
------------------- ------
Bond Funds California High-Yield Municipal Fund
High-Yield Municipal Fund
High-Yield Fund
Diversified Bond Fund
Investment Category Series
------------------- ------
Equity Funds none
Investment Category Series
------------------- ------
Money Market Funds Prime Money Market Fund
Dated: September 3, 2002
Exhibit C
Investment Category Fee Schedules: Money Market Funds
Schedule 1 Funds:
none
Category Assets Fee Rate
--------------- --------
First $1 billion 0.2500%
Next $1 billion 0.2070%
Next $3 billion 0.1660%
Next $5 billion 0.1490%
Next $15 billion 0.1380%
Next $25 billion 0.1375%
Thereafter 0.1370%
Schedule 2 Funds:
none
Category Assets Fee Rate
--------------- --------
First $1 billion 0.2700%
Next $1 billion 0.2270%
Next $3 billion 0.1860%
Next $5 billion 0.1690%
Next $15 billion 0.1580%
Next $25 billion 0.1575%
Thereafter 0.1570%
Schedule 3 Funds:
Prime Money Market Fund
Category Assets Fee Rate
--------------- --------
First $1 billion 0.3700%
Next $1 billion 0.3270%
Next $3 billion 0.2860%
Next $5 billion 0.2690%
Next $15 billion 0.2580%
Next $25 billion 0.2575%
Thereafter 0.2570%
Category Fee Schedules: Bond Funds
Schedule 1 Funds:
none
Category Assets Fee Rate
--------------- --------
First $1 billion 0.2800%
Next $1 billion 0.2280%
Next $3 billion 0.1980%
Next $5 billion 0.1780%
Next $15 billion 0.1650%
Next $25 billion 0.1630%
Thereafter 0.1625%
Schedule 2 Funds:
California High-Yield Municipal Fund
Category Assets Fee Rate
--------------- --------
First $1 billion 0.3100%
Next $1 billion 0.2580%
Next $3 billion 0.2280%
Next $5 billion 0.2080%
Next $15 billion 0.1950%
Next $25 billion 0.1930%
Thereafter 0.1925%
Schedule 3 Funds:
none
Category Assets Fee Rate
--------------- --------
First $1 billion 0.3600%
Next $1 billion 0.3080%
Next $3 billion 0.2780%
Next $5 billion 0.2580%
Next $15 billion 0.2450%
Next $25 billion 0.2430%
Thereafter 0.2425%
Category Fee Schedules: Bond Funds
(continued)
Schedule 4 Funds:
none
Category Assets Fee Rate
--------------- --------
First $1 billion 0.6100%
Next $1 billion 0.5580%
Next $3 billion 0.5280%
Next $5 billion 0.5080%
Next $15 billion 0.4950%
Next $25 billion 0.4930%
Thereafter 0.4925%
Schedule 5 Funds:
High-Yield Municipal Fund
Diversified Bond Fund
Category Assets Fee Rate
--------------- --------
First $1 billion 0.4100%
Next $1 billion 0.3580%
Next $3 billion 0.3280%
Next $5 billion 0.3080%
Next $15 billion 0.2950%
Next $25 billion 0.2930%
Thereafter 0.2925%
Schedule 6 Funds:
High-Yield Fund
Category Assets Fee Rate
--------------- --------
First $1 billion 0.6600%
Next $1 billion 0.6080%
Next $3 billion 0.5780%
Next $5 billion 0.5580%
Next $15 billion 0.5450%
Next $25 billion 0.5430%
Thereafter 0.5425%
Category Fee Schedules: Equity Funds
Schedule 1 Funds:
none
Category Assets Fee Rate
--------------- --------
First $1 billion 0.5200%
Next $5 billion 0.4600%
Next $15 billion 0.4160%
Next $25 billion 0.3690%
Next $50 billion 0.3420%
Next $150 billion 0.3390%
Thereafter 0.3380%
Schedule 2 Funds:
none
Category Assets Fee Rate
--------------- --------
First $1 billion 0.7200%
Next $5 billion 0.6600%
Next $15 billion 0.6160%
Next $25 billion 0.5690%
Next $50 billion 0.5420%
Next $150 billion 0.5390%
Thereafter 0.5380%
Dated: September 3, 2002
D-1
Exhibit D
Complex Fee Schedule
Complex Assets Fee Rate
-------------- --------
First $2.5 billion 0.3100%
Next $7.5 billion 0.3000%
Next $15.0 billion 0.2985%
Next $25.0 billion 0.2970%
Next $50.0 billion 0.2960%
Next $100.0 billion 0.2950%
Next $100.0 billion 0.2940%
Next $200.0 billion 0.2930%
Next $250.0 billion 0.2920%
Next $500.0 billion 0.2910%
Thereafter 0.2900%
Dated: September 3, 2002