[front cover] August 31, 1998
SEMIANNUAL REPORT
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AMERICAN CENTURY
[graphic of stairs]
BENHAM GROUP
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PRIME MONEY MARKET
[american century logo(reg.sm)]
American
Century
[inside front cover]
A Note from the Founder
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On our 40th anniversary, I would personally like to express my profound
appreciation for the confidence you have shown in American Century. We are
grateful for the opportunity to manage your money, and we will do our utmost to
continue to meet your expectations and justify your confidence in us.
I founded American Century on the belief that if we can make you
successful, you, in turn, will make us successful. That is the principle that
will guide us in the future.
Sincerely,
/s/James E. Stowers
About our New Report Design
- --------------------------------------------------------------------------------
Why We Changed
We're trying hard to be reader-friendly. Our reports contain a lot of very good
information, from fund statistics and financials to Q&A's with fund managers. We
hope the new design will make the reports more interesting and understandable
while helping you keep abreast of your fund's strategy and performance.
What's New
The reports are designed to be attractive and easy to use whether you're reading
them in depth or just skimming.
New features include:
* Larger type size in many sections.
* Brief explanations of the financial statements.
* More prominent graphs and charts.
* Quotes in the margins to highlight report content.
THE BOTTOM LINE.
The new design actually costs slightly less than the old one. We reallocated
costs and eliminated a cover letter and the envelope that previously came with
your report enclosed. This not only saves money, but reduces the number of
mailing pieces you receive.
The new reports also use roughly the same amount of paper as the old ones.
Previously, paper was trimmed and thrown away to produce the smaller report
size.
We believe we've come up with a more interesting, informative and user-friendly
publication.
We hope you enjoy it.
[left margin]
Benham Group
Prime Money Market
(BPRXX)
[40 Years logo]
Four Decades of Serving Investors
40 Years
American Century
1958-1998
Our Message to You
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/photo of James E. Stowers III and James E. Stowers, Jr./
James E. Stowers III, seated, with James E. Stowers, Jr.
Money market funds reaffirmed their value during the six months ended
August 31, 1998. While global equity markets fell sharply, money funds and other
cash instruments provided a relatively stable place where investors could
redirect money earmarked for savings or short-term goals.
Prime Money Market's yield remained quite stable, but the threat of global
economic weakness caused interest rates in general to decline. On September 29,
the Federal Reserve acknowledged the global slowdown and cut its bellwether
federal funds rate for the first time in almost three years. As a result,
Prime's yield will likely trend downward in the coming months.
Slower U.S. economic growth should also reduce inflationary pressures. In a
slow-growth, low-inflation environment, Prime and other money market funds can
keep ahead of cost-of-living increases as well as provide a relatively stable
place to park money. Furthermore, Prime, because of its higher-yielding holdings
and low fee structure, should continue to produce a competitive yield compared
to other money funds and cash alternatives.
Significant new money flowed into Prime during the summer, but not just
from skittish stock investors. On August 29, Cash Reserve, a $1.1 billion money
fund managed by American Century, merged into Prime. We want to assure Prime
shareholders that the impact of the merger should be minimal. The fund managers,
credit analysts, and investment approach remain the same. Cash Reserve had the
same investment and credit teams and the same investment objectives as Prime,
and that is why we decided to merge the two funds. Some positives should in fact
result from the merger. Larger funds receive more attention from the securities
dealers with whom the fund managers trade, and Prime should get better yields on
securities traded in larger quantities. It's also easier to diversify the fund's
portfolio when there are more assets under management.
Finally, speaking of positives, we hope you like the new design of this
report. It's intended to make the important information you need about your fund
easier to find and read.
We appreciate your investment with American Century.
Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
[right margin]
Table of Contents
Report Highlights 2
Services Update 3
PRIME MONEY MARKET
Performance Information 4
Portfolio at a Glance 4
Management Q&A 5
Portfolio Composition
by Security Type 5
Portfolio Composition
by Credit Rating 6
Schedule of Investments 7
FINANCIAL STATEMENTS
Statement of Assets and
Liabilities 11
Statement of Operations 12
Statements of Changes
in Net Assets 13
Notes to Financial
Statements 14
Financial Highlights 17
OTHER INFORMATION
Proxy Voting Results 19
Share Class and Retirement
Account Information 20
Background Information
Investment Philosophy
and Policies 21
Comparative Indices 21
Lipper Rankings 21
Credit Rating
Guidelines 21
Investment Team
Leaders 21
Glossary 22
www.americancentury.com 1
Report Highlights
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MARKET PERSPECTIVE
* The U.S. interest rate outlook reversed in response to financial turmoil in
Asia and Russia. Earlier this year, the consensus view was that rates would
rise. By August, investors and analysts predicted interest rates would fall
because of weakening global economic conditions.
* Money market yields inverted by August--one-year securities actually yielded
less than three-month securities. One-year yields declined to reflect the
belief that the Federal Reserve would cut interest rates by at least 50
basis points (0.50%) to stimulate the U.S. economy.
* In August, heavy demand for U.S. government money market securities caused
the yield advantage of corporate money market securities over government
money market paper (called the "risk premium") to increase.
* On September 29, the Federal Reserve cut its bellwether federal funds rate
for the first time in nearly three years. At least one or two more
short-term interest rate cuts are priced into money market yields.
FUND PERFORMANCE
* Prime performed well, providing investors with a higher yield and total
return than the average money market fund, according to Lipper Analytical
Services.
* The financial turmoil in Asia and Russia had little immediate impact on
Prime's performance. Prime's yield declined slightly, but that was due to a
previously-approved increase in the fund's expense ratio on May 31, not
portfolio performance or market conditions.
* Even after the expense ratio increase, the fund's expenses were still well
below the average for all money funds. The low fee structure helps explain
why Prime continues to outperform the average money fund.
* We expect Prime's yield to decline as short-term U.S. interest rates
continue to fall. Falling interest rates will affect all U.S. money funds
and cash instruments.
FUND STRATEGY
* As the interest rate outlook changed, we repositioned the portfolio. We
bought securities with one-year maturities (and higher yields) and some
shorter-term securities to keep the fund's weighted average maturity within
guidelines.
* We acquired the one-year securities when longer-term money market paper
still yielded more than short-term.
* Approximately 98% of the portfolio was invested in "top tier" securities (as
rated by Standard & Poor's) as of August 31, 1998. The remaining 2% was
rated "top tier" by three other independent credit rating agencies.
* Prime's credit strength is enhanced by our internal credit research team,
which constantly assesses the financial strength of companies issuing
corporate paper.
* Going forward, we will maintain high credit standards and strive to avoid
vulnerable companies and industries.
[left margin]
"THE FINANCIAL TURMOIL IN ASIA AND RUSSIA HAD LITTLE IMMEDIATE IMPACT ON
PRIME'S PERFORMANCE."
PRIME MONEY MARKET(1)
(BPRXX)
TOTAL RETURNS: AS OF 8/31/98
6 Months 2.61%(2)
1 Year 5.29%
NET ASSETS: $2.9 billion
7-DAY CURRENT YIELD: 5.08%
INCEPTION DATE: 11/17/93
(1) Investor Class.
(2) Not annualized.
See Total Returns on page 4.
Investment terms are defined in the Glossary on page 22.
2 1-800-345-2021
Services Update
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We get many questions from money market investors about our services. Here
are answers to several frequently asked questions.
CAN I MAKE DIRECT DEPOSITS INTO MY MONEY MARKET FUND?
Yes. Give us a call, and we can send you the information you need to set up
direct deposit of your paycheck, Social Security check, Treasury Direct interest
payment, military allotment, or payments from other government agencies.
WHAT IS THE HOLDING PERIOD ON NEW DEPOSITS INTO MY ACCOUNT?
Generally there is an eight-business-day holding period for deposited funds
(initial investments in a new account are held for 15 calendar days). There is a
one-day holding period for U.S. Treasury checks, money orders, and travelers'
checks.
IS THERE AN EASY WAY TO MOVE MONEY FROM MY MONEY MARKET ACCOUNT INTO MY STOCK
AND BOND FUND ACCOUNTS ON A REGULAR BASIS, FOR DOLLAR-COST-AVERAGING PURPOSES?
Yes. Our "Automatic Exchange" plan allows regularly scheduled automatic
transfers from your American Century money market fund into any of your
variable-price American Century stock or bond funds. You can arrange for this
service with a phone call.
IS THERE A LIMIT TO THE NUMBER OF EXCHANGES I CAN MAKE OUT OF MY MONEY MARKET
FUND?
If you are exchanging from your money market fund into your bond or stock
fund, there is no limit. However, there is a limit of six exchanges per calendar
year out of your bond and stock funds.
Exchanges can be made by:
* calling an Investor Services Representative at 1-800-345-2021
* calling our Automated Information Line at 1-800-345-8765*
* writing us a letter
* visiting our Web site at
www.americancentury.com*
IS THERE A FEE FOR WRITING CHECKS AGAINST MY MONEY MARKET FUND?
No. You can write as many checks as you like at no charge, as long as each
check is for $100 or more.
IF YOU HAVE ANY QUESTIONS ABOUT OUR SERVICES, CALL US TOLL FREE AT
1-800-345-2021 OR E-MAIL US AT OUR WEB SITE (WWW.AMERICANCENTURY.COM).
[right margin]
ACCESSING YOUR MONEY. . .
WE CAN SEND A CHECK DIRECTLY TO YOU AT YOUR ADDRESS OF RECORD. ALL YOU NEED TO
DO IS GIVE US A CALL OR WRITE US A LETTER REQUESTING THE CHECK. WE CAN ALSO MAKE
AUTOMATIC DEPOSITS FROM YOUR MONEY MARKET FUND TO YOUR BANK ACCOUNT.
* Requires shareholder authorization.
www.americancentury.com 3
Prime Money Market--Performance
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<TABLE>
<CAPTION>
TOTAL RETURNS AS OF AUGUST 31, 1998
INVESTOR CLASS (INCEPTION 11/17/93) ADVISOR CLASS (INCEPTION 8/28/98)
PRIME 90-DAY TREASURY MONEY MARKET INSTRUMENT FUNDS(2) PRIME 90-DAY TREASURY
MONEY MARKET BILL INDEX AVERAGE RETURN FUND'S RANKING MONEY MARKET BILL INDEX
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) ........... 2.61% 2.09% 2.45% -- -- --
1 YEAR ................ 5.29% 4.71% 4.93% 49 OUT OF 305 -- --
- ----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS ............... 5.21% 5.02% 4.92% 44 OUT OF 259 -- --
LIFE OF FUND .......... 5.11% 4.94%(3) 4.73%(3) 12 OUT OF 202(3) 0.04%(1) --
(1) Returns for periods less than one year are not annualized.
(2) According to Lipper Analytical Services, an independent mutual fund ranking
service.
(3) Since 11/30/93, the date nearest the class's inception for which data are
available.
</TABLE>
See pages 20-22 for more information about share classes, returns, the
comparative index, and Lipper fund rankings.
PORTFOLIO AT A GLANCE
8/31/98 2/28/98
NUMBER OF ISSUERS 73 58
WEIGHTED AVERAGE
MATURITY 71 DAYS 65 DAYS
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.53%* 0.50%
* Annualized.
YIELDS AS OF AUGUST 31, 1998
INVESTOR CLASS
7-DAY CURRENT YIELD 5.08%
7-DAY EFFECTIVE YIELD 5.21%
Past performance does not guarantee future results.
Money market funds are neither insured nor guaranteed by the FDIC or any other
government agency.
Yields will fluctuate, and although the fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
fund.
4 1-800-345-2021
Prime Money Market--Q&A
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An interview with Denise Tabacco and John Walsh, portfolio managers on the
Prime Money Market fund investment team.
HOW DID THE FUND PERFORM DURING THE SIX MONTHS ENDED AUGUST 31, 1998?
Prime performed well, providing investors with a higher yield and total
return than the average money market fund. Prime's total return was 2.61%, well
above the 2.45% average return of the 313 "Money Market Instrument Funds"
tracked by Lipper Analytical Services. (See the Total Returns table on the
previous page for other fund performance comparisons.)
Prime's seven-day current yield declined slightly (from 5.17% on February
28 to 5.08% on August 31), but that was due primarily to an increase in the
fund's expense ratio, not portfolio performance. Under the terms of the new
management agreement approved by shareholders last year, the fund's expense
ratio rose from 0.50% to 0.60% on May 31, 1998. This increase brought Prime's
expense ratio in line with other American Century money market funds, but still
kept it well below the approximately 0.70% average for all money market funds.
No further expense ratio increases were approved by shareholders.
Prime's low fee structure helps explain why its yield and returns continue
to beat those of the average money fund.
WHAT IMPACT DID THE FINANCIAL TURMOIL IN ASIA AND RUSSIA HAVE ON PRIME'S
PERFORMANCE?
Not much, in the short term. The turmoil had more of an impact on the U.S.
money market in general, the interest rate outlook, and our portfolio strategy
than it did on performance. The sell-off in global stock and bond markets in
July and August resulted in a "flight to quality" as investors sought a safe
haven for their money. This caused heavy demand for U.S. money market
securities, resulting in lower yields, particularly for U.S. government
securities. As the yields for government money market securities fell, the "risk
premium" (the yield difference) between those securities and corporate money
market securities increased to about 35 basis points (0.35% -- a basis point
equals one one-hundredth of 1%).
PLEASE DESCRIBE THE RISK PREMIUM IN MORE DETAIL. WHAT IS ITS SIGNIFICANCE?
Prime invests primarily in high-quality commercial paper (CP) issued by
corporations. Historically, this paper has yielded about 20 basis points more
than government securities such as Treasury bills. This higher yield is the
"risk premium" --the additional compensation investors get for the slightly
greater financial risk that CP has compared to government-backed securities. The
risk premium is also what allows CP to typically outperform government
securities.
Fortunately, the risk reflected in the risk premium can be managed. It's
important to remember that we invest primarily in "top tier" CP--securities that
have been rated in the top two credit categories by at least two independent
credit rating agencies. Also, the credit strength of all money funds is
regulated by the Securities & Exchange Commission (SEC). Prime's credit strength
is further enhanced by our own internal credit research team. This team
constantly assesses the financial strength of companies issuing CP, sometimes
rejecting investments that would have met rating agency and SEC standards.
[right margin]
"PRIME PERFORMED WELL, PROVIDING INVESTORS WITH A HIGHER YIELD AND TOTAL RETURN
THAN THE AVERAGE MONEY MARKET FUND."
[pie charts - data below]
PORTFOLIO COMPOSITION BY SECURITY TYPE
AS OF AUGUST 31, 1998
Commercial Paper 70%
Variable-Rate Notes 17%
Asset-Backed Securities 7%
CDs 4%
Other 2%
AS OF FEBRUARY 28, 1998
Commercial Paper 71%
Variable-Rate Notes 18%
Asset-Backed Securities 5%
CDs 5%
Other 1%
Security types are defined on page 22.
www.americancentury.com 5
Prime Money Market--Q&A
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(Continued)
WHAT OTHER IMPACT DID THE GLOBAL FINANCIAL TURMOIL HAVE?
It reversed the interest rate outlook, inverted the yield structure in the
U.S. fixed-income market, and changed our investment strategy. Earlier this
year, the consensus view was that U.S. interest rates would rise in response to
inflation pressures caused by the U.S. economy's strong growth. By August,
investors and analysts predicted interest rates would fall to stimulate
economies weakened by fallout from the Asian and Russian implosions.
As the interest rate outlook changed, we repositioned the portfolio. We
bought securities with one-year maturities (to capture and lock in higher
yields), and we bought some shorter-term securities to keep the fund's weighted
average maturity within guidelines, below 90 days.
We acquired the one-year securities when longer-term money market paper
still yielded more than short-term. That's a normal yield environment--you'd
expect to earn more yield for securities that take longer to mature and
therefore expose you to a greater possibility of economic and interest rate
changes. However, by August, money market yields had inverted, and one-year
securities actually yielded less than three-month securities. One-year yields
declined to reflect investors' belief that the Federal Reserve (the Fed--the
U.S. central bank) would cut interest rates by at least 50 basis points to
stimulate the U.S. economy. The yields for shorter-term paper stayed higher
because these securities were closer to maturity and were less likely to be
affected by Fed rate cuts.
HAVE YOU BEEN ABLE TO MAINTAIN THE HIGH CREDIT QUALITY OF PRIME'S PORTFOLIO?
Yes. Approximately 98% of the portfolio was invested in "top tier"
securities (as rated by Standard & Poor's) as of August 31, 1998. The
portfolio's percentage of A-1+ securities declined (from 72% on February 28 to
64% on August 31), but that's because our credit team found higher-yielding A-1
securities with credit quality worthy of an A-1+ rating. The remaining 2% of the
portfolio was invested in A-2 securities. These securities aren't rated top tier
by Standard & Poor's, but they are by Moody's, Fitch Investors, and Thompson's
Bank Watch.
The portfolio is now dominated by U.S. and Europe-based companies, where
financial conditions are relatively stable. But we're not taking that stability
for granted -- we are in the process of aggressively questioning whether some
U.S. bank securities are appropriate for Prime given their lending practices.
Our credit team will not hesitate to remove established U.S. banks that no
longer meet the criteria from our approved list.
WHAT IS YOUR OUTLOOK FOR PRIME?
We expect the yield to decline as interest rates continue to fall. On
September 29, the Fed cut its bellwether federal funds rate for the first time
in nearly three years. At least one or two more such cuts are priced into money
market yields. These cuts would eventually force us to buy lower-yielding
securities when our older, higher-yielding holdings mature.
We will maintain high credit standards and strive to avoid vulnerable
companies and industries. Working closely with our credit team, we plan to take
evasive action on companies well before the rating agencies downgrade their
securities.
[left margin]
"APPROXIMATELY 98% OF THE PORTFOLIO WAS INVESTED IN 'TOP TIER' SECURITIES AS OF
AUGUST 31, 1998."
PORTFOLIO COMPOSITION BY CREDIT RATING
% OF FUND INVESTMENTS
AS OF AS OF
8/31/98 2/28/98
A-1+ 64% 72%
A-1 34% 28%
A-2 2% --
Ratings provided by Standard & Poor's. See Credit Rating Information on page 21
for more information.
"THE PORTFOLIO IS NOW DOMINATED BY U.S. AND EUROPE-BASED COMPANIES, WHERE
FINANCIAL CONDITIONS ARE RELATIVELY STABLE."
6 1-800-345-2021
Prime Money Market--Schedule of Investments
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AUGUST 31, 1998 (UNAUDITED)
Principal Amount Value
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COMMERCIAL PAPER (1)
BANKING--12.3%
$ 20,000,000 Banco de Galicia y Buenos Aires
S.A. de C.V., 5.47%,
9/11/98-9/17/98 (LOC:
Bayerische Hypo-Und
Vereinsbank, A.G.) $ 19,960,493
25,000,000 Bankers Trust New York Corp.,
5.48%, 10/13/98-12/21/98
(LOC: Credit Suisse First
Boston) 24,682,614
18,500,000 Cofco Capital Corp., 5.57%,
9/16/98 18,457,065
30,000,000 Garanti Funding Corporation,
5.50%, 2/3/99 (LOC:
Bayerische Hypo-Und
Vereinsbank, A.G.) 29,289,584
72,000,000 Generale Bank, Inc.,
5.47%-5.52%,
10/5/98-12/10/98 71,077,773
37,750,000 IMI Funding Corp. (USA),
5.51%-5.54%,
9/18/98-2/5/99 37,445,613
15,000,000 National Australia Bank Ltd. SA,
5.58%, 9/1/98 15,000,000
25,000,000 Pemex Capital, Inc., 5.52%,
10/15/98 (LOC: Societe
Generale) 24,831,333
50,000,000 Spintab-Swedmortgage AB,
5.53%, 11/9/98-11/20/98 49,453,144
40,000,000 Unibanco-Uniao de Bancos
Brasileiros S.A. Grand Cayman,
5.45%-5.48%,
4/15/99-6/28/99 (LOC:
Westdeutsche Landesbank
Girozentrale) 38,403,622
20,000,000 Union Bank of California, 5.54%,
11/2/98 19,809,178
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348,410,419
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BUILDING & HOME IMPROVEMENTS--0.3%
10,000,000 Cemex SA de CV, 5.50%,
12/15/98 (LOC: Credit Suisse
First Boston) 9,839,583
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CHEMICALS & RESINS--3.4%
25,000,000 du Pont (E.I.) de Nemours & Co.,
5.49%, 9/28/98 24,897,063
13,500,000 du Pont (E.I.) de Nemours & Co.,
5.50%, 9/29/98 (Acquired
8/11/98, Cost $13,398,938)(2) 13,442,250
57,500,000 Formosa Plastics Corp. USA,
5.51%-5.57%,
9/8/98-10/7/98 57,390,924
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95,730,237
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Principal Amount Value
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.7%
$ 21,250,000 Motorola, Inc., 5.49%, 11/19/98 $ 20,993,991
------------------
COMMUNICATIONS SERVICES--0.5%
14,700,000 U S WEST Communications
Group, 5.50%, 11/18/98 14,524,825
------------------
CONSUMER PRODUCTS--0.9%
25,000,000 Procter & Gamble Co. (The),
5.47%, 12/22/98 24,574,556
------------------
CREDIT CARD & TRADE RECEIVABLES--8.3%
124,000,000 Corporate Receivables Corp.,
5.50%-5.55%,
9/23/98-11/12/98 (Acquired
7/10/98-8/31/98, Cost
$122,656,660)(2) 123,107,209
10,000,000 Dakota Certificates (Citibank),
5.50%, 11/13/98 9,888,472
104,000,000 Dakota Certificates (Citibank),
5.48%-5.53%,
9/4/98-12/7/98 (Acquired
7/10/98-8/14/98, Cost
$102,635,132)(2) 103,282,421
------------------
236,278,102
------------------
EDUCATION--0.3%
10,045,000 Yale University, 5.50%,
11/6/98-11/16/98 9,939,825
------------------
ENERGY (PRODUCTION & MARKETING)--3.6%
23,200,000 Chevron Transport Corp.,
5.51%-5.52%,
9/11/98-11/3/98 23,057,183
13,000,000 Chevron Transport Corp., 5.48%,
12/18/98 (Acquired 8/20/98,
Cost $12,762,533)(2) 12,786,280
20,000,000 Chevron U.K. Investment PLC,
5.52%, 10/22/98 19,843,600
8,200,000 Koch Industries, Inc., 5.75%,
9/2/98 (Acquired 8/31/98,
Cost $8,197,381)(2) 8,198,690
39,300,000 Statoil-Den Norske Stats,
5.50%-5.52%,
10/28/98-10/29/98 38,955,440
------------------
102,841,193
------------------
FINANCIAL SERVICES--28.9%
35,000,000 BT Alex Brown, Inc.,
5.47%-5.55%,
10/14/98-12/11/98 34,593,635
36,000,000 Countrywide Home Loans, Inc.,
5.53%-5.58%,
9/1/98-10/27/98 35,894,731
35,000,000 Credit Suisse First Boston, Inc.,
5.51%, 10/26/98 34,705,368
See Notes to Financial Statements
www.americancentury.com 7
Prime Money Market--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
AUGUST 31, 1998 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
$ 122,310,000 Falcon Asset Securities Corp.,
5.50%-5.54%,
9/15/98-11/10/98 (Acquired
6/22/98-8/27/98, Cost
$121,042,690)(2) $ 121,637,579
52,000,000 Ford Motor Credit Co., 5.50%,
10/5/98-11/6/98 51,534,333
22,300,000 Ford Motor Credit Co. Puerto Rico,
Inc., 5.52%, 10/2/98 22,194,001
90,000,000 General Electric Capital Corp.,
5.46%-5.85%,
9/1/98-3/1/99 89,257,766
20,000,000 General Electric Capital Services,
Inc., 5.53%, 9/9/98 19,975,422
67,700,000 General Electric Financial
Assurance Holdings,
5.51%-5.54%,
9/3/98-11/10/98 67,483,387
74,300,000 General Motors Acceptance Corp.,
5.50%, 11/17/98-11/18/98 73,419,833
15,000,000 Goldman Sachs Group L.P.,
5.49%, 11/25/98 14,805,563
94,100,000 Merrill Lynch & Co., Inc.,
5.48%-5.52%,
9/24/98-2/26/99 92,213,137
25,000,000 Morgan Stanley Dean Witter,
Discover & Co., 5.48%, 1/25/99 24,444,389
32,247,000 Receivables Capital Corp.,
5.51%-5.56%,
9/17/98-10/23/98 (LOC:
Bank of America N.T. & S.A.)
(Acquired 8/24/98-8/28/98,
Cost $31,965,926)(2) 32,002,536
9,000,000 WCP Funding Inc., 5.53%,
9/17/98 8,977,880
78,000,000 WCP Funding Inc., 5.52%-5.54%,
9/8/98-11/13/98 (Acquired
6/19/98-8/27/98, Cost
$77,193,101)(2) 77,410,826
18,700,000 Yamaha Motor Finance Corp.,
5.53%, 10/28/98 (LOC: Chase
Manhattan Bank) 18,536,266
------------------
819,086,652
------------------
INDUSTRIAL--3.0%
86,149,000 Siebe plc, 5.51%-5.53%,
9/9/98-11/4/98 (Acquired
6/10/98-8/13/98, Cost
$78,141,877)(2) 85,696,534
------------------
INSURANCE--5.2%
36,695,000 American Family Financial Services,
Inc., 5.48%-5.52%,
10/7/98-12/2/98 36,403,079
19,500,000 Marsh & McLennan Companies,
Inc., 5.49%, 11/5/98 19,306,706
Principal Amount Value
- --------------------------------------------------------------------------------
$ 25,000,000 Marsh & McLennan Companies,
Inc., 5.375%, 5/21/99
(Acquired 8/26/98, Cost
$23,999,653)(2) $ 24,022,049
15,000,000 Prudential Funding Corp., 5.54%,
10/8/98 14,914,592
20,000,000 SAFECO Corporation,
5.53%-5.54%,
9/8/98-10/14/98 19,923,075
32,590,000 SAFECO Corporation,
5.53%-5.54%,
9/18/98-11/10/98
(Acquired 7/8/98-8/25/98,
Cost $32,186,291)(2) 32,311,650
------------------
146,881,151
------------------
METALS & MINING--2.0%
20,000,000 Rio Tinto America Inc., 5.46%,
9/2/98 19,996,968
36,100,000 Rio Tinto America Inc.,
5.50%-5.52%,
10/2/98-11/24/98
(Acquired 7/10/98-8/27/98,
Cost $35,638,611)(2) 35,831,290
------------------
55,828,258
------------------
PHARMACEUTICALS--0.4%
10,000,000 Glaxo Wellcome PLC, 5.50%,
10/9/98 9,941,944
------------------
PRINTING & PUBLISHING--0.5%
13,200,000 Reed Elsevier Inc., 5.50%,
10/19/98 (Acquired 7/17/98,
Cost $13,010,433)(2) 13,103,200
------------------
UTILITIES--1.0%
29,000,000 National Rural Utilities
Cooperative Finance Corp.,
5.49%-5.51%,
9/24/98-10/22/98 28,812,768
------------------
TOTAL COMMERCIAL PAPER--71.3% 2,022,483,238
------------------
CORPORATE DEBT
BANKING--6.0%
10,000,000 American Express Centurion Bank,
VRN, 5.68%, 9/8/98, resets
monthly off the 1-month LIBOR
plus 0.03% with no caps 10,005,301
83,000,000 American Express Centurion Bank,
VRN, 5.59%, 9/9/98-9/18/98,
resets monthly off the 1-month
LIBOR minus 0.06% with no
caps 83,000,000
See Notes to Financial Statements
8 1-800-345-2021
Prime Money Market--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
AUGUST 31, 1998 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
$ 10,000,000 Banc One Corp., MTN, VRN,
5.53%, 9/1/98, resets weekly
off the Federal Funds rate plus
0.03% with no caps $ 9,995,231
10,000,000 Chase Manhattan Corp., MTN,
Series C, VRN, 5.69%,
10/15/98, resets quarterly off
the 3-month LIBOR with no
caps 10,000,986
27,000,000 KeyBank N.A., VRN, 5.58%,
9/1/98, resets daily off
the Federal Funds rate plus 0.07%
with no caps 26,997,049
15,000,000 U.S. Bank NA Minnesota, VRN,
5.52%, 9/16/98, resets
monthly off the 1-month LIBOR
minus 0.13% with no caps 14,998,786
15,000,000 U.S. Bank NA Minnesota, VRN,
5.53%, 9/16/98, resets
monthly off the 1-month LIBOR
minus 0.12% with no caps 14,994,720
------------------
169,992,073
------------------
FINANCIAL SERVICES--4.0%
30,000,000 Abbey National Treasury Services
PLC, MTN, VRN, 5.48%, 9/15/98,
resets monthly off the 1-month
LIBOR minus 0.17%
with no caps 29,975,470
30,000,000 Credit Suisse First Boston Inc.,
MTN, VRN, 5.62%, 9/1/98,
resets daily off the Federal
Funds rate plus 0.11% with no caps
(Acquired 4/15/98-7/23/98, Cost
$30,000,000)(2) 30,000,000
20,000,000 General Electric Capital Corp.,
MTN, Series A, VRN, 5.55%,
9/4/98, resets quarterly off the
3-month LIBOR minus 0.14% with
no caps 19,991,838
25,000,000 General Electric Capital Corp.,
VRN, 5.61%, 10/21/98, resets
quarterly off the 3-month LIBOR
minus 0.08% with no caps 25,000,000
10,000,000 Merrill Lynch & Co., Inc., MTN,
Series B, VRN, 5.84%,
10/5/98, resets quarterly off
the 3-month LIBOR plus 0.15%
with no caps 10,012,248
------------------
114,979,556
------------------
INSURANCE--7.6%
100,000,000 General American Life Insurance
Company, VRN, 5.85%, 9/1/98,
resets monthly off the 1-month
LIBOR plus 0.20% with no caps
(Acquired 1/3/97-7/7/97,
Cost $100,000,000)(2) 100,000,000
Principal Amount Value
- --------------------------------------------------------------------------------
$ 45,000,000 Jackson National Life Insurance
Co., VRN, 5.84%, 9/10/98,
resets monthly off the 1-month
LIBOR plus 0.19% with no
caps (Acquired 6/10/98,
Cost $45,000,000)(2) $ 45,000,000
70,400,000 Travelers Insurance Company
(The), VRN, 5.69%, 9/9/98-9/22/98,
resets monthly off the 1-month
LIBOR plus 0.04% with no caps
(Acquired 5/22/98-6/8/98, Cost
$70,400,000)(2) 70,400,000
------------------
215,400,000
------------------
TOTAL CORPORATE DEBT-17.6% 500,371,629
------------------
ASSET-BACKED SECURITIES
1,263,305 Americredit Automobile
Receivables Trust, Series
1997 D, Class A1, 5.80%,
11/5/98 1,263,305
25,559,129 Americredit Automobile Receivables
Trust, Series
1998 B, Class A1 SEQ, 5.63%,
6/12/99 25,559,129
23,000,000 Americredit Automobile Receivables
Trust, Series
1998 C, Class A1 SEQ, 5.64%,
9/12/99 23,000,000
2,570,354 Capita Equipment Receivables
Trust, Series 1997-1, Class A1,
5.79%, 12/15/98 2,570,354
33,912,861 Caterpillar Financial Asset Trust,
Series 1998 A, Class A1 SEQ,
5.64%, 7/26/99 33,912,861
4,247,252 Chase Manhattan Auto Owner
Trust, Series 1998 A, Class A1
SEQ, 5.55%, 3/12/99 4,247,252
9,658,018 Chase Manhattan Auto Owner
Trust, Series 1998 B,
Class A1 SEQ, 5.58%,
5/10/99 9,658,018
2,470,375 Contimortgage Home Equity
Loan Trust, Series 1998-1,
Class A1 SEQ, 5.65%,
3/15/99 2,470,375
8,992,220 Contimortgage Home Equity
Loan Trust, Series 1998-2,
Class A1 SEQ, 5.65%,
6/15/99 8,992,220
9,832,273 Ford Credit Auto Owner Trust,
Series 1998 A, Class A1 SEQ,
5.55%, 2/16/99 9,832,273
See Notes to Financial Statements
www.americancentury.com 9
Prime Money Market--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
AUGUST 31, 1998 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
$ 30,021,940 Ford Credit Auto Owner Trust,
Series 1998 C, Class A1 SEQ,
5.61%, 1/15/99 $ 30,021,940
------------------
TOTAL ASSET-BACKED SECURITIES--5.3% 151,527,727
------------------
CERTIFICATES OF DEPOSIT
20,000,000 ABN Amro Bank NV (Chicago),
5.79%, 3/26/99 20,004,326
30,000,000 Bayerische Landesbank
Girozentrale (New York), 5.66%,
2/22/99 30,000,000
60,000,000 Deutsche Bank AG,
5.70%-5.74%,
3/5/99-5/12/99 59,980,098
Principal Amount Value
- --------------------------------------------------------------------------------
$ 9,500,000 Rabobank Nederland NV, 5.43%,
1/12/99 $ 9,491,732
25,000,000 Royal Bank of Canada (New
York), 5.55%, 2/11/99 24,993,430
------------------
TOTAL CERTIFICATES OF DEPOSIT--5.1% 144,469,586
------------------
BANK NOTES--0.7%
20,000,000 BankBoston Corp., 5.60%,
12/31/98 20,000,000
------------------
TOTAL INVESTMENT SECURITIES-100.0% $2,838,852,180
==================
NOTES TO SCHEDULE OF INVESTMENTS
LIBOR = London Interbank Offered Rate
LOC = Letter of Credit
MTN = Medium Term Note
resets = The frequency with which a 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.
VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Rate shown is effective
August 31, 1998.
(1) The rates for commercial paper are the yield to maturity at purchase.
(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 August 31, 1998, was $928,232,514, which represented
32.4% of net assets. Restricted securities considered illiquid represent 4.0% of
net assets.
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the principal amount of each investment
* the amortized cost of each investment
* the percentage of total investments in each industry, as applicable
* the percent and dollar breakdown of each investment category
See Notes to Financial Statements
10 1-800-345-2021
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
AUGUST 31, 1998 (UNAUDITED)
ASSETS
Investment securities, at value
(amortized cost and
cost for federal income
tax purposes)(Note1) ............................... $ 2,838,852,180
Cash ................................................. 52,268,135
Interest receivable .................................. 7,487,727
---------------
2,898,608,042
---------------
LIABILITIES
Disbursements in excess
of demand deposit cash ............................. 2,940,565
Payable for capital
shares redeemed .................................... 25,288,905
Accrued management
fees (Note 2) ...................................... 1,423,556
Distribution and service
fee payable (Note 2) ............................... 92
Payable for trustees'
fees and expenses .................................. 6,505
Accrued expenses and
other liabilities .................................. 9,580
---------------
29,669,203
---------------
Net Assets ........................................... $ 2,868,938,839
===============
NET ASSETS CONSIST OF:
Capital paid in ...................................... $ 2,869,277,075
Accumulated net realized
loss on investment transactions .................... (338,236)
---------------
$ 2,868,938,839
===============
Investor Class
Net assets ........................................... $ 2,866,723,100
Shares outstanding ................................... 2,867,061,336
Net asset value per share ............................ $ 1.00
Advisor Class
Net assets ........................................... $ 2,215,739
Shares outstanding ................................... 2,215,739
Net asset value per share ............................ $ 1.00
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF ASSETS AND LIABILITIES--This statement details
what the fund owns (assets), what it owes (liabilities), and its net assets as
of the last day of the period. If you subtract what the fund owes from what it
owns, you get the fund's net assets. For each class of shares, the net assets
divided by the total number of shares outstanding gives you the price of an
individual share, or the net asset value per share.
NET ASSETS are also broken out by capital (money invested by shareholders); net
investment income not yet paid to shareholders; and net gains earned on
investments but not yet paid to shareholders or net losses on investments (known
as realized gains or losses). This breakout tells you the value of net assets
that are performance-related, such as investment gains or losses, and the value
of net assets that are not related to performance, such as shareholder
investments and redemptions.
See Notes to Financial Statements
www.americancentury.com 11
Statement of Operations
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED AUGUST 31, 1998 (UNAUDITED)
INVESTMENT INCOME
Income:
Interest ................................................ $ 43,392,895
------------
Expenses (Note 2):
Management fees ......................................... 4,554,059
Distribution fees - Advisor Class ....................... 46
Service fees - Advisor Class ............................ 46
Trustees' fees and expenses ............................. 19,105
------------
Total expenses ........................................ 4,573,256
Amount waived ........................................... (346,955)
------------
Net expenses .......................................... 4,226,301
------------
Net investment income ................................... 39,166,594
------------
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments ........................ (72)
------------
Net Increase in Net Assets
Resulting from Operations ............................. $ 39,166,522
============
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF OPERATIONS--This statement breaks out how the
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.
Fund OPERATIONS include:
* income earned from investments
* management fees and other expenses
* gains or losses from selling investments (known as realized gains or losses)
See Notes to Financial Statements
12 1-800-345-2021
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED AUGUST 31, 1998 (UNAUDITED) AND YEAR ENDED FEBRUARY 28, 1998
Increase in Net Assets AUGUST 31, 1998 FEBRUARY 28, 1998
OPERATIONS
Net investment income .................. $ 39,166,594 $ 67,224,070
Net realized gain (loss)
on investments ....................... (72) 24,038
--------------- ---------------
Net increase in net assets
resulting from operations ............ 39,166,522 67,248,108
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class ....................... (39,165,840) (67,224,070)
Advisor Class ........................ (754) --
--------------- ---------------
Decrease in net assets
from distributions ................... (39,166,594) (67,224,070)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 3)
Net increase in net assets
from capital share transactions ...... 1,451,628,224 205,296,326
--------------- ---------------
Net increase in net assets ............. 1,451,628,152 205,320,364
NET ASSETS
Beginning of period .................... 1,417,310,687 1,211,990,323
--------------- ---------------
End of period .......................... $ 2,868,938,839 $ 1,417,310,687
=============== ===============
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
the fund's net assets changed over the past two reporting periods. It details
how much the fund grew or shrank as a result of:
* operations--a summary of the Statement of Operations from the previous page
for the most recent period
* distributions--income and gains distributed to shareholders
* share transactions--shareholders' purchases, reinvestments, and redemptions
Net assets at the beginning of the period plus the sum of operations,
distributions to shareholders and capital share transactions result in net
assets at the end of the period.
See Notes to Financial Statements
www.americancentury.com 13
Notes to Financial Statements
- --------------------------------------------------------------------------------
AUGUST 31, 1998 (UNAUDITED)
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
only 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 Fund is
authorized to issue two classes of shares: the Investor Class and the Advisor
Class. The two classes of shares differ principally in their respective
shareholder servicing and distribution expenses and arrangements. All shares of
the Fund represent an equal pro rata interest in the assets of the class to
which such shares belong, and have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except for class specific
expenses and exclusive rights to vote on matters affecting only individual
classes. Sale of the Advisor Class commenced August 28, 1998. The following
significant accounting policies, related to all classes of the Fund, are in
accordance with generally accepted accounting principles.
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 as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.
INVESTMENT INCOME-- Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums. Discounts and
premiums are accreted/amortized daily on a straight-line basis.
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 or state income taxes.
DISTRIBUTIONS-- Distributions from net investment income are declared and
credited 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.
Accumulated net realized capital loss carryovers of $338,236 (expiring 2002
through 2005) may be used to offset future taxable gains.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions 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.
ADDITIONAL INFORMATION--Funds Distributor, Inc. (FDI) is the Trust's
distributor. Certain officers of FDI are also officers of the Trust.
14 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
AUGUST 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The Trust has entered into a Management Agreement with American Century
Investment Management, Inc. (ACIM) that provides the Fund with investment
advisory and management services in exchange for a single, unified management
fee per class. Expenses excluded from this agreement are brokerage, taxes,
portfolio insurance, interest, fees and expenses of the Trustees who are not
considered "interested persons" as defined in the Investment Company Act of 1940
(including counsel fees) and extraordinary expenses. ACIM waived expenses which
exceeded 0.50% of average daily net assets through May 31, 1998. The annual rate
at which this fee is assessed is determined monthly in a two-step process:
First, a fee rate schedule is applied to the net assets of all of the funds in
the Fund's investment category which are managed by ACIM (the "Investment
Category Fee"). The overall investment objective of the Fund determines its
Investment Category. The three investment categories are: the Money Market Fund
Category, the Bond Fund Category and the Equity Fund Category. The Fund is in
the Money Market Fund Category. Second, a separate fee rate schedule is applied
to the net assets of all of the funds managed by ACIM (the "Complex Fee"). The
Investment Category Fee and the Complex Fee are then added to determine the
unified management fee rate. The management fee is paid monthly by the Fund
based on the Fund's class average daily net assets during the previous month
multiplied by the monthly management fee rate.
The annualized Investment Category Fee schedule for the Fund is as follows
0.3700% of the first $1 billion
0.3270% of the next $1 billion
0.2860% of the next $3 billion
0.2690% of the next $5 billion
0.2580% of the next $15 billion
0.2575% of the next $25 billion
0.2570% of the average daily net assets over $50 billion
The annualized Complex Fee schedule (Investor Class) is as follows:
0.3100% of the first $2.5 billion
0.3000% of the next $7.5 billion
0.2985% of the next $15 billion
0.2970% of the next $25 billion
0.2960% of the next $50 billion
0.2950% of the next $100 billion
0.2940% of the next $100 billion
0.2930% of the next $200 billion
0.2920% of the next $250 billion
0.2910% of the next $500 billion
0.2900% of the average daily net assets over $1,250 billion
The Complex Fee schedule for the Advisor Class is lower by 0.2500% at each
graduated step. For example, if the Investor Class Complex Fee is 0.3100% for
the first $2.5 billion, the Advisor Class Complex Fee is 0.0600% (0.3100% minus
0.2500%) for the first $2.5 billion.
The Board of Trustees has adopted the Advisor Class Master Distribution and
Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the Investment
Company Act of 1940. The Plan provides that the Fund will pay ACIM an annual
distribution fee equal to 0.25% and annual service fee equal to 0.25%. The fees
are computed daily and paid monthly based on the Advisor Class's average daily
closing net assets during the previous month. The distribution fee provides
compensation for distribution expenses incurred by financial intermediaries in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers, and financial institutions that have
entered into sales agreements with respect to shares of the Fund. The service
fee provides compensation for shareholder and administrative services rendered
by ACIM, its affiliates or independent third party providers. Fees incurred by
the Fund under the Plan during the period August 29, 1998 through August 31,
1998 were $92.
Certain officers and trustees of the Trust are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Trust's investment manager, ACIM, and the
Trust's transfer agent, American Century Services Corporation.
www.americancentury.com 15
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
AUGUST 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows (unlimited number of shares
authorized):
SHARES AMOUNT
INVESTOR CLASS
Six months ended August 31, 1998
Sold ................................. 1,743,308,051 $ 1,743,308,051
Issued in connection with
acquisition (Note 4) ................. 1,201,153,326 1,201,069,659
Issued in reinvestment
of distributions ..................... 37,561,426 37,561,426
Redeemed ............................. (1,532,526,651)
(1,532,526,651)
--------------- ---------------
Net increase ......................... 1,449,496,152 $ 1,449,412,485
=============== ===============
Year ended February 28, 1998
Sold ................................. 2,330,994,339 $ 2,330,994,339
Issued in reinvestment
of distributions ..................... 63,902,564 63,902,564
Redeemed ............................. (2,189,600,577) (2,189,600,577)
--------------- ---------------
Net Increase ......................... 205,296,326 $ 205,296,326
=============== ===============
ADVISOR CLASS
Period ended August 31, 1998(1)
Sold ................................. -- --
Issued in connection
with acquisition (Note 4) ............ 2,242,355 $ 2,242,355
Issued in reinvestment
of distributions ..................... 880 880
Redeemed ............................. (27,496) (27,496)
--------------- ---------------
Net increase ......................... 2,215,739 $ 2,215,739
=============== ===============
(1) August 28, 1998 (acquisition date-- see Note 4) through August 31, 1998.
- --------------------------------------------------------------------------------
4. REORGANIZATION PLAN
On August 28, 1998 American Century -Benham Prime Money Market Fund (Prime)
acquired all of the net assets of the American Century - Benham Cash Reserve
Fund (Cash Reserve), pursuant to a plan of reorganization approved by the
acquired fund's shareholders on August 7, 1998. Prime is the surviving fund for
the purposes of maintaining the financial statements and performance history in
the post-reorganization.
The acquisition was accomplished by a tax-free exchange of 1,201,153,326
shares of Prime Investor Class for 1,201,153,326 shares of Cash Reserve Investor
Class outstanding on August 28, 1998 and 2,242,355 shares of Prime Advisor Class
for 2,242,355 shares of Cash Reserve Advisor Class outstanding on August 28,
1998. Immediately before the acquisition, the net assets of Prime were
$1,641,758,871, consisting only of the Investor Class. The net assets of Cash
Reserve immediately before the acquisition were $1,203,312,014, consisting of
$1,201,069,659 Investor Class net assets and $2,242,355 Advisor Class net
assets. Immediately after the acquisition, the combined net assets of the Fund
were $2,845,070,885, which consisted of $2,842,828,530 Investor Class net assets
and $2,242,355 Advisor Class net assets.
Prime acquired capital loss carryforwards of approximately $83,667. These
acquired capital loss carryforwards are subject to limitations on their use
under the Internal Revenue Code, as amended.
16 1-800-345-2021
Prime Money Market--Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED FEBRUARY 28 (EXCEPT AS NOTED)
Investor Class
1998(1) 1998 1997 1996(2) 1995 1994(3)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- ------------- ------------- -------------
Income From
Investment Operations
Net Investment Income ...... 0.03 0.05 0.05 0.06 0.05 0.01
------------- ------------- ------------- ------------- ------------- -------------
Distributions
From Net Investment
Income .................... (0.03) (0.05) (0.05) (0.06) (0.05) (0.01)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
End of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= ============= ============= =============
Total Return(4) ............ 2.61% 5.29% 5.04% 5.60% 4.93% 0.96%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ........ 0.53%(5) 0.50% 0.50% 0.48% 0.04% --
Ratio of Operating Expenses
to Average Net Assets
(Before Expense Waiver) ...... 0.57%(5) 0.63% 0.63% 0.62% 0.71% 1.49%(5)
Ratio of Net Investment Income
to Average Net Assets ........ 4.91%(5) 5.17% 4.92% 5.43% 5.28% 3.35%(5)
Ratio of Net Investment Income
to Average Net Assets
(Before Expense Waiver) ...... 4.87%(5) 5.04% 4.79% 5.29% 4.61% 1.86%(5)
Net Assets, End
of Period (in thousands) ..... $ 2,866,723 $ 1,417,311 $ 1,211,990 $ 1,270,653 $ 1,509,863 $ 75,168
</TABLE>
(1) Six months ended August 31, 1998 (unaudited).
(2) Year ended February 29, 1996.
(3) November 17, 1993 (inception) through February 28, 1994.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income
* income distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
See Notes to Financial Statements
www.americancentury.com 17
Prime Money Market--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
Advisor
Class
1998(1)
PER-SHARE DATA
Net Asset Value,
Beginning of Period .................................... $ 1.00
---------
Income From
Investment Operations
Net Investment Income .................................. --(2)
---------
Distributions
From Net Investment
Income ................................................. --(2)
---------
Net Asset Value,
End of Period .......................................... $ 1.00
=========
Total Return(3) ........................................ 0.04%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ....................................... 0.85%(4)
Ratio of Net Investment Income to
Average Net Assets ....................................... 4.09%(4)
Net Assets, End of Period
(in thousands) ........................................... $ 2,216
(1) August 28, 1998 (acquisition date - see Note 4) through August 31, 1998.
(2) Income and distributions were less than $0.01 per share.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
See Notes to Financial Statements
18 1-800-345-2021
Proxy Voting Results
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On August 7, 1998, the following proposal was voted on and passed by the
shareholders of the Benham Cash Reserve Fund. See Note 4 in the Notes to
Financial Statements.
PROPOSAL 1:
To vote on the approval of a plan of reorganization.
For: 699,031,288
Against: 18,353,769
Abstain: 24,886,389
www.americancentury.com 19
Share Class and Retirement Account Information
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SHARE CLASSES
American Century offers two classes of shares for Prime Money Market fund.
One class is for investors who buy directly from American Century, and the other
is for investors who buy through financial intermediaries.
The original class of Prime Money Market shares is called the INVESTOR
CLASS. All shares issued and outstanding before August 28, 1998, have been
designated as Investor Class shares. Investor Class shares may also be purchased
after August 28, 1998. Investor Class shareholders do not pay any commissions or
other fees for purchase of fund shares directly from American Century. Investors
who buy Investor Class shares through a broker-dealer may be required to pay the
broker-dealer a transaction fee. THE PRICE AND PERFORMANCE OF THE INVESTOR CLASS
SHARES ARE LISTED IN NEWSPAPERS. NO OTHER CLASS IS CURRENTLY LISTED.
In addition, there is an ADVISOR CLASS, which is sold through banks,
broker-dealers, insurance companies and financial advisors. Advisor Class shares
are subject to a 0.50% Rule 12b-1 service and distribution fee. Half of that fee
is available to pay for recordkeeping and administrative services, and half is
available to pay for distribution services provided by the financial
intermediary through which the Advisor Class shares are purchased. The total
expense ratio of the Advisor Class is 0.25% higher than the total expense ratio
of the Investor Class.
Both classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.
RETIREMENT ACCOUNT INFORMATION
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.
20 1-800-345-2021
Background Information
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INVESTMENT PHILOSOPHY AND POLICIES
The Benham Group offers 38 fixed-income funds, ranging from money market
funds to long-term bond funds and including both taxable and tax-exempt funds.
Each fund is managed to provide a "pure play" on a specific sector of the
fixed-income market. To ensure adherence to this principle, the basic structure
of each fund's portfolio is tied to a specific market index. Fund managers
attempt to add value by making modest portfolio adjustments based on their
analysis of prevailing market conditions. Investment decisions are made by
management teams, which meet regularly to discuss market analysis and investment
strategies.
In addition to these principles, each fund has its own investment policies:
PRIME MONEY MARKET is a money market fund that seeks to provide interest
income 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 FDIC or any other government agency. Yields will fluctuate, and although the
fund seeks to preserve the value of your investment at $1 per share, it is
possible to lose money by investing in the fund.
COMPARATIVE INDICES
The following index is used in the report for fund performance comparisons.
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.
CREDIT RATING GUIDELINES
Credit ratings are issued by independent research companies such as
Standard & Poor's and Moody's. Ratings are based on an issuer's financial
strength and ability to pay interest and principal in a timely manner.
It's important to note that credit ratings are subjective, reflecting the
opinions of the rating agencies; they are not absolute standards of quality.
[right margin]
INVESTMENT TEAM LEADERS
PORTFOLIO MANAGERS
DENISE TABACCO
JOHN WALSH
CREDIT RESEARCH MANAGER
GREG AFIESH
www.americancentury.com 21
Glossary
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RETURNS
* 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.
* 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 pages 17-18.
YIELDS
* 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.
* 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
* NUMBER OF ISSUERS--the number of entities that issued securities held by the
fund on a given date.
* WEIGHTED AVERAGE MATURITY (WAM)--a measure 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.
* EXPENSE RATIO--the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)
TYPES OF MONEY MARKET SECURITIES
* ASSET-BACKED SECURITIES--debt securities that represent ownership in a pool of
receivables, such as credit card debt, auto loans or mortgages.
* 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.
* 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.
* VARIABLE-RATE NOTES (VRNS)--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) . VRNs
are considered derivatives because they "derive" their interest rates from their
designated base rates. However, VRNs 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 VRNs to be inappropriate investments for money
market funds.
* U.S. GOVERNMENT AGENCY SECURITIES--debt securities issued by U.S. government
agencies (such as the Federal Farm Credit Bank and the Federal Home Loan Bank).
Some agency securities are backed by the full faith and credit of the U.S.
government, while most are guaranteed only by the issuing agency. These
securities are issued with maturities ranging from three months to 30 years.
Money market funds invest in these securities when they have remaining
maturities of 13 months or less.
22 1-800-345-2021
Notes
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www.americancentury.com 23
Notes
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24 1-800-345-2021
[inside back cover]
[right margin]
[american century logo(reg.sm)]
American
Century
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
INVESTOR SERVICES:
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 816-444-3485
FAX: 816-340-7962
INTERNET: www.americancentury.com
AMERICAN CENTURY INVESTMENT TRUST
INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI
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.
(c) 1998 AMERICAN CENTURY SERVICES CORPORATION
FUNDS DISTRIBUTOR, INC.
[recycled logo]
Recycled
[back cover]
[40 Years]
Four Decades of Serving Investors
40 Years
American Century
1958-1998
American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES
9810 (c)1998 American Century Services Corporation
SH-BKT-13907 Funds Distributor, Inc.
