PROSPECTUS
[company logo]
American Century (sm)
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997
BENHAM
GROUP(R)
Prime Money Market
[front cover]
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.
AMERICAN CENTURY INVESTMENTS
BENHAM GROUP
MONEY MARKET FUNDS
GOVERNMENT BOND FUNDS
DIVERSIFIED BOND FUNDS
MUNICIPAL BOND FUNDS
Prime Money
Market
AMERICAN CENTURY GROUP
ASSET ALLOCATION &
BALANCED FUNDS
CONSERVATIVE EQUITY FUNDS
SPECIALTY FUNDS
TWENTIETH CENTURY(R) GROUP
GROWTH FUNDS
INTERNATIONAL FUNDS
[inside cover]
PROSPECTUS
SEPTEMBER 3, 1996
REVISED JANUARY 1, 1997
Prime Money Market
AMERICAN CENTURY INVESTMENT TRUST
American Century Investment Trust is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. One of the money market funds
from our Benham Group (the "Fund") is described in this Prospectus. The other
funds are described in separate prospectuses.
INVESTMENTS IN THE FUND ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY OTHER AGENCY. THERE IS NO ASSURANCE THAT THE FUND WILL BE
ABLE TO MAINTAIN A $1.00 SHARE PRICE.
American Century offers retail investors a full line of no-load funds,
investments that have no sales charges or commissions.
This Prospectus gives you information about the Fund that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated September 3, 1996 and filed with the Securities and Exchange
Commission ("SEC"). It is incorporated in this Prospectus by reference. To
obtain a copy without charge, call or write:
AMERICAN CENTURY INVESTMENTS
4500 Main Street o P.O. Box 419200
Kansas City, Missouri 64141-6200 o 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-753-1865
Internet: www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus 1
INVESTMENT OBJECTIVE OF THE FUND
AMERICAN CENTURY-BENHAM
PRIME MONEY MARKET FUND
The Fund's investment objective is to seek the highest level of current
income consistent with preservation of capital.
The Fund buys high-quality, U.S. dollar-denominated money market
instruments and other short-term obligations of banks, governments and
corporations.
INVESTMENTS IN THE FUND ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY OTHER AGENCY. THERE IS NO ASSURANCE THAT THE FUND WILL BE
ABLE TO MAINTAIN A $1.00 SHARE PRICE.
There is no assurance that the Fund will achieve its investment objective.
NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
2 Investment Objective American Century Investments
TABLE OF CONTENTS
Transaction and Operating Expense Table ............................. 4
Financial Highlights ................................................ 5
INFORMATION REGARDING THE FUND
Investment Policies of the Fund ..................................... 6
Investment Objective ............................................. 6
Eligible Investments ............................................. 6
Portfolio Investment Quality and Maturity Criteria ............... 6
Diversification .................................................. 7
Industry Concentration ........................................... 7
Risk Factors and Investment Techniques .............................. 7
Corporate Obligations ............................................ 7
Bank Obligations ................................................. 8
Government Obligations ........................................... 8
Variable and Floating-Rate Instruments ........................... 8
Restricted and Illiquid Securities ............................... 9
U.S. Dollar-Denominated Foreign Securities ....................... 9
Other Investment Practices, Their Characteristics and Risks ......... 9
Repurchase Agreements ............................................ 9
When-Issued and Forward Commitment Agreements .................... 9
Borrowing ........................................................10
Other Techniques .................................................10
Performance Advertising .............................................10
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
American Century Investments ........................................11
Investing in American Century .......................................11
How to Open an Account ..............................................11
By Mail ........................................................11
By Wire ........................................................11
By Exchange ....................................................12
In Person ......................................................12
Subsequent Investments ...........................................12
By Mail ........................................................12
By Telephone ...................................................12
By Online Access ...............................................12
By Wire ........................................................12
In Person ......................................................12
Automatic Investment Plan ........................................12
How to Exchange from One Account to Another .........................12
By Mail ........................................................13
By Telephone ...................................................13
By Online Access ...............................................13
How to Redeem Shares ................................................13
By Mail ........................................................13
By Telephone ...................................................13
By Check-A-Month ...............................................13
Other Automatic Redemptions ....................................13
Redemption Proceeds ..............................................13
By Check .......................................................13
By Wire and ACH ................................................13
Redemption of Shares in Low-Balance Accounts .....................13
Signature Guarantee .................................................14
Special Shareholder Services ........................................14
Automated Information Line .....................................14
Online Account Access ..........................................14
Checkwriting ...................................................14
Tax-Qualified Retirement Plans .................................15
Important Policies Regarding Your Investments .......................15
Reports to Shareholders .............................................16
Employer-Sponsored Retirement Plans and Institutional Accounts ......16
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price .........................................................17
When Share Price Is Determined ...................................17
How Share Price Is Determined ....................................17
Where to Find Yield Information ..................................18
Distributions .......................................................18
Taxes ...............................................................18
Tax-Deferred Accounts ............................................18
Taxable Accounts .................................................18
Management ..........................................................19
Investment Management ............................................19
Code of Ethics ...................................................20
Transfer and Administrative Services .............................20
Distribution of Fund Shares .........................................21
Expenses ............................................................21
Further Information About American Century ..........................21
Prospectus Table of Contents 3
TRANSACTION AND OPERATING EXPENSE TABLE
Prime Money Market
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............................ none
Maximum Sales Load Imposed on Reinvested Dividends ................. none
Deferred Sales Load ................................................ none
Redemption Fee(1) .................................................. none
Exchange Fee ....................................................... none
ANNUAL FUND OPERATING EXPENSES:(2)
(as a percentage of net assets)
Management Fees .................................................... .19%
12b-1 Fees ......................................................... none
Other Expenses ..................................................... .31%
Total Fund Operating Expenses ...................................... .50%
EXAMPLE
You would pay the following expenses on a 1 year $ 5
$1,000 investment, assuming a 5% annual return and 3 years 16
redemption at the end of each time period: 5 years 28
10 years 63
(1) Redemption proceeds sent by wire are subject to a $10 processing fee.
(2) Benham Management Corporation (the "Manager") has agreed to limit each
Fund's total operating expenses to specified percentages of each
Fund's average daily net assets. The agreement provides that the
Manager may recover amounts absorbed on behalf of the Fund during the
preceding 11 months if, and to the extent that, for any given month,
Fund expenses were less than the expense limit in effect at that time.
The current expense limitation for the Fund is .50%. This expense
limitation is subject to annual renewal in June, 1998. If the expense
limitation was not in effect, the Fund's Management Fee, Other
Expenses and Total Fund Operating Expenses would be as follows,
respectively: .31%, .31% and .62%.
The Fund pays the Manager advisory fees equal to an annualized percentage
of the Fund's average daily net assets. Other expenses include administrative
and transfer agent fees paid to American Century Services Corporation.
The purpose of the above table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the shares of the Fund. The example set forth
above assumes reinvestment of all dividends and distributions and uses a 5%
annual rate of return as required by SEC regulations.
NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
4 Transaction and Operating Expense Table American Century Investments
FINANCIAL HIGHLIGHTS
PRIME MONEY MARKET
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors. Their report thereon
appears in the Fund's annual report, which is incorporated by reference into the
Statement of Additional Information. The semiannual and annual reports contain
additional performance information and will be made available upon request and
without charge. The information presented is for a share outstanding throughout
the years ended February 29 and 28, except as noted.
<TABLE>
1996 1995 1994(1)
PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ....................... $1.00 $1.00 $1.00
-------- -------- --------
Income from Investment Operations
Net Investment Income ................................... .0560 .0493 .0095
-------- -------- --------
Distributions
From Net Investment Income .............................. (.0560) (.0493) (.0095)
-------- -------- --------
Net Asset Value, End of Period ............................. $1.00 $1.00 $1.00
-------- -------- --------
TOTAL RETURN(2) ......................................... 5.60% 4.93% .96%
======== ======== ========
SUPPLEMENTAL DATA AND RATIOS
Ratio of Operating Expenses to Average Net Assets(3) .... .48% .04% 0%
Ratio of Operating Expenses to Average Net Assets
(Before Reimbursement)(3) ............................. .62% .71% 1.49%(4)
Ratio of Net Investment Income to Average Net Assets .... 5.43% 5.28% 3.35%(4)
Ratio of Net Investment Income to Average Net Assets
(Before Reimbursement) ................................ 5.29% 4.61% 1.86%(4)
Net Assets, End of Period (in thousands) .............. $1,270,653 1,509,863 75,168
</TABLE>
(1) Commencement of operations for the Benham Prime Money Market Fund was
November 17, 1993.
(2) Total return figures assume reinvestment of dividends and are not
annualized.
(3) The ratios for the year ended February 29, 1996 include expenses paid
through expense offset arrangements.
(4) Annualized.
Prospectus Financial Highlights 5
INFORMATION REGARDING THE FUND
INVESTMENT POLICIES OF THE FUND
The Fund has adopted certain investment restrictions that are set forth in
the Statement of Additional Information. Those restrictions, as well as the
investment objective of the Fund identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The Fund has implemented additional investment policies
and practices to guide its activities in the pursuit of its investment
objective. These policies and practices, which are described throughout this
Prospectus, are not designated as fundamental policies and may be changed
without shareholder approval.
For an explanation of the securities ratings referred to in the following
discussion, see "Other Information" in the Statement of Additional Information.
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek the highest level of current
income consistent with preservation of capital. As with any mutual fund, there
is no guarantee that the Fund will achieve its investment objective.
ELIGIBLE INVESTMENTS
The Fund buys high-quality ("first-tier"), U.S. dollar-denominated money
market instruments and other short-term obligations of banks, governments, and
corporations. The table below provides a brief overview of the Fund's possible
investments. The obligations referenced in the table and the risks associated
with investing in them are described in the section titled "Risk Factors and
Investment Techniques," which begins on page 7.
ISSUERS TYPES OF OBLIGATIONS
Domestic and foreign financial Negotiable certificates of
institutions (e.g., banks, broker- deposit, bankers' acceptances,
dealers, insurance companies, bank notes, and commercial
leasing and financing corpora- paper (including floating-rate
tions) agency securities)
- -----------------------------------------------------------------------------
Domestic and foreign Commercial paper and short-
nonfinancial corporations term corporate debt obliga-
tions (including fixed- and
variable-rate notes and
bonds)
- -----------------------------------------------------------------------------
U.S. government and its U.S. Treasury bills, notes,
agencies and instrumentalities bonds, and U.S. government
agency obligations (including
floating-rate agency securities)
- -----------------------------------------------------------------------------
Foreign governments Commercial paper and
and their agencies and discount notes
instrumentalities
PORTFOLIO INVESTMENT QUALITY
AND MATURITY CRITERIA
The Manager follows regulatory guidelines on quality and maturity for the
Fund's investments, which are designed to help maintain a stable $1.00 share
price. In particular, the Fund:
(1) Buys only U.S. dollar-denominated obligations with remaining
maturities of 13 months or less (and variable- and floating-rate
obligations with demand features that effectively shorten their
maturities to 13 months or less);
(2) Maintains a dollar-weighted average portfolio maturity of 90 days or
less;
(3) Restricts its investments to high-quality obligations determined by
the Manager to present minimal credit risks, pursuant to guidelines
established by the board of trustees.
To be considered high-quality, an obligation must be one of the following:
6 Information Regarding the Fund American Century Investments
(1) A U.S. government obligation;
(2) Rated (or issued by an issuer rated with respect to a class of
short-term debt obligations) within the two highest rating categories
for short-term debt obligations by at least two nationally recognized
statistical rating organizations ("rating agencies") (or one if only
one has rated the obligation);
(3) An unrated obligation judged by the Manager, pursuant to guidelines
established by the board of trustees, to be of comparable quality.
The Fund intends to buy only obligations which are designated as first-tier
securities as defined by the SEC; that is, securities with the highest rating.
The acquisition of securities that are unrated or rated by only one rating
agency must be approved or ratified by the board of trustees.
DIVERSIFICATION
In order to reduce investment risks, the Manager is required by law to
diversify the Fund's investment portfolio. As a general rule, the Manager may
not invest more than 5% of the Fund's total assets in securities issued by a
single institution. In addition, the Fund must also limit its investments in
securities subject to puts of a single institution.
This policy does not apply to U.S. government securities, in which the
Fund may invest without limitation. See the Statement of Additional
Information for a more detailed description.
INDUSTRY CONCENTRATION
Under normal market conditions, 25% or more of the Fund's total assets are
invested in obligations of issuers in the financial services industry. This
industry concentration reflects that of the markets in which the Fund invests.
More than half of the markets' commercial paper is issued by companies or
organizations in the financial services industry.
For temporary defensive purposes, less than 25% of the Fund's total assets
may be invested in obligations of issuers in the financial services industry.
The manager will not invest more than 25% of the Fund's total assets in any
other industry.
RISK FACTORS AND INVESTMENT TECHNIQUES
The Fund may be appropriate for investors who seek to (1) earn income at
current money market rates while preserving their investments; (2) use the Fund
as part of a long-term, balanced investment portfolio consisting of money market
instruments, bonds, and stocks; or (3) use the Fund to place investment monies
as part of a dollar-cost averaging investment program.
Because the Fund emphasizes stability, it will not generate as much income
as a bond fund. No single fund constitutes a balanced investment plan.
Corporations and governments address their short-term borrowing and
cash-flow management needs in a highly liquid, worldwide financial market called
the "money market." The following is a brief description of the types of money
market instruments the Fund may buy.
CORPORATE OBLIGATIONS
Commercial paper is issued by large corporations to raise cash. The maximum
maturity for commercial paper is 270 days, although most commercial paper is
issued with maturities of 60 days or less. Commercial paper is offered at a
discount with its full face value paid at maturity.
Although commercial paper rates generally fluctuate with the value of the
London Interbank Offered Rate (LIBOR), Treasury bills, bankers' acceptances, and
certificates of deposit, they are also influenced by (1) the issuer's size and
credit rating and (2) the commercial paper maturity date.
Smaller or lower-rated corporations may tap the commercial paper market
through asset-backed commercial paper programs. In a typical program, a special
purpose corporation (a "SPC"), created and/or serviced by a bank, uses the
proceeds from an issuance of commercial paper to purchase receivables from one
or more corporations (sellers). The sellers transfer their interest in the cash
flow from the receivables to the SPC, and this cash is used to pay interest and
repay principal on the commercial paper. Letters of credit may be available to
cover the risk that the cash flow from the receivables will not be sufficient to
cover the maturing commercial paper.
Prospectus Information Regarding the Fund 7
The Fund may purchase corporate notes and bonds with remaining maturities
of 13 months or less in the secondary market provided that each of these
securities has characteristics consistent with regulatory requirements for money
market funds.
BANK OBLIGATIONS
Negotiable certificates of deposit (CDs) evidence a bank's obligation to
repay money deposited with it for a specified period of time. The table below
identifies the types of CDs the Fund may buy.
CD TYPE ISSUER
Domestic Domestic offices of U.S.
banks
- -----------------------------------------------------------------------------
Yankee U.S. branches of foreign
banks
- -----------------------------------------------------------------------------
Eurodollar Issued in London by U.S.,
Canadian, European, and
Japanese banks
- -----------------------------------------------------------------------------
Schedule B Canadian subsidiaries of
non-Canadian banks
Bankers' acceptances are used to finance foreign commercial trade. Issued
by a bank with an importer's name on them, these instruments allow the importer
to back up its own pledge to pay for imported goods with a bank's obligation to
cover the transaction if the importer fails to do so.
Bank notes are senior unsecured promissory notes issued in the U.S. by
domestic commercial banks.
The bank obligations the Fund may buy generally are not insured by the FDIC
or any other insurer.
GOVERNMENT OBLIGATIONS
U.S. Treasury securities differ from one another in their interest rates,
maturities, and issuance and interest payment schedules. Treasury bills have
initial maturities of one year or less; Treasury notes, two to ten years; and
Treasury bonds, more than ten years.
A number of U.S. government agencies and government-sponsored organizations
issue debt securities. These agencies generally are created by Congress to
fulfill a specific need, such as providing credit for home buyers or farmers.
Among these agencies are the Federal Home Loan Banks, the Federal Farm Credit
System, the Student Loan Marketing Association, and the Resolution Funding
Corporation.
Some obligations issued or guaranteed by U.S. government agencies or
instrumentalities are supported by the full faith and credit of the U.S.
government; others are supported by the right of the issuer to borrow from the
Treasury; others are supported by the U.S. government's discretionary authority
to purchase certain obligations of the agency or instrumentality, and others are
supported only by the credit of the issuing agency or instrumentality.
Supranational organizations (generally, multilateral lending institutions,
or "MLI"s) are created by governments to promote economic reconstruction and
development. An MLI's creditworthiness is based not only on its own financial
performance, but on the willingness and ability of member governments to support
its lending activities.
While maintaining strict financial controls to ensure liquidity and strong
creditworthiness, MLIs finance their operations in the same manner as any other
financial institution, with a combination of short- and long-term debt
obligations. Short-term debt is usually issued in the form of short-term
discount notes and commercial paper.
VARIABLE AND FLOATING-RATE INSTRUMENTS
Variable- and floating-rate instruments are issued by corporations,
financial institutions, and government agencies and instrumentalities.
Floating-rate instruments have interest rates that change whenever there is
a change in a designated base rate, whereas variable-rate instruments provide
for specified periodic interest rate adjustments. The interest rate on variable-
and floating-rate instruments is ordinarily determined by reference to (or is a
percentage of) an objective standard, such as the Federal Funds effective rate,
the 90-day U.S. Treasury bill rate, or LIBOR.
Although the Fund typically limits its investments to securities with
remaining maturities of 13 months or less, it may invest in variable- and
floating-rate instruments that have nominal (or stated) maturities in excess of
13 months, provided that such instru-
8 Information Regarding the Fund American Century Investments
ments (1) have demand features consistent with regulatory requirements for
money market funds, or (2) are securities issued by the U.S. government or a
U.S. government agency that meet certain regulatory requirements for money
market funds.
RESTRICTED AND ILLIQUID SECURITIES
The Funds may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the Fund's
criteria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional buyers rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.
With respect to securities eligible for resale under Rule 144A, the staff
of the SEC has taken the position that the liquidity of such securities in the
portfolio of a fund offering redeemable securities is a question of fact for the
board of trustees to determine, such determination to be based upon a
consideration of the readily available trading markets and the review of any
contractual restrictions. Accordingly, the board of trustees is responsible for
developing and establishing the guidelines and procedures for determining the
liquidity of Rule 144A securities. As allowed by Rule 144A, the board of
trustees of the Funds has delegated the day-to-day function of determining the
liquidity of Rule 144A securities to the Manager. The board retains the
responsibility to monitor the implementation of the guidelines and procedures it
has adopted.
Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A security
that is illiquid. In such an event, the Fund's manager will consider appropriate
remedies to minimize the effect on such fund's liquidity. The Fund may not
invest more than 10% of its total assets in illiquid securities (securities that
may not be sold within seven days at approximately the price used in determining
the net asset value of fund shares).
U.S. DOLLAR-DENOMINATED FOREIGN SECURITIES
The Fund invests exclusively in U.S. dollar-denominated instruments, some
of which may be issued by foreign entities as described in the table on page 6.
Consequently, the Fund may be subject to risks different than those incurred by
a fund that invests only in debt obligations of domestic issuers.
Currently, the only securities held outside the United States in which the
Fund expects to invest are EuroCDs, which are held in England. As a result, the
Fund's exposure to these foreign investment risks is expected to be lower than
funds which invest more broadly in securities held outside the United States.
Regulatory limits specified in the section titled "Portfolio Investment Quality
and Maturity Criteria" on page 6 apply equally to securities of foreign and
domestic issuers.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
For additional information regarding the investment practices of the Fund,
see the Fund's Statement of Additional Information.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers that are deemed to present
minimum credit risk. A repurchase agreement involves the purchase of a security
and a simultaneous agreement to sell the security back to the seller at a higher
price. At the direction of the board of trustees, the Manager has established
procedures to minimize potential losses due to credit risk. Delays or losses
could result if the other party to the agreement defaults or becomes bankrupt.
WHEN-ISSUED AND FORWARD
COMMITMENT AGREEMENTS
The Fund may sometimes purchase new issues of securities on a when-issued
or forward commitment basis when, in the opinion of the Manager, such purchases
will further the investment objectives of the Fund. The price of when-issued
securities is established at the time commitment to purchase is made. Delivery
of and payment for these securities typically occurs 1 to 7 days after the
commitment to purchase.
Prospectus Information Regarding the Fund 9
Market rates of interest on debt securities at the time of delivery may be
higher or lower than those contracted for on the security. Accordingly, the
value of such security may decline prior to delivery, which could result in a
loss to the Fund.
BORROWING
The Fund may borrow money only for temporary or emergency purposes.
Borrowings are not expected to exceed 5% of the Fund's total assets.
OTHER TECHNIQUES
The Manager may buy other types of securities or employ other portfolio
management techniques on behalf of the Fund including reverse repurchase
agreements. When SEC guidelines require it to do so, the Fund will set aside
cash or appropriate liquid assets in a segregated account to cover the Fund's
obligations.
PERFORMANCE ADVERTISING
From time to time, the Fund may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return, yield and
effective yield.
Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced a fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.
A quotation of yield reflects a fund's income over a stated period
expressed as a percentage of the fund's share price. Yield is calculated by
measuring the income generated by an investment in the fund over a seven-day
period (net of Fund expenses). This income is then annualized, that is, the
amount of income generated by the investment over the seven-day period is
assumed to be generated over each similar period each week throughout a full
year and is shown as a percentage of the investment. The effective yield is
calculated in a similar manner but, when annualized, the income earned by the
investment is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect on the assumed
reinvestment.
Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules. The SEC yield should be regarded as an estimate of
the Fund's rate of investment income, and it may not equal the Fund's actual
income distribution rate, the income paid to a shareholder's account, or the
income reported in the Fund's financial statements.
The Fund may also include in advertisements data comparing performance with
the performance of non-related investment media, published editorial comments
and performance rankings compiled by independent organizations (such as Lipper
Analytical Services or Donoghue's Money Fund Report) and publications that
monitor the performance of mutual funds. Performance information may be quoted
numerically or may be presented in a table, graph or other illustration. In
addition, Fund performance may be compared to well-known indices of market
performance including the Donoghue's Money Fund Average and Bank Rate Monitor
National Index of 2 1/2-year CD rates. The fund's performance may also be
compared, on a relative basis, to the other funds in our fund family. This
relative comparison, which may be based upon historical or expected fund
performance, volatility or other fund characteristics, may be presented
numerically, graphically or in text. The performance of the fund may also be
combined or blended with other funds in our fund family, and that combined or
blended performance may be compared to the same indices to which individual
funds may be compared.
All performance information advertised by the Fund is historical in nature
and is not intended to represent or guarantee future results. The value of Fund
shares when redeemed may be more or less than their original cost.
10 Information Regarding the Fund American Century Investments
HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS
AMERICAN CENTURY INVESTMENTS
The Fund offered by this Prospectus is a part of the American Century
Investments family of mutual funds. Our family provides a full range of
investment opportunities, from the aggressive equity growth funds in our
Twentieth Century Group, to the fixed income funds in our Benham Group, to the
moderate risk and specialty funds in our American Century Group. Please call
1-800-345-2021 for a brochure or prospectuses for the other funds in the
American Century Investments family.
INVESTING IN AMERICAN CENTURY
The following section explains how to invest in American Century funds,
including purchases, redemptions, exchanges and special services. You will find
more detail about doing business with us by referring to the Investor Services
Guide that you will receive when you open an account.
If you own or are considering purchasing Fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 16.
HOW TO OPEN AN ACCOUNT
To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.
The minimum investment is $2,500 ($1,000 for IRA accounts).
The minimum investment requirements may be different for some types of
retirement accounts. Call one of our Investor Services Representatives for
information on our retirement plans, which are available for individual
investors or for those investing through their employers.
Please note: If you register your account as belonging to multiple owners
(e.g., as joint tenants), you must provide us with specific authorization on
your application in order for us to accept written or telephone instructions
from a single owner. Otherwise, all owners will have to agree to any
transactions that involve the account (whether the transaction request is in
writing or over the telephone).
You may invest in the following ways:
BY MAIL
Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.
BY WIRE
You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:
o RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)
o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111
o BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918
o REFERENCE FOR BENEFICIARY (RFB):
American Century account number into which you are investing. If more than
one, leave blank and see Bank to Bank Information below.
o ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.
o BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):
o Taxpayer identification or Social Security number
o If more than one account, account numbers and amount to be invested
in each account.
Prospectus How to Invest with American Century Investments 11
o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA or SARSEP-IRA.
BY EXCHANGE
Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central Time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.
IN PERSON
If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:
4500 Main Street
Kansas City, Missouri 64111
1665 Charleston Road
Mountain View, California 94043
2000 S. Colorado Blvd.
Denver, Colorado 80222
SUBSEQUENT INVESTMENTS
Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see "Automatic Investment Plan", this page) or by any
of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the remittance portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.
BY MAIL
When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)
BY TELEPHONE
Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.
BY ONLINE ACCESS
Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.
BY WIRE
You may make subsequent investments by wire. Follow the wire transfer
instructions on page 11 and indicate your account number.
IN PERSON
You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.
AUTOMATIC INVESTMENT PLAN
You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must be
at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application to
receive more information. If you would like to add a direct deposit to an
existing account, please call one of our Investor Services Representatives.
HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER
As long as you meet any minimum investment requirements, you may exchange
your Fund shares to our other funds. An exchange request will be processed the
same day it is received if it is received before the fund's net asset values are
calculated, which is one hour prior to the close of the New York Stock Exchange
for the Benham Target Maturities Trust, and at the close of the Exchange for all
of our other funds. See "When Share Price is Determined," page 17.
For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an Automatic
Exchange Plan between any two funds in the amount of at least $50 per month. See
our Investor Services Guide for further information about exchanges.
12 How to Invest with American Century Investments American Century Investments
BY MAIL
You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.
BY TELEPHONE
You can make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line--see page 14) if you have
authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to receive the appropriate form.
BY ONLINE ACCESS
You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.
HOW TO REDEEM SHARES
We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received.
Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.
BY MAIL
Your written instructions to redeem shares may be made either by a
redemption form, which we will send to you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 14.
BY TELEPHONE
If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.
BY CHECK-A-MONTH
You may redeem shares by Check-A-Month. A Check-A-Month plan automatically
redeems enough shares each month to provide you with a check in an amount you
choose (minimum $50). To set up a Check-A-Month plan, please call and request
our Check-A-Month brochure.
OTHER AUTOMATIC REDEMPTIONS
You may elect to make redemptions automatically by authorizing us to send
funds to you or to your account at a bank or other financial institution. To set
up automatic redemptions, call one of our Investor Services Representatives.
REDEMPTION PROCEEDS
Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up to
15 days or longer to send redemption proceeds (to allow your purchase funds to
clear). No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption proceeds are sent.
Redemption proceeds may be sent to you in one of the following ways:
BY CHECK
Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.
BY WIRE AND ACH
You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.
Your bank will usually receive wired funds within 48 hours of transmission.
Funds transferred by ACH may be received up to seven days after transmission.
Wired funds are subject to a $10 fee to cover bank wire charges, which is
deducted from redemption proceeds. Once the funds are transmitted, the time of
receipt and the funds' availability are not under our control.
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you of the necessity to bring
the value of the shares held in the account up to the minimum. If action is not
taken within 90 days of the let-
Prospectus How to Invest with American Century Investments 13
ter's date, the shares held in the account will be redeemed and proceeds from
the redemption will be sent by check to your address of record. We reserve the
right to increase the investment minimums.
SIGNATURE GUARANTEE
To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee will be required
when:
o redeeming more than $25,000; or
o establishing or increasing a Check-A-Month or automatic transfer on an
existing account.
You may obtain a signature guarantee from a bank or trust company, credit
union, broker, dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.
For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.
We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.
SPECIAL SHAREHOLDER SERVICES
We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.
Our special shareholder services include:
AUTOMATED INFORMATION LINE
We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.
ONLINE ACCOUNT ACCESS
You may contact us 24 hours a day, seven days a week at
www.americancentury.com to access your fund's daily share prices, receive
updates on major market indexes and view historical performance of your funds.
If you select "Full Services" on your application, you can use your personal
access code and Social Security number to view your account balances and account
activity, make subsequent investments from your bank account or exchange shares
from one fund to another.
CHECKWRITING
We offer CheckWriting as a service option for your account. CheckWriting
allows you to redeem shares in your account by writing a draft ("check") against
your account balance. (Shares held in certificate form may not be redeemed by
check.) There is no limit on the number of checks you can write, but each one
must be for at least $100.
When you write a check, you will continue to receive dividends on all
shares until your check is presented for payment to our clearing bank. If you
redeem all shares in your account by check, any accrued distributions on the
redeemed shares will be paid to you in cash on the next monthly distribution
date.
If you want to add CheckWriting to an existing account that offers
CheckWriting, contact us by phone or mail for an appropriate form. For a new
account, you may elect CheckWriting on your purchase application by choosing the
"Full Services" option. CheckWriting is not available for any account held in an
IRA or 403(b) plan.
CheckWriting redemptions may only be made on checks provided by us.
Currently, there is no charge for checks or for the CheckWriting service.
We will return checks drawn on insufficient funds or on funds from
investments made by means other than by wire within the previous 15 days.
Neither the company nor our clearing bank will be liable for any
14 How to Invest with American Century Investments American Century Investments
loss or expenses associated with returned checks. Your account may be assessed a
$15 service charge for checks drawn on insufficient funds.
A stop payment may be ordered on a check written against your account. We
will use reasonable efforts to stop a payment, but we cannot guarantee that we
will be able to do so. If we are successful in fulfilling a stop-payment order,
your account may be assessed a $15 fee.
TAX-QUALIFIED RETIREMENT PLANS
The Fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:
o Individual Retirement Accounts (IRAs);
o 403(b) plans for employees of public school systems and non-profit
organizations; or
o Profit sharing plans and pension plans for corporations and other
employers.
If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.
You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.
IMPORTANT POLICIES REGARDING YOUR INVESTMENTS
Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.
(1) We reserve the right for any reason to suspend the offering of shares
for a period of time, or to reject any specific purchase order
(including purchases by exchange). Additionally, purchases may be
refused if, in the opinion of the Manager, they are of a size that
would disrupt the management of the Fund.
(2) We reserve the right to make changes to any stated investment
requirements, including those that relate to purchases, transfers and
redemptions. In addition, we may also alter, add to or terminate any
investor services and privileges. Any changes may affect all
shareholders or only certain series or classes of shareholders.
(3) Shares being acquired must be qualified for sale in your state of
residence.
(4) Transactions requesting a specific price and date, will be refused.
Once you have mailed or otherwise transmitted your transaction
instructions to us, they may not be modified or canceled.
(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require
evidence satisfactory to us of the authority of the individual making
the request.
(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include
requesting personal identification from callers, recording telephone
calls, and providing written confirmations of telephone transactions.
These procedures are designed to protect shareholders from
unauthorized or fraudulent instructions. If we do not employ
reasonable procedures to confirm the genuineness of instructions, then
we may be liable for losses due to unauthorized or fraudulent
instructions. The company, its transfer agent and investment advisor
will not be responsible for any loss due to instructions they
reasonably believe are genuine.
(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary
Elizabeth Jones, she should sign that way and not as Mary E. Jones.
(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you
experience difficulty in reaching us during such periods, you may send
your transaction instructions by mail, express mail or courier
service, or you may visit one of our Investors Centers. You may also
use our Automated Information Line if you have requested and received
an access code and are not attempting to redeem shares.
(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to
cover the penalty the IRS will impose on us for failure to report your
correct taxpayer identification number on information reports.
Prospectus How to Invest with American Century Investments 15
(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 per hour may be applied.
REPORTS TO SHAREHOLDERS
At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all year-to-date
activity in your account. You may request a statement of your account activity
at any time.
With the exception of most automatic transactions and transactions by
CheckWriting, each time you invest, redeem, transfer or exchange shares, we will
send you a confirmation of the transactions. Transactions initiated by
CheckWriting will be confirmed on a monthly basis. See the Investor Services
Guide for more detail.
Carefully review all the information relating to transactions on your
statements and confirmations to ensure that your instructions were acted on
properly. Please notify us immediately in writing if there is an error. If you
fail to provide notification of an error with reasonable promptness, i.e.,
within 30 days of non-automatic transactions or within 30 days of the date of
your consolidated quarterly statement, in the case of automatic transactions, we
will deem you to have ratified the transaction.
No later than January 31st of each year, we will send you reports that
you may use in completing your U.S. income tax return. See the Investor
Services Guide for more information.
Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.
EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS
Information contained in our Investor Services Guide pertains to
shareholders who invest directly with American Century rather than through an
employer-sponsored retirement plan or through a financial intermediary.
If you own or are considering purchasing Fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the Fund,
exchange them for shares of other American Century funds, and redeem them will
depend on the terms of your plan.
If you own or are considering purchasing Fund shares through a bank,
broker-dealer, insurance company or other financial intermediary, your ability
to purchase, exchange and redeem shares will depend on your agreement with, and
the policies of, such financial intermediary.
You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your plan administrator or financial intermediary.
16 How to Invest with American Century Investments American Century Investments
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of the Fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds, except the American Century Target
Maturities Trust, net asset value is determined at the close of regular trading
on each day that the New York Stock Exchange is open, usually 3 p.m. Central
time. Net asset value for the Target Maturities is determined one hour prior to
the close of the Exchange.
Investments and requests to redeem or exchange shares will receive the
share price next determined after receipt by us of the investment or redemption
or exchange request. For example, investments and requests to redeem or exchange
shares of a fund received by us or one of our agents before the close of
business on the Exchange, usually 3 p.m. Central time, are effective on, and
will receive the price determined, that day. Investment, redemption and exchange
requests received thereafter are effective on, and receive the price determined
on, the next day the Exchange is open.
Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the net asset value is determined.
Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.
Investment and transaction instructions received by us on any business day
by mail before the net asset value is determined will receive that day's price.
Investments and instructions received after that time will receive the price
determined on the next business day.
If you invest in Fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the Fund's transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the Fund's procedures or any contractual arrangement with the
Fund or the Fund's distributor in order for you to receive that day's price.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized
as follows:
Portfolio securities of the Fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the board of trustees.
Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the board of trustees.
Pursuant to a determination by the Fund's board of trustees and Rule 2a-7
under the Investment Company Act of 1940 (the "1940 Act"), portfolio securities
of the Fund are valued at amortized cost. When a security is valued at amortized
cost, it is valued at its cost when purchased, and thereafter by assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
Prospectus Additional Information You Should Know 17
WHERE TO FIND YIELD INFORMATION
The yield of the Fund is published weekly in leading financial publications
and daily in many local newspapers. The net asset values, as well as yield
information on all of the other funds in the American Century family of funds,
may be obtained by calling us or by accessing our Web site at
www.americancentury.com.
DISTRIBUTIONS
At the close of each day, including Saturdays, Sundays and holidays, net
income plus net realized gains on portfolio securities is determined and
declared as a distribution. The distribution will be paid monthly on the last
Friday of each month, except for year-end distributions which will be made on
the last business day of the year.
You will begin to participate in the distributions the day after your
purchase is effective. (See "When Share Price is Determined," page 17.) If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed (other than by CheckWriting), the
distribution on the redeemed shares will be included with your redemption
proceeds.
The Fund does not expect to realize any long-term capital gains and,
accordingly, does not expect to pay any capital gains distributions.
Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 59 1/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date. Please consult our Investor Services Guide for
further information regarding your distribution options.
TAXES
The Fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders,
it pays no income taxes.
TAX-DEFERRED ACCOUNTS
If Fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the Fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
TAXABLE ACCOUNTS
If Fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income do not
qualify for the 70% dividends-received deduction for corporations since they are
derived from interest income. Distributions from net long-term capital gains are
taxable as long-term capital gains regardless of the length of time you have
held the shares on which such distributions are paid. However, you should note
that any loss realized upon the sale or redemption of shares held for six months
or less will be treated as a long-term capital loss to the extent of any
distribution of long-term capital gain to you with respect to such shares.
Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a capital gain distribution, you must pay income
taxes on the distribution, even though the value of your investment (plus cash
received, if any) will not have increased.
In January of the year following the distribution, if you own shares in a
taxable account, you will receive
18 Additional Information You Should Know American Century Investments
a Form 1099-DIV notifying you of the status of your distributions for federal
income tax purposes.
Distributions may also be subject to state and local taxes, even if all or
a substantial part of such distribution are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to Fund shareholders when the Fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue
Code and its Regulations, we are required by federal law to withhold and remit
to the IRS 31% of reportable payments (which may include dividends, capital
gains distributions and redemptions). Those regulations require you to certify
that the Social Security number or tax identification number you provide is
correct and that you are not subject to 31% withholding for previous
under-reporting to the IRS. You will be asked to make the appropriate
certification on your application. Payments reported by us that omit your Social
Security number or tax identification number will subject us to a penalty of
$50, which will be charged against your account if you fail to provide the
certification by the time the report is filed, and is not refundable.
Redemption of shares of the Fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize a gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and will generally be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of Fund shares, the reinvestment in additional Fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Internal Revenue Code, resulting in a postponement of the recognition of
such loss for federal income tax purposes.
MANAGEMENT
INVESTMENT MANAGEMENT
The Fund is the sole series of the American Century Investment Trust (the
"Trust"). Under the laws of the Commonwealth of Massachusetts, the board of
trustees is responsible for managing the business and affairs of the Trust.
Acting pursuant to an investment advisory agreement entered into with the Trust,
Benham Management Corporation (the "Manager") serves as the investment manager
of the Fund. Its principal place of business is 1665 Charleston Road, Mountain
View, California 94043. The Manager has been providing investment advisory
services to investment companies and institutional clients since 1971.
In June 1995, American Century Companies, Inc. ("ACC") acquired Benham
Management International, Inc., the then-parent company of the Manager. ACC is
the parent company of American Century Investment Management, Inc. ("ACIM"),
which provides investment management services to many of the funds in the
American Century family of funds. In the acquisition, the Manager became a
wholly-owned subsidiary of ACC. Certain employees of the Manager will be
providing investment management services to funds managed by ACIM, while certain
ACIM employees provide investment management services to funds managed by the
Manager.
The Manager supervises and manages the investment portfolio of the Fund and
directs the purchase and sale of its investment securities. The Manager utilizes
a team of portfolio managers, assistant portfolio managers and analysts acting
together to manage the assets of the Fund. The team meets regularly to review
portfolio holdings and to discuss purchase and sale activity. The team adjusts
holdings in the Fund's portfolios and the Fund's asset mix as it deems
appropriate in pursuit of the Fund's investment objective. Individual portfolio
manager members of the team may also adjust portfolio holdings of the Fund or of
sectors of the Fund as necessary between team meetings.
The portfolio manager members of the teams managing the Fund described in
this Prospectus and their work experience for the last five years are listed as
follows:
Prospectus Additional Information You Should Know 19
AMY O'DONNELL, Portfolio Manager, has been primarily responsible for the
day-to-day operation of the Fund since its inception in November of 1993. Ms.
O'Donnell joined American Century in 1987, and was promoted to her present
position as a Portfolio Manager in 1992. She has a B.S. in business
administration and an M.B.A. in Finance from California State University,
Hayward.
ROBERT V. GAHAGAN, Vice President and Portfolio Manager, is a member of
the team that manages the Fund. Mr. Gahagan has a B.A. and M.B.A. from the
University of Missouri in Kansas City and has over 12 years of investment
experience. He joined American Century in 1983 and manages several other
American Century funds.
The activities of the Manager are subject only to direction of the Trust's
Board of Trustees. For the services provided to the Fund, the Manager receives
an annual fee which cannot exceed 0.50% of average daily net assets. The
Manager's fee drops to a marginal rate of 0.19% of average daily net assets as
the Trust's assets increase. Currently, however, the Fund is the sole series of
the Trust. As a result, the fee rate is effectively applied to the Fund's
average daily net assets.
CODE OF ETHICS
The Fund and the Manager have adopted a Code of Ethics, which restricts
personal investing practices by employees of the Manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the Fund's portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of the Fund
shareholders come before the interests of the people who manage the Fund.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri, 64111, (the "transfer agent") acts as transfer agent and
dividend-paying agent for the Fund. It provides facilities, equipment and
personnel to the Fund and is paid for such services by the Fund. For
administrative services, the Fund pays the transfer agent a monthly fee equal to
its pro rata share of the dollar amount derived from applying the average daily
net assets of all of the funds managed by the Manager. The administrative fee
rate ranges from 0.11% to 0.08% of average daily net assets, dropping as assets
managed by the Manager increase. For transfer agent services, the Fund pays the
transfer agent a monthly fee for each shareholder account maintained and for
each shareholder transaction executed during that month.
The Fund charges no sales commissions, or "loads," of any kind. However,
investors who do not choose to purchase or sell Fund shares directly from the
transfer agent may purchase or sell Fund shares through registered
broker-dealers and other qualified service providers, who may charge investors
fees for their services. These broker-dealers and service providers generally
provide shareholder, administrative and/or accounting services which would
otherwise be provided by the transfer agent. To accommodate these investors, the
Manager and its affiliates have entered into agreements with some broker-dealers
and service providers to provide these services. Fees for such services are
borne normally by the Fund at the rates normally paid to the transfer agent,
which would otherwise provide the services. Any distribution expenses associated
with these arrangements are borne by the Manager.
From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the Manager
or its affiliates.
The Manager and the transfer agent are both wholly owned by ACC. James E.
Stowers Jr., Chairman of the Board of Directors of ACC, controls ACC by virtue
of his ownership of a majority of its common stock.
20 Additional Information You Should Know American Century Investments
DISTRIBUTION OF FUND SHARES
The Fund's shares are distributed by American Century Investment Services,
Inc. (the "Distributor"), a registered broker-dealer and an affiliate of the
Manager. The Manager pays all expenses for promoting and distributing the Fund
shares offered by this Prospectus. The Fund does not pay any commissions or
other fees to the Distributor or to any other broker-dealers or financial
intermediaries in connection with the distribution of Fund shares.
EXPENSES
The Fund pays certain operating expenses directly, including, but not
limited to: custodian, audit, and legal fees; fees of the independent trustees;
costs of printing and mailing prospectuses, statements of additional
information, proxy statements, notices, and reports to shareholders; insurance
expenses; and costs of registering the Fund's shares for sale under federal and
state securities laws. See the Statement of Additional Information for a more
detailed discussion of independent trustee compensation.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
The Trust was organized as a Massachusetts business trust on June 16, 1993.
The Trust is a diversified, open-end management investment company. Its business
and affairs are managed by its officers under the direction of its board of
trustees.
The principal office of the Trust is American Century Tower, 4500 Main
Street, P. O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may
be made by mail to that address, or by phone to 1-800-345-2021 (international
calls: 816-531-5575).
The Fund is the sole series of the Trust which issues shares with no par
value. Additional series of the Trust may be created in the future. In the event
that such other series are created, the assets belonging to each series of
shares will be held separately by the custodian and in effect each series will
be a separate fund.
Each share, irrespective of series, is entitled to one vote for each dollar
of net asset value applicable to such share on all questions, except those
matters which must be voted on separately by the series of shares affected.
Matters affecting only one Fund are voted upon only by that Fund.
Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of trustees can elect all of the
trustees if they choose to do so, and in such event the holders of the remaining
votes will not be able to elect any person or persons to the Board of Trustees.
Unless required by the 1940 Act, it will not be necessary for the Trust to
hold annual meetings of shareholders. As a result, shareholders may not vote
each year on the election of trustees or the appointment of auditors. However,
pursuant to the Trust's by-laws, the holders of shares representing at least 10%
of the votes entitled to be cast may request that the Trust hold a special
meeting of shareholders. The Trust will assist in the communication with other
shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF ITS POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.
THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL SECURITIES OF THE FUND ONLY IN
THOSE STATES WHERE THE FUND'S SHARES HAVE BEEN REGISTERED OR OTHERWISE QUALIFIED
FOR SALE. THE FUND WILL NOT ACCEPT APPLICATIONS FROM PERSONS RESIDING IN STATES
WHERE THE FUND'S SHARES ARE NOT REGISTERED.
Prospectus Additional Information You Should Know 21
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
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