ANNUAL REPORT
[american century logo]
American
Century(sm)
February 28, 1997
BENHAM
GROUP
Prime Money Market
cover
TABLE OF CONTENTS
Report Highlights............................................1
Our Message to You...........................................2
Period Overview..............................................3
Corporate Credit Review......................................4
Performance & Portfolio Information..........................5
Management Q & A.............................................6
Schedule of Investments......................................8
Statement of Assets and Liabilities.........................11
Statement of Operations.....................................12
Statements of Changes in Net Assets.........................13
Notes to Financial Statements...............................14
Financial Highlights........................................16
Independent Auditors' Report................................17
IRA/403(b) Information......................................18
Background Information
Investment Philosophy & Policies.........................20
Comparative Indices......................................20
Lipper Rankings..........................................20
Portfolio Management Team................................20
Credit Research Team.....................................20
Glossary....................................................21
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 needs, we have divided American Century funds
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 -- Family of Funds
BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY GROUP
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS U.S. GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Prime Money Market
We welcome your comments or questions about this report.
See the back cover for ways to contact us by mail, phone or e-mail.
Twentieth Century and the Benham Group are registered marks of American Century
Services Corporation and Benham Management Corporation, respectively. American
Century is a service mark of American Century Services Corporation.
American Century Investments
REPORT HIGHLIGHTS
PERIOD OVERVIEW
o The U.S. economy expanded rapidly during the twelve months ended February
28, 1997. The economy grew much faster than expected, particularly during
the second and fourth quarters of 1996.
o Signs of continued economic strength have many predicting first-quarter
1997 economic growth to be between 3.0% and 3.5%.
o Despite the rapid expansion of the economy, inflation remained tame. For
all of 1996, core consumer prices--which exclude often-volatile food and
energy prices--rose by just 2.6%, tying 1994 for the lowest annual increase
in almost 30 years.
o The seemingly contradictory combination of strong growth and low inflation
caused considerable uncertainty in U.S. financial markets about the Federal
Reserve's interest rate intentions.
o This uncertainty caused money market rates to fluctuate throughout the
period.
CORPORATE CREDIT REVIEW
o A strong U.S. economy led to improved corporate credit during 1996.
According to bond-rater Moody's Investors Service, corporate credit
upgrades outpaced downgrades by 283 to 184 during 1996.
o Despite the generally positive credit outlook, "sub-prime" auto lenders--so
called because they make loans to borrowers with poor credit
histories--defaulted on debt payments or suffered credit rating downgrades.
o Japanese banks continued to suffer from slow economic growth and slumping
Japanese real estate and stock markets. We expect many Japanese banks to
report significant losses when the Japanese fiscal year ends on March 31.
MANAGEMENT Q&A
o The fund returned 5.04% for the twelve months ended February 28, 1997,
compared with the 4.76% average return of its peer group. Prime's
life-of-fund return places it in the top 5% of its peer group average
(according to Lipper Analytical Services).
o With yields remaining in a narrow range throughout the period, our steady,
conservative approach to managing the fund's average maturity paid off with
above-average return.
o Some money market funds were hit by defaults and downgrades on debt issued
by sub-prime auto lenders, but Prime was unaffected because these risky
issuers failed to meet our strict credit criteria.
o We enhanced the fund's responsiveness to changing interest rates by
increasing its holdings of floating-rate notes, whose interest rates reset
periodically.
o Going forward, we expect strong economic growth and low levels of
unemployment to push interest rates higher. We'll try to capture the rise
in rates by keeping the fund's average maturity at the low end of its 50-
to 60-day neutral range.
Prime Money Market
Total Returns: AS OF 2/28/97
6 Months 2.48%*
1 Year 5.04%
Net Assets: $1.2 billion
(AS OF 2/28/97)
Inception Date: 11/17/93
Ticker Symbol: BPRXX
* Not annualized.
Many of the investment terms in this report are defined in the Glossary on page
21.
Annual Report Report Highlights 1
OUR MESSAGE TO YOU
[photo of James E. Stowers III and James M. Benham]
The fiscal year ended February 28, 1997, was an eventful one, both for U.S.
money market rates and our company. Over the past twelve months, money market
rates fluctuated in response to changing interest rate expectations. In the
following pages, our investment management team provides further details about
the market and how your fund was managed during the year.
Fluctuating market conditions underscore the importance of quality investments.
Our commitment to high-quality securities is exemplified by the expansion of our
credit research team. The seven members of the team perform an in-depth analysis
on all securities considered for purchase by American Century money market and
bond funds. The team has established a credit management system that defines
investment limits to cap our funds' exposure to individual issuers, countries or
industries. The team plays an important role in the management of the Prime
Money Market Fund.
On the corporate front, we completed the operational integration of Twentieth
Century and The Benham Group in September 1996. As a result, you now have direct
access to a broader spectrum of funds and services.
We also changed the name of our company. On January 1, 1997, we began serving
you under the name American Century Investments, which reflects our expanded
identity and the independent thinking common to Twentieth Century and Benham.
American Century's fund family is divided into three groups--the Benham Group,
the American Century Group and the Twentieth Century Group. The Prime Money
Market Fund will remain in the Benham Group, because the fund's investment
goals--current income and the preservation of principal--match key attributes of
that group.
This report incorporates a new format designed using your input. We hope you
find it more informative and easier to read. Another informative resource is the
American Century Web site. If you use a personal computer and have Internet
access, we've made it easier for you to download information about American
Century funds and access your fund accounts. With a personal access code, you
can view account balances, exchange money between existing accounts and make
additional investments. The Web site address is: www.americancentury.com. We are
one of the first fund companies to offer direct on-line transactions via the
Internet.
These are examples of how we continue to work to provide information and
services that are useful and convenient to investors in our funds. Thank you for
investing with us.
Sincerely,
/s/James E. Stowers III /s/James M. Benham
James E. Stowers III James M. Benham
President and Chief Executive Officer Vice Chairman
American Century Companies American Century Companies
2 Our Message to You American Century Investments
PERIOD OVERVIEW
U.S. Economy
The U.S. economy expanded rapidly during the twelve months ended February 28,
1997. Strong employment growth and a booming housing market helped the economy
grow at a 4.7% annual rate during the second quarter of 1996. While the pace of
growth slowed to 2.1% during the third quarter, the economy came roaring back in
the fourth quarter to expand at a 3.8% annual rate. Signs of continued economic
strength have many predicting first-quarter 1997 economic growth to be between
3.0% and 3.5%.
Despite the rapid expansion of the economy, inflation remained tame in 1996 and
early 1997. Core consumer prices, which exclude often-volatile food and energy
prices, rose by just 2.6% in 1996, tying 1994 for the lowest annual increase in
almost 30 years. Though wages rose during the period, overall labor costs were
kept in check by lower healthcare and benefit costs. A stronger dollar also
helped keep inflation in check by making imported goods less expensive for U.S.
consumers. With inflation dormant, the Federal Reserve (the Fed) held short-term
interest rates steady throughout the period.
Despite the fact that inflation remained tame, the Fed raised short-term
interest rates in March 1997 to pre-empt higher inflation. While we think the
Fed may raise interest rates further, we don't expect the federal funds rate
(the lending rate targeted by the Fed for large overnight loans between
commercial banks) to breach the 6% level. That's because the "real" federal
funds rate--the federal funds rate minus the rate of inflation--is already at a
level that would inhibit economic growth.
Corporate Money Market Securities
Changing expectations of Fed interest rate policy caused money market rates to
fluctuate sharply between March 1996 and February 1997. At the beginning of the
period, many expected the U.S. economy to wind down in 1996, but a series of
stronger-than-expected reports on the economy dispelled that notion almost
immediately. The seemingly contradictory combination of strong economic growth
and low inflation was responsible for the markets' uncertainty about the Fed's
interest rate intentions.
The accompanying graph depicts the volatility in money market rates between
March 1996 and February 1997. As the graph illustrates, three-month LIBOR
(London Interbank Offered Rate), which tends to reflect market participants'
future expectations for short-term interest rates, fluctuated throughout the
period. (LIBOR is a money market rate that most banks and corporations track
when determining the rate they'll pay to investors on short-term debt.) The
sharpest movements in three-month LIBOR typically occurred in response to the
release of the government's monthly employment report, which the market uses as
a gauge of U.S. economic strength.
[line graph - data described below]
FEDERAL FUNDS RATE VS. THREE-MONTH LIBOR
March '96 through February '97
o Employment Report Released
3-mo. LIBOR Fed Funds
o3/6/96 5.32% 5.25%
3/13/96 5.40% 5.25%
3/20/96 5.47% 5.25%
3/27/96 5.47% 5.25%
o4/3/96 5.49% 5.25%
4/10/96 5.52% 5.25%
4/17/96 5.53% 5.25%
4/24/96 5.50% 5.25%
o5/1/96 5.49% 5.25%
5/8/96 5.53% 5.25%
5/15/96 5.51% 5.25%
5/22/96 5.51% 5.25%
5/29/96 5.50% 5.25%
o6/5/96 5.54% 5.25%
6/12/96 5.58% 5.25%
6/19/96 5.60% 5.25%
6/26/96 5.59% 5.25%
o7/3/96 5.61% 5.25%
7/10/96 5.66% 5.25%
7/17/96 5.69% 5.25%
7/24/96 5.66% 5.25%
o7/31/96 5.68% 5.25%
8/7/96 5.59% 5.25%
8/14/96 5.54% 5.25%
8/21/96 5.53% 5.25%
8/28/96 5.51% 5.25%
o9/4/96 5.61% 5.25%
9/11/96 5.67% 5.25%
9/18/96 5.62% 5.25%
9/25/96 5.64% 5.25%
o10/2/96 5.64% 5.25%
10/9/96 5.57% 5.25%
10/16/96 5.56% 5.25%
10/23/96 5.55% 5.25%
o10/30/96 5.54% 5.25%
11/6/96 5.52% 5.25%
11/13/96 5.52% 5.25%
11/20/96 5.52% 5.25%
11/27/96 5.52% 5.25%
o12/4/96 5.53% 5.25%
12/11/96 5.56% 5.25%
12/18/96 5.60% 5.25%
12/25/96 5.63% 5.25%
1/1/97 5.61% 5.25%
o1/8/97 5.58% 5.25%
1/15/97 5.60% 5.25%
1/22/97 5.59% 5.25%
1/29/97 5.59% 5.25%
o2/5/97 5.59% 5.25%
2/12/97 5.55% 5.25%
2/19/97 5.51% 5.25%
2/26/97 5.50% 5.25%
Source: DRI/McGraw Hill
Annual Report Period Overview 3
CORPORATE CREDIT REVIEW
A strong U.S. economy led to improved corporate credit conditions during the
twelve months ended February 28, 1997. Steady corporate earnings growth
contributed to a record number of corporate credit rating upgrades. According to
bond-rating agency Moody's Investors Service, upgrades outpaced downgrades
during 1996 by 283 to 184, a ratio of 3 to 2.
Specific industries benefiting from the upgrade trend included industrial
companies, most recently in the airline sector. In the financial sector, banks
continued a credit upgrade trend that began a few years ago, while a rising
stock market and heavy initial public offering activity translated into upgrades
for brokerage firms.
Nevertheless, we continue to monitor a few negative credit trends evident during
the period. Two problem areas highlight how our proactive and conservative
approach to credit analysis helps limit the fund's credit risk.
So far in 1997, several "sub-prime" auto lenders--so called because they make
loans to borrowers with poor credit histories--have defaulted on debt payments
or experienced credit rating downgrades.
The difficulties experienced by sub-prime lenders (which struck some mutual fund
companies) illustrate the importance of our conservative credit criteria. Take
sub-prime lender Mercury Finance, which defaulted on its debt payments, as an
example. Mercury's direct debt issues were considered "tier 1" according to SEC
standards. The SEC defines a "tier 1" security as an issue that has received the
highest possible short-term rating from two independent rating agencies. Our
standards for considering a security for purchase are much tougher. Mercury's
debt failed to clear even the first hurdle in our internal rating process.
Another development we're watching closely is the ongoing Japanese banking
crisis. Japanese banks have suffered since 1990, when speculative bubbles in
both the Japanese real estate and stock markets burst. Japan's economy is
recovering slowly, while its real estate and stock markets continue to
deteriorate. We expect many Japanese banks to report significant losses from bad
real estate loans, falling equity positions and sluggish loan activity when the
Japanese fiscal year ends March 31.
To prop up the banking system, the Japanese government announced it would back
the 20 largest Japanese banks. We've pared down that list of 20 to only those
banks that can function independently. In practice, that means the list of
Japanese banks with which we'll do business is much shorter than the list of 20
that others find acceptable. We currently have no Japanese bank exposure.
[line graph - data described below]
IMPROVING CORPORATE CREDIT QUALITY
Number of Rating Changes
Downgrades Upgrades
1987 189 102
1988 237 138
1989 339 138
1990 433 98
1991 350 119
1992 227 136
1993 154 163
1994 160 183
1995 221 205
1996 184 283
Source: Moody`s Investors Service
4 Corporate Credit Review American Century Investments
<TABLE>
<CAPTION>
PERFORMANCE & PORTFOLIO INFORMATION
AVERAGE ANNUAL RETURNS
6 MONTHS 1 YEAR 3 YEARS LIFE OF FUND
TOTAL RETURNS (as of February 28, 1997)
<S> <C> <C> <C> <C>
Prime Money Market ....................... 2.48% 5.04% 5.18% 5.03%
90-Day Treasury Bill Index ............... 2.53% 5.13% 5.13% 4.97%(1)
Average Money Market Instrument Fund(2) .. 2.34% 4.76% 4.75% 4.59%(1)
Fund's Ranking Among Money Market
Instrument Funds(2) .................... -- 66 out of 291 9 out of 221 8 out of 216
(1) Returns since 11/30/93, the date nearest the fund's inception for which
return data are available.
Inception date was November 17, 1993.
(2) According to Lipper Analytical Services.
See pages 20-21 for more information about returns, the comparative index and
Lipper fund rankings.
</TABLE>
CURRENT YIELD (as of February 28, 1997)
7-DAY 7-DAY
CURRENT EFFECTIVE
YIELD YIELD
Prime Money Market 4.94% 5.06%
Yields are defined in the Glossary on page 21.
PORTFOLIO AT A GLANCE
2/28/97 2/29/96
Number of Securities 71 74
Weighted Average Maturity 54 days 68 days
Expense Ratio 0.50% 0.48%
Money market funds are neither insured nor guaranteed by the U.S. government.
Yields will fluctuate, and there can be no assurance that the fund will be able
to maintain a stable $1.00 share price.
Annual Report Performance & Portfolio Information 5
MANAGEMENT Q&A
An interview with Amy O'Donnell, a portfolio manager on the Prime Money Market
fund management team.
How did the fund perform?
The fund performed very well relative to its peers during the twelve months
ended February 28, 1997. For the fiscal year, the fund returned 5.04%, exceeding
the 4.76% average return of the 291 "Money Market Instrument Funds" tracked by
Lipper. The fund's longer-term returns are even more impressive: Prime's
life-of-fund return places it in the top 5% of its Lipper category. The fund's
long-term performance was aided by the fact that Benham Management Corporation
waived its management fees and absorbed the fund's operating expenses from
inception through December 31, 1994. (See the Total Returns table on the
previous page for other fund performance comparisons.)
How was the fund positioned during the period?
With yields remaining in a narrow range, we made only minor adjustments to the
fund's positioning. Concern that the Fed might raise rates led us to bring the
fund's average maturity near the low end of its neutral range of 50 to 60 days.
(The fund benefits from a shorter average maturity when rates are rising because
we can reinvest its assets more quickly.) Rather than try to predict the
direction of interest rates, we took a steady, conservative approach that paid
off with above-average return for the fund.
Some money market funds were recently affected by defaults and rating downgrades
on debt issued by some of the most aggressive auto loan companies, called
"sub-prime lenders." Did the fund hold any securities that defaulted or were
downgraded?
No. The fund has never owned securities issued by a sub-prime auto lender. The
consistent, disciplined application of our conservative credit criteria is one
reason we weren't affected by a default that hit some of our competitors. We
simply don't want to increase our credit risk for a slightly higher yield. We
rely on our high credit standards to narrow down the universe of issuers to what
we feel are the most creditworthy. From that exclusive list, we do our homework
to uncover the best yield and return stories.
You increased the fund's holdings of floating-rate notes (floaters). Why?
Floaters are a good way to increase the fund's responsiveness to changes in
interest rates because their coupons reset on a periodic--usually
monthly--basis. We buy floaters that reset off of the federal funds rate when we
think rates are going down. That's because fed funds is a lagging indicator that
reflects changes to rates only after the fact. When we think rates are going up,
which is our current expectation, we buy floaters that reset off of 1-month
LIBOR. LIBOR floaters are especially attractive in a rising interest rate
environment because LIBOR tends to reflect market participants' future
expectations for the level of interest rates.
[pie charts - data described below]
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 2/28/97)
Commercial Paper 61%
Floating-Rate Notes 16%
U.S. Government Agency Securities 12%
CDs 11%
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 8/31/96)
Commercial Paper 64%
CDs 16%
Floating-Rate Notes 11%
U.S. Government Agency Securities 6%
Other 3%
6 Management Q&A American Century Investments
MANAGEMENT Q&A
You overweighted the fund's holdings in the industrial sector and underweighted
the financial sector. Why?
About 75% of all short-term corporate debt is issued by financial institutions
(such as banks and insurance companies), but the fund's holdings are just about
evenly divided between industrials and financials. We consider this an effective
way to enhance the fund's diversification. However, we're not buying industrials
simply for the sake of diversification; in general, financial companies are very
creditworthy issuers, but they can be somewhat volatile because their business
touches on so many sectors of the market. One attraction of industrial paper is
that when we buy an issue, we're only exposed to a single sector.
Asset-backed securities are a large and growing part of the corporate money
market. Do you plan to incorporate more asset-backed securities into the fund?
Yes. Asset-backed securities have very high credit quality because they carry
credit enhancements, such as bond insurance. Another attraction of asset-backed
securities is that they typically have higher yields than commercial paper and
CDs. We'd be more likely to buy them when we want to extend the fund's average
maturity because they tend to have one-year maturities. But before we go in this
direction, we want to be sure we're doing it right, so we're adding specialists
in asset-backed securities to our corporate credit research staff.
What's your outlook for money market rates going forward?
It's uncertain if the Fed's March 1997 interest rate increase was an isolated
event or the first in a series of moves. Nevertheless, high levels of consumer
confidence, a vibrant housing market and rising employment and wage growth all
seem to argue for strong U.S. economic growth. As a result, we expect rates to
go even higher in the months ahead.
With that outlook in mind, how will you manage the fund over the next six
months?
We'll likely shift the fund's portfolio to a laddered structure, which should
perform better in a rising interest rate environment. (A ladder structure
staggers the maturities of the fund's securities so they occur at regular
intervals.) Because we don't think the Fed is going to raise rates aggressively,
we won't shorten the fund's maturity as much as we otherwise might when rates
are rising. We'll probably keep the fund's average maturity at around 50 days.
That will allow us to buy more longer-maturity paper than we normally would in a
rising interest rate environment, which should help boost the fund's yield.
[pie charts - data described below]
PORTFOLIO COMPOSITION BY CREDIT RATING (as of 2/28/97)
A-1+ 85%
A-1 15%
PORTFOLIO COMPOSITION BY CREDIT RATING (as of 8/31/96)
A-1+ 70%
A-1 25%
Unrated U.S. Government Agency Securities 5%
Annual Report Management Q&A 7
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997
Principal Amount Value
- ------------------------------------------------------------------------------
COMMERCIAL PAPER(1)
Banking-13.6%
$5,000,000 BIL North America, Inc., 5.24%,
3-11-97 $4,992,584
25,000,000 Caisse D'Amortissement de la
Dette Sociale, 5.23%, 4-22-97 24,808,972
4,000,000 Caisse D'Amortissement de la
Dette Sociale, 5.27%, 7-1-97 3,928,156
10,000,000 Canadian Imperial, 5.23%, 4-21-97 9,924,279
22,000,000 Dresdner U.S. Finance, Inc., 5.24%,
3-11-97 21,967,856
4,957,000 IMI Funding Co. (USA), 5.27%,
3-4-97 4,954,798
10,022,000 IMI Funding Co. (USA), 5.27%,
7-1-97 9,839,617
17,000,000 National Australia, 5.23%, 4-16-97 16,883,786
20,850,000 National Australia, 5.23%, 4-17-97 20,705,185
25,000,000 Royal Bank of Canada, 5.21%,
4-2-97 24,881,333
15,000,000 UBS Finance (Delaware), 5.28%,
3-3-97 14,995,517
-----------
157,882,083
-----------
Chemicals & Resins-0.9%
10,000,000 du Pont (E.I.) de Nemours &
Co., 5.23%, 4-17-97 9,931,458
-----------
Diversified Companies-3.3%
17,000,000 Mitsubishi International, 5.23%,
3-13-97 16,970,023
13,000,000 Mitsubishi International, 5.21%,
4-4-97 12,934,559
8,000,000 Mitsubishi International, 5.26%,
6-13-97 7,875,200
-----------
37,779,782
-----------
Education-2.8%
8,000,000 Leland Stanford University, 5.22%,
3-17-97 7,981,156
24,895,000 Yale University, 5.23%, 4-23-97 24,701,849
-----------
32,683,005
-----------
Principal Amount Value
- ------------------------------------------------------------------------------
Electronic Equipment-2.3%
$26,600,000 Sony Capital Corporation, 5.26%,
3-7-97 (Acquired 2-20-97,
Cost $26,541,813)(2) $ 26,576,725
-----------
Financial Services-12.5%
30,000,000 American Express Credit, 5.22%,
4-11-97 29,819,258
22,000,000 Bass Finance (C.I.) Ltd., 5.24%,
4-29-97 21,810,348
14,000,000 Ford Motor Credit, 5.24%, 3-10-97 13,981,625
15,000,000 General Electric Capital Corp.,
5.22%, 4-14-97 14,903,383
5,000,000 General Electric Services, Inc.,
5.24%, 4-29-97 4,956,569
27,000,000 General Electric Services, Inc.,
5.24%, 5-7-97 26,734,178
5,000,000 General Motors Acceptance Co.,
5.25%, 5-22-97 4,939,639
5,000,000 Hitachi Credit America Corp.,
5.21%, 3-18-97 4,987,297
4,200,000 Hitachi Credit America Corp.,
5.21%, 4-4-97 4,178,660
13,000,000 Hitachi Credit America Corp.,
5.23%, 4-24-97 12,895,675
5,725,000 Hitachi Credit America Corp.,
5.24%, 4-28-97 5,675,561
-----------
144,882,193
-----------
Food & Beverage-0.9%
10,736,000 Brown-Forman Corporation, 5.26%,
3-6-97 10,728,082
-----------
Household Audio & Video-3.3%
18,600,000 Panasonic Financing, Inc., 5.27%,
3-4-97 (Acquired 2-12-97,
Cost $18,545,543)(2) 18,591,831
20,000,000 Panasonic Financing, Inc., 5.23%,
4-18-97 (Acquired 2-19-97,
Cost $19,830,511)(2) 19,859,733
-----------
38,451,564
-----------
Instruments-1.1%
13,000,000 Fuji Photo Film Finance, 5.22%,
3-14-97 12,975,213
-----------
See Notes to Financial Statements
8 Schedule of Investments American Century Investments
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997
Principal Amount Value
- ------------------------------------------------------------------------------
Insurance-3.1%
$23,500,000 USAA Capital Corp., 5.21%,
3-31-97 $ 23,396,404
12,800,000 USAA Capital Corp., 5.23%,
4-22-97 12,701,824
-----------
36,098,228
-----------
Machinery-1.6%
18,000,000 Dover Corp., 5.21%, 3-24-97
(Acquired 2-19-97,
Cost $17,913,210)(2) 17,939,510
-----------
Metals & Mining-1.7%
20,000,000 RTZ America, Inc., 5.22%, 3-17-97
(Acquired 12-18-96,
Cost $19,733,000)(2) 19,952,000
-----------
Petroleum Refining-0.9%
10,000,000 Chevron Transport, 5.23%, 4-24-97
(Acquired 2-21-97,
Cost $9,909,411)(2) 9,921,100
-----------
Retail-2.3%
20,000,000 Southland Corp., 5.28%, 3-3-97 19,994,089
7,000,000 Southland Corp., 5.24%, 3-11-97 6,989,558
-----------
26,983,647
-----------
Security Brokers & Dealers-8.2%
20,000,000 BT Securities Corporation, 5.25%,
6-9-97 19,702,222
4,000,000 Goldman Sachs Group L.P., 5.21%,
3-19-97 3,989,360
22,000,000 Goldman Sachs Group L.P., 5.22%,
4-7-97 21,879,030
20,000,000 Merrill Lynch & Co., Inc., 5.23%,
3-12-97 19,967,856
5,000,000 Morgan Stanley Group, Inc., 5.24%,
5-2-97 4,954,361
15,000,000 Morgan Stanley Group, Inc., 5.24%,
5-16-97 14,832,167
10,000,000 Morgan Stanley Group, Inc., 5.25%,
5-23-97 9,878,267
-----------
95,203,263
-----------
Principal Amount Value
- ------------------------------------------------------------------------------
Sovereign Governments
& Agencies-2.1%
$ 2,000,000 Canadian Wheat Board, 5.24%,
5-14-97 $ 1,978,252
22,000,000 Kingdom of Sweden, 5.24%,
4-28-97 21,812,854
-----------
23,791,106
-----------
Total Commercial Paper-60.6% 701,778,959
-----------
OTHER CORPORATE DEBT-15.9%
10,000,000 American Express Centurion, VRN,
5.425%, 3-24-97, resets monthly
off the 1-month LIBOR plus
.05%, final maurity 10-24-1997 10,006,798
23,750,000 American Express Centurion, VRN,
5.345%, 3-24-97, resets monthly
off the 1-month LIBOR minus
.03%, final maturity 12-23-97 23,750,000
10,000,000 Bankers Trust N.Y., VRN, 5.38%,
3-3-97, resets daily off the
Fed Funds rate plus .09%,
final maturity 6-9-97 10,000,000
15,000,000 Bayerische Landesbank Girozentrale,
N.Y., VRN, 5.2875%, 3-3-97,
resets monthly off the 1-month
LIBOR minus .15%,
final maturity 3-3-97 14,999,911
50,000,000 General American Life, VRN, 5.64%,
3-3-97, resets monthly off the
1-month LIBOR plus .20%, final
maturity 1-6-98 (Acquired 1-3-97,
Cost $50,000,000)(3) 50,000,000
25,000,000 General Electric Capital Corp., VRN,
5.445%, 5-19-97, resets quarterly
off the 3-month LIBOR minus
.00625%, final maturity 8-15-97 25,000,000
25,000,000 PNC Bank, N.A., VRN, 5.32578%,
3-17-97, resets monthly off the
1-month LIBOR minus .10%,
final maturity 5-15-97 24,996,638
25,000,000 SMM Trust 1996, Series U, VRN,
5.425%, 3-20-97, resets monthly
off the 1-month LIBOR plus .05%,
final maturity 6-20-97 (Acquired
9-30-96, Cost $25,000,000)(2) 25,000,000
-----------
Total OTHER CORPORATE DEBT-15.9%% 183,753,347
-----------
See Notes to Financial Statements
Annual Report Schedule of Investments 9
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997
P
rincipal Amount Value
- ------------------------------------------------------------------------------
ASSET-BACKED SECURITIES-0.4%(4)
$ 5,326,533 Ford Credit Auto Owner Trust,
S eries 1996-B, Class A1, 5.5138%,
10-15-97 $ 5,326,533
-----------
U.S. GOVERNMENT AGENCY SECURITIES(1)
10,000,000 FHLB, 5.298%, 3-18-97 9,997,699
8,200,000 FHLB, 5.30%, 3-21-97 8,197,808
20,000,000 FHLB, 5.685%, 11-20-97 19,997,740
40,000,000 FHLB, 5.80%, 1-30-98 40,000,000
7,000,000 FHLB Discount Note, 5.21%,
3-18-97 6,982,381
25,000,000 FHLB, VRN, 5.44%, 3-3-97 25,000,000
9,195,000 FNMA Discount Note, 5.20%,
3-12-97 9,180,025
20,000,000 SLMA, VRN, 5.23%, 3-4-97 19,998,516
-----------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES-12.0% 139,354,169
-----------
CERTIFICATES OF DEPOSIT
25,000,000 Bayerische Vereinsbank, 5.56%,
7-16-97 25,001,851
35,000,000 Canadian Imperial Bank, 5.45%,
4-15-97 35,000,000
30,000,000 Morgan Guaranty Trust Co., 5.90%,
9-30-97 30,000,000
8,000,000 Societe General, 5.37%, 3-19-97 8,000,000
30,000,000 Societe General, 5.62%, 4-1-97 30,000,152
-----------
TOTAL Certificates of Deposit-11.1% 128,002,003
-----------
TOTAL INVESTMENT SECURITIES-100.0% $1,158,215,011
==============
Notes to Schedule of Investments
FHLB = Federal Home Loan Banks
FNMA = Federal National Mortgage Association
LIBOR = London Interbank Offered Rate
resets = The frequency with which a fixed-income security's coupon changes,
based on current market conditions or an underlying index. The more frequently a
security resets, the less risk the investor is taking that the coupon will vary
significantly from current market rates.
SLMA = Student Loan Marketing Association
VRN = Variable Rate Note. Interest reset date is indicated and used
in calculating the weighted average portfolio maturity. Rate shown is effective
February 28, 1997.
(1) The rates for U.S. Government Agency discount notes and commercial paper are
the yield to maturity at February 28, 1997. The rates for U.S. Government Agency
securities are the stated coupon rate.
(2) Security was purchased under Rule 144A or Section 4(2) of the Securities Act
of 1933 and, unless registered under the Act or exempted from registration, may
only be sold to qualified institutional investors. The aggregate value of
restricted securities at February 28, 1997, was $137,840,899, which represents
11.4% of the net assets of the Prime Fund.
(3) Restricted as to resale.
(4) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.
See Notes to Financial Statements
10 Schedule of Investments American Century Investments
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997
ASSETS
<S> <C>
Investment securities, at value (Note1)........................................$ $,158,215,011
Cash............................................................................ 12,239,249
Receivable for investments sold................................................. 39,993,970
Receivable for capital shares sold.............................................. 290,202
Interest receivable............................................................. 6,321,946
Prepaid expenses and other assets............................................... 25,200
-------------
1,217,085,578
-------------
LIABILITIES
Disbursements in excess of demand deposit cash.................................. 3,784,938
Payable for capital shares redeemed............................................. 772,250
Payable to affiliates (Note 2).................................................. 453,745
Dividends payable............................................................... 43,104
Accrued expenses and other liabilities.......................................... 41,218
-------------
5,095,255
-------------
Net Assets Applicable to Outstanding Shares....................................$ 1,211,990,323
=============
CAPITAL SHARES
Outstanding (Unlimited number of shares authorized)............................. 1,212,268,858
=============
Net Asset Value Per Share....................................................... $1.00
=============
NET ASSETS CONSIST OF:
Capital paid in................................................................$ 1,212,268,858
Accumulated undistributed net realized (loss) on investment transactions........ (278,535)
-------------
$ 1,211,990,323
=============
See Notes to Financial Statements
</TABLE>
Annual Report Statement of Assets and Liabilities 11
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1997
INVESTMENT INCOME
Income:
Interest..................................................... $67,337,768
-----------
Expenses (Note 2):
Investment advisory fees..................................... 3,850,341
Transfer agency fees......................................... 1,844,608
Administrative fees.......................................... 1,188,257
Printing and postage......................................... 430,976
Telephone expenses........................................... 171,008
Custodian fees............................................... 120,225
Auditing and legal fees...................................... 65,625
Directors' fees and expenses................................. 63,784
Registration and filing fees................................. 51,647
Organizational expenses...................................... 5,870
Other operating expenses..................................... 11,364
------
Total expenses............................................... 7,803,705
Custodian earnings credits (Note 3).......................... (16,854)
Amount waived................................................ (1,584,981)
----------
Net expenses................................................. 6,201,870
---------
Net investment income........................................ 61,135,898
----------
REALIZED (LOSS) ON INVESTMENTS
Net realized (loss) on investments........................... (278,535)
--------
Net Increase in Net Assets Resulting from Operations......... $60,857,363
===========
See Notes to Financial Statements
12 Statement of Operations American Century Investments
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED FEBRUARY 28, 1997
AND FEBRUARY 29, 1996
(Decrease) in Net Assets 1997 1996
OPERATIONS
<S> <C> <C>
Net investment income........................................................... $61,135,898 $74,177,757
Net realized (loss) on investments.............................................. (278,535) --
---------- ----------
Net increase in net assets resulting from operations............................ 60,857,363 74,177,757
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income...................................................... (61,135,898) (74,177,757)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold....................................................... 1,722,837,328 2,375,209,952
Proceeds from reinvestment of distributions..................................... 58,408,826 71,075,673
Payments for shares redeemed.................................................... (1,839,630,699) (2,685,494,938)
-------------- --------------
Net (decrease) in net assets from capital share transactions.................... (58,384,545) (239,209,313)
----------- ------------
Net (decrease) in net assets.................................................... (58,663,080) (239,209,313)
NET ASSETS
Beginning of year............................................................... 1,270,653,403 1,509,862,716
------------- -------------
End of year..................................................................... $1,211,990,323 $1,270,653,403
============== ==============
TRANSACTIONS IN SHARES OF THE FUNDS
Sold .... .........................................................1,722,837,328 2,375,209,952
Issued in reinvestment of distributions......................................... 58,408,826 71,075,673
Redeemed........................................................................ (1,839,630,699) (2,685,494,938)
-------------- --------------
Net (decrease).................................................................. (58,384,545) (239,209,313)
=========== ============
See Notes to Financial Statements
</TABLE>
Annual Report Statements of Changes in Net Assets 13
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization--American Century Investment Trust (the Trust) is registered under
the Investment Company Act of 1940 as an open-end management investment company.
American Century-Benham Prime Money Market Fund (the Fund) is the sole fund
issued by the Trust. The Fund seeks the highest level of current income
consistent with preservation of capital. 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 following
significant accounting policies, related to the Fund, are in accordance with
accounting policies generally accepted in the investment company industry.
Security Valuations--Securities are valued at amortized cost, which approximates
current market value. When valuations are not readily available, securities are
valued at fair value as determined in accordance with procedures adopted by the
Board of Trustees.
Security Transactions--Security transactions are accounted for on the date
purchased or sold. Net realized gains and losses are determined on the
identified cost basis, which is also used for federal income tax purposes.
Investment Income--Interest income is recorded on the accrual basis and includes
amortization of discounts and premiums.
Income Tax Status--It is the Fund's policy to distribute all taxable income and
to otherwise qualify as a regulated investment company under the provisions of
the Internal Revenue Code. Accordingly, no provision has been made for federal
income taxes.
Distributions--Distributions from net investment income are declared daily and
distributed monthly. The Fund does not expect to realize any long-term capital
gains, and accordingly, does not expect to pay any capital gains distributions.
At February 28, 1997, accumulated net realized capital loss carryovers of
$278,535 (expiring 2005) may be used to offset future taxable gains.
Supplementary Information--Certain officers and trustees of the Trust are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the Trust's investment advisor,
Benham Management Corporation (BMC), the Trust's distributor, American Century
Investment Services, Inc. (ACIS), and the Trust's transfer agent, American
Century Services Corporation (ACSC).
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the period. Actual results could differ from these
estimates.
Organization Cost--Costs incurred by the Fund in connection with its
organization, initial registration, and public offering of shares are being
amortized on a straight-line basis over a five-year period ending October 1998.
14 Notes to Financial Statements American Century Investments
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1997
- ------------------------------------------------------------------------
2. Transactions with Related Parties
The Trust has entered into an Investment Advisory Agreement with BMC that
provides the Trust with investment advisory services in exchange for an
investment advisory fee. ACSC pays all compensation of Trust officers and
trustees who are officers or directors of ACC or any of its subsidiaries. In
addition, promotion and distribution expenses are paid by BMC. The investment
advisory fee is paid monthly by the Fund by applying its average daily closing
net assets to the following annualized investment advisory fee schedule:
0.50% of the first $100 million
0.45% of the next $100 million
0.40% of the next $100 million
0.35% of the next $100 million
0.30% of the next $100 million
0.25% of the next $1 billion
0.24% of the next $1 billion
0.23% of the next $1 billion
0.22% of the next $1 billion
0.21% of the next $1 billion
0.20% of the next $1 billion
0.19% of the average daily net assets over $6.5 billion
The Trust has an Administrative Services and Transfer Agency Agreement with
ACSC. Under the Agreement, ACSC provides substantially all administrative and
transfer agency services necessary to operate the Fund. Fees for these services
are based on transaction volume, number of accounts and average daily closing
net assets for funds advised by BMC. The Agreement was formerly with Benham
Financial Services, Inc.
The Trust has an additional agreement with BMC pursuant to which BMC established
a contractual expense guarantee that limits Fund expenses (excluding items such
as brokerage commissions, taxes, interest, and custodian earnings credits, and
extraordinary expenses) to 0.50% of average daily closing net assets. The
agreement provides that BMC may recover amounts (representing expenses in excess
of the Fund's expense guarantee rate) absorbed during the preceding 11 months,
if, and to the extent that, for any given month, the Fund's expenses are less
than the expense guarantee rate in effect at that time. The expense guarantee
rate is in effect through May 31, 1998.
The payable to affiliates as of February 28, 1997, based on the above agreements
were as follows:
Investment Advisor ................ $177,390
Administrative Services and
Transfer Agent .................... 276,355
--------
$453,745
========
- ------------------------------------------------------------------------
3. Expense Offset Arrangements
The Fund's Statement of Operations reflect custodian earnings credits. These
amounts are used to offset the custodian fees payable by the Fund to the
custodian bank. The credits are earned when the Fund maintains a balance of
uninvested cash at the custodian bank. Beginning with the year ended February
29, 1996, the ratios of operating expenses to average net assets shown in the
Financial Highlights are calculated as if these credits had not been earned.
- ------------------------------------------------------------------------
4. Corporate Events
The following name changes became effective January 1, 1997:
<TABLE>
NEW NAMES FORMER NAMES
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fund's Issuer: American Century Investment Trust Benham Investment Trust
Fund: American Century - Benham Prime Money Market Fund Benham Prime Money Market Fund
Parent Company: American Century Companies, Inc. Twentieth Century Companies, Inc.
Distributor: American Century Investment Services, Inc. Twentieth Century Securities, Inc.
Transfer Agent: American Century Services Corporation Twentieth Century Services, Inc.
</TABLE>
Annual Report Notes to Financial Statements 15
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Years Ended February 28 (except as
noted)
1997 1996(1) 1995 1994(2)
PER-SHARE DATA
<S> <C> <C> <C> <C>
Net Asset Value,Beginning of Period......... $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
Income from Investment Operations
Net Investment Income ................. 0.05 0.06 0.05 0.01
---- ---- ---- ----
Distributions
From Net Investment Income............. (0.05) (0.06) (0.05) (0.01)
----- ----- ----- -----
Net Asset Value, End of Period.............. $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
Total Return(3)........................ 5.04% 5.60% 4.93% 0.96%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets(4).................. 0.50% 0.48% 0.04% --
Ratio of Operating Expenses to
Average Net Assets (Before Expense Waiver)(4) 0.63% 0.62% 0.71% 1.49%(5)
Ratio of Net Investment Income
to Average Net Assets.................. 4.92% 5.43% 5.28% 3.35%(5)
Ratio of Net Investment Income
to Average Net Assets (Before Expense Waiver) 4.79% 5.29% 4.61% 1.86%(5)
Net Assets, End
of Period (in thousands)............... $1,211,990 $1,270,653 $1,509,863 $75,168
(1) Year Ended February 29, 1996.
(2) November 17, 1993 (Inception) through February 28, 1994.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total return for periods less than one year are not
annualized.
(4) The ratios for periods subsequent to February 29, 1995, include expenses
paid through expense offset arrangements.
(5) Annualized.
See Notes to Financial Statements
</TABLE>
16 Financial Highlights American Century Investments
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
American Century Investment Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investment securities, of American Century-Benham Prime Money
Market Fund (a series of American Century Investment Trust) as of February 28,
1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
then ended, and the financial highlights for each of the periods presented.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
American Century-Benham Prime Money Market Fund (a series of American Century
Investment Trust) as of February 28, 1997, the results of its operations, the
changes in its net assets and the financial highlights for the periods indicated
above, in conformity with generally accepted accounting principles.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Kansas City, Missouri
April 4, 1997
Annual Report Independent Auditors' Report 17
IMPORTANT NOTICE FOR
ALL IRA AND 403(b) SHAREHOLDERS
As required by law, any distributions you receive from an IRA and certain 403(b)
distributions [not eligible for rollover to an IRA or to another 403(b)] are
subject to federal income tax withholding at the rate of 10% of the total amount
withdrawn, unless you elect not to have withholding apply. If you don't want us
to withhold on this amount, you may send us a written notice not to have the
federal income tax withheld. Your written notice is valid for six months from
the date of receipt at American Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Exchange/ Redemption form or an IRS Form W-4P. Call American Century for either
form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
18 Important Notice American Century Investments
NOTES
Annual Report Notes 19
BACKGROUND INFORMATION
Investment Philosophy & Policies
American Century Investments offers 42 fixed-income funds, ranging from money
market funds to long-term bond funds and including both taxable and tax-exempt
funds.
Prime Money Market seeks as high a level of interest income as is consistent
with the preservation of principal by investing in a diversified portfolio of
short-term money market securities. The fund must maintain a weighted average
maturity of 90 days or less.
An investment in Prime Money Market is neither insured nor guaranteed by the
U.S. government. Yields will fluctuate, and there can be no assurance that the
fund will be able to maintain a stable net asset value of $1 per share.
Comparative Indices
The following index is used in the report as a fund performance comparison. It
is not an investment product available for purchase.
The 90-Day Treasury Bill Index is derived from secondary market interest rates
as published by the Federal Reserve Bank.
Lipper Rankings
Lipper Analytical Services, Inc. is an independent mutual fund ranking service
that groups funds according to their investment objectives. Rankings are based
on average annual returns for each fund in a given category for the periods
indicated. Rankings are not included for periods less than one year.
The Lipper category for the Prime Money Market fund is:
Money Market Instrument Funds--funds that intend to maintain a stable net asset
value and that invest in high-quality financial instruments rated in the top two
grades with dollar-weighted average maturities of less than 90 days.
PORTFOLIO MANAGEMENT TEAM
Vice President and
Senior Portfolio Manager Bob Gahagan
Portfolio Managers Amy O'Donnell, Denise Tabacco
CREDIT RESEARCH TEAM
Taxable Fixed-Income
Research Director Vicki Zesses
Senior Credit
Research Analysts Edward Grant, Tanya Fleischer
Credit Research Analysts Michael Difley, Tom Vaiana,
John Walsh
Associate Credit
Research Analyst Sudha Mani
20 Background Information American Century Investments
GLOSSARY
Returns
o Total Return figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.
o Average Annual Returns illustrate the annually compounded returns that
would have produced the fund's cumulative total returns if the fund's
performance had been constant over the entire period. Average annual
returns smooth out variations in a fund's return; they are not the same as
fiscal year-by-year results. For fiscal year-by-year returns, please refer
to the "Financial Highlights" on page 16.
Yields
o 7-day Current Yield is calculated based on the income generated by an
investment in the fund over a seven-day period and is expressed as an
annual percentage rate.
o 7-day Effective Yield is calculated similarly, although this figure is
slightly higher than the fund's 7-Day Current Yield because of the effects
of compounding. The 7-Day Effective Yield assumes that income earned from
the fund's investments is reinvested and generating additional income.
Portfolio Statistics
o Number of Issues--the number of different securities held by a fund on a
given date.
o Weighted Average Maturity (WAM)--a measurement of the sensitivity of a
fixed-income portfolio to interest rate changes. WAM indicates the average
time until the securities in the portfolio mature, weighted by dollar
amount. The longer the WAM, the more interest rate exposure and sensitivity
the portfolio has.
o Expense Ratio--the operating expenses of the fund, expressed as a
percentage of net assets. Shareholders pay an annual fee to the investment
advisor for investment advisory and management services. The expenses and
fees are deducted from fund income, not from each shareholder. The annual
fee has a contractual expense limit guarantee based on the terms of the
Investment Advisory Agreement. (See Note 2 in the Notes to Financial
Statements.)
Types of Money Market Securities
o Asset-Backed Securities--debt securities that represent ownership in a pool
of receivables, such as credit card debt, auto loans or mortgages.
o Certificates of Deposit (CDs)--CDs represent a bank's obligation to repay
money deposited with it for a specified period of time. Different types of
CDs have different issuers. For example, Yankee CDs are issued by U.S.
branches of foreign banks, and Eurodollar CDs are issued in London by
Canadian, European and Japanese banks.
o Commercial Paper (CP)--short-term debt issued by large corporations to
raise cash and to cover current expenses in anticipation of future
revenues. The maximum maturity for CP is 270 days, although most CP is
issued in a one- to 50-day maturity range. CP rates generally track those
of other widely traded money market instruments, such as Treasury bills and
certificates of deposit, but they are also influenced by the maturity date
and the size and credit rating of the issuer.
o Floating-Rate Notes (Floaters)--debt securities whose interest rates change
when a designated base rate changes. The base rate is often the federal
funds rate, the 90-day Treasury bill rate or the London Interbank Offered
Rate (LIBOR). Floaters are considered derivatives because they "derive"
their interest rates from their designated base rates. However, floaters
are not "risky" derivatives--their behavior is similar to that of their
designated base rates. The SEC has recognized this similarity and does not
consider floaters to be inappropriate investments for money market funds.
o U.S. Government Agency Notes--intermediate-term debt securities issued by
U.S. government agencies (such as the Federal Farm Credit Bank and the
Federal Home Loan Bank). Some agency notes are backed by the full faith and
credit of the U.S. government, while most are guaranteed only by the
issuing agency. These notes are issued with maturities ranging from three
months to 30 years. Money market funds invest in these securities when they
have remaining maturities of one year or less.
Annual Report Glossary 21
[american century logo]
American
Century(sm)
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
American Century Investment Trust
Investment Manager
Benham Management Corporation
This report and the statements it contains are submitted for the general
information of our shareholders. The report is not authorized for distribution
to prospective investors unless preceded or accompanied by an effective
prospectus.
American Century Investment Services, Inc.
9704 [recycled logo]
SH-BKT-8345 Recycled
