N14
Initial Statement
As filed with the Securities and Exchange Commission on April 17, 1998
Registration Nos.
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. ____ [ ]
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AMERICAN CENTURY INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
4500 Main Street,
P.O. Box 419200
Kansas City, MO 64141-6200
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 816-531-5575
Charles A. Etherington
Vice President and Assistant General Counsel
4500 Main Street, P.O. Box 419200, Kansas City, MO 64141-6200
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective under the Securities Act of 1933.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is required because an indefinite number of shares have previously been
registered on Form N-1A (Registration Nos. 33-65170, 811-8532) pursuant to Rule
24f-2 under the Investment Company Act of 1940. The Registrant is filing as an
exhibit to this Registration Statement an opinion related to the legality of
shares being issued in connection with this Registration Statement. Pursuant to
Rule 429, this Registration Statement relates to the aforesaid Registration
Statement on Form N-1A.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
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AMERICAN CENTURY INVESTMENT TRUST
FORM N-14
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a)
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Part A Item No. Prospectus/Proxy
and Caption Statement Caption
1. Beginning of Registration Statement and Cover Page
Outside Front Cover Page of Prospectus
2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
3. Fee Table, Synopsis Information and Risk Important Information You Should
Factors Consider; Comparison of Certain
Information Regarding the Funds; Risk Factors; Transaction and
Operating Expense Information; Information About the Funds
4. Information About the Transaction Important Information You Should
Consider; Risk Factors; Additional
Information Relating to the Proposed
Transaction; Information About the Funds
5. Information About the Registrant Important Information You Should
Consider; Comparison of Certain
Information Regarding the Funds; Risk
Factors; Information About the Funds;
Additional Information
6. Information About the Company Being Acquired Important Information You Should
Consider; Comparison of Certain
Information Regarding the Funds; Risk
Factors; Information About the Funds;
Additional Information
7. Voting Information Important Information You Should
Consider; Information Relating to Voting
Matters
8. Interest of Certain Persons and Experts Information Relating To Voting Matters
9. Additional Information Required for Reoffering Not applicable
by Persons Deemed to be Underwriters
Part B
10. Cover Page Statement of Additional Information Cover
Page
11. Table of Contents Table of Contents
12. Additional Information About the Registrant Statement of Additional Information of
Prime
13. Additional Information About the Company Statements of Additional Information of
Being Acquired Cash Reserve
14. Financial Statements Pro Forma Financial Statements
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Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
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American Century Investments
4500 Main Street
Kansas City, Missouri 64111
June 8, 1998
Dear American Century-Benham Cash Reserve Fund Shareholder:
I am writing to ask for your support of an important proposal affecting
your fund. The proposal will be voted on at an upcoming Special Meeting of
shareholders to be held on Friday, August 7, 1998. Please take a few minutes to
read the enclosed materials, complete and sign the proxy voting card and mail it
back to us.
As a shareholder of American Century-Benham Cash Reserve Fund, you are
being asked to approve the combination of your fund with American Century-Benham
Prime Money Market Fund.
The reason for the combination is that the funds are very similar, as
you will see by reading the enclosed materials. Each fund was started prior to
the 1995 combination of the Benham and Twentieth Century mutual fund families.
As a result of that combination, the funds share portfolio managers. Management
believes it will be more efficient to have the funds' talented portfolio
management team focus on a single, larger portfolio of assets than to continue
managing two very similar, smaller portfolios.
The Board of Directors of your fund has unanimously voted in favor of
this reorganization and believes the combination is in your fund's and your best
interests. We encourage you to vote "FOR" the reorganization. The enclosed
materials give more detailed information about the proposed reorganization and
the reasons why we recommend you vote for it.
If you lead a busy life, you're probably tempted to put these materials
aside, having the best intentions to return to them at another time. PLEASE
DON'T DO THAT. If shareholders don't return their proxies, additional expenses
must be incurred to pay for follow-up mailings and phone calls. PLEASE TAKE A
FEW MINUTES TO REVIEW THE ENCLOSED MATERIALS AND SIGN AND RETURN YOUR PROXY CARD
TODAY. If you have any questions or need any help in voting your shares, please
call us at 1-800-345-2021.
To more efficiently handle this proxy solicitation, we have hired D.F.
King & Co., Inc. to act as our proxy solicitor. They might be calling you during
the solicitation process to ensure that you do not have questions or concerns
about the voting process and to assist you with your vote.
Thank you for your time in considering this important proposal. We
believe the reorganization will enable us to better serve your needs. Thank you
for investing with American Century and for your continued support.
Sincerely,
/s/ James E. Stowers III
James E. Stowers III
Chief Executive Officer
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IMPORTANT INFORMATION YOU SHOULD CONSIDER
The following Q&A is a brief summary of some of the issues that may be
important to you. As is true with all summaries, however, not all of the
information or topics that you may think are important will be included. As a
result, this Q&A is qualified in its entirety by the more detailed information
contained elsewhere in this document, or incorporated into this document. Please
read all the enclosed proxy materials before voting. PLEASE REMEMBER TO VOTE
YOUR SHARES AS SOON AS POSSIBLE. If enough shareholders return their proxy cards
soon, additional costs for follow-up mailings and phone calls may be avoided.
Q. What is the purpose of the upcoming meeting?
A. Your Board of Directors has recommended merging Cash Reserve
into Prime. This combination requires shareholder approval.
The meeting will be held on Friday, August 7, 1998 at 10:00
a.m. (Central time) at American Century Tower I, 4500 Main
Street, Kansas City, Missouri. Shareholders of record as of
the close of business on May 15, 1998 are eligible to vote.
Q. Why is the reorganization being proposed?
A. The reorganization seeks to improve operational and investment
management efficiencies by combining funds with identical
investment objectives and substantially similar investment
policies, approaches, procedures and portfolio securities.
Combining these similar funds will also help eliminate
customer confusion regarding which fund to choose.
Q. How will the reorganization be accomplished?
A. Shareholders of Cash Reserve are being asked to approve the
combination of their fund with Prime pursuant to the Agreement
and Plan of Reorganization described on page __. The
reorganization will take the form of a sale of assets by Cash
Reserve in exchange for shares of Prime. Cash Reserve will
then make a liquidating distribution of those shares to its
shareholders.
Q. What will shareholders get if the reorganization is approved?
A. As a result of the liquidating distribution, you will receive
shares of Prime in an amount equal to the value of your shares
on the date the combination takes place (probably August
29th). Since both funds seek to maintain a $1.00 net asset
value (price per share), the net asset value of the funds
should be the same on the merger date. As a result, you should
receive the same number of shares of Prime as you have in Cash
Reserve, and the TOTAL VALUE of your account after the
reorganization WILL BE THE SAME as before the reorganization.
Q. Why did the Board of Directors approve the reorganization?
A. After reviewing many factors, your Board of Directors
unanimously determined that the reorganization was in the best
interests of Cash Reserve and its shareholders. Some of the
factors considered include:
o the management fees of the funds are the same;
o the funds' investment objectives and policies are
substantially similar;
o combining the funds will enable the manager to
achieve management and operational efficiencies; and
o the funds have the same investment advisor and
portfolio management team.
o the funds are currently being managed in
substantially the same manner.
Q. Will the exchange for shares of Prime cause you to realize income or
capital gains for tax purposes?
A. No. The exchange of shares in the reorganization will be
tax-free. We will obtain a legal opinion confirming that the
reorganization will not be a taxable event for you for federal
income tax purposes. Your tax basis and holding period for
your shares will be unchanged.
Q. How do the fee structure and total expense ratio of Prime compare to
Cash Reserve?
A. The fees and total expense ratios of the funds are the same.
Q. Is Prime riskier than Cash Reserve?
A. No. Both funds are money market funds with substantially the
same investment policies, procedures and strategies.
Q. If shareholders send their proxies in now as requested, can they change
their vote later?
A. Yes! A proxy can be revoked at any time by writing to us, or
by sending us another proxy, or by showing up at the meeting
and voting in person. Even if you plan to show up at the
meeting to vote in person, we ask that you return the enclosed
proxy. Doing so will help us achieve a quorum for the meeting.
Q. How do shareholders vote their shares?
A. You can vote by mail, phone, fax or in person at the Special
Meeting. To vote by mail, complete, sign and mail the enclosed
proxy voting card to us in the enclosed postage-paid envelope.
You can fax your vote by signing the proxy voting card and
faxing both sides of the card to 1-888-796-9932. D.F. King &
Co., our proxy solicitor, can accept your vote over
phone--simply call 1-800-488-8095. Your shares will be voted
EXACTLY as you tell us. If you simply sign the card and return
it, we will follow the recommendation of your Board of
Directors and vote it "FOR" the reorganization. You may also
vote in person at the meeting on August 7, 1998.
Q. When and how will the combination take place?
A. Subject to receiving shareholder approval, the reorganization
is scheduled to take place on August 29, 1998. After the funds
have calculated the value of their assets and liabilities on
August 28th, Cash Reserve will transfer its assets and
liabilities to Prime in exchange for the appropriate number of
Prime shares. Cash Reserve will then make a liquidating
distribution of those shares pro rata to its shareholders
according to the value of their accounts immediately prior to
the transfer of assets. THE VALUE OF YOUR ACCOUNT WILL NOT
CHANGE AS A RESULT OF THIS REORGANIZATION.
Q. Will the reorganization affect the management team of Cash Reserve?
A. No. The portfolio managers of Cash Reserve also serve as
portfolio managers for Prime.
Q. How will the distribution, purchase and redemption procedures and
exchange rights change as a result of the reorganization?
A. They won't. Prime has the same distribution, purchase and
exchange policies and procedures as Cash Reserve.
Q. Where can shareholders get more information about the funds?
A. A copy of Prime's Prospectus accompanies this proxy statement.
In addition, the Manager's Discussion and Analysis of Fund
Performance portion of Prime's most recent Annual Report to
Shareholders is included in this document as Appendix II. If
you would like a copy of Cash Reserve's prospectus or either
fund's Statement of Additional Information, or most recent
annual or semiannual report, please call one of our Investor
Services Representatives at 1-800-345-2021.
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AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Investments
4500 Main Street
P. O. Box 419200
Kansas City, Missouri 64141-6200
(800) 345-2021
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on August 7, 1998
To American Century-Benham Cash Reserve Shareholders:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders of
the American Century-Benham Cash Reserve Fund, a portfolio of American Century
Mutual Funds, Inc. ("Cash Reserve") will be held at American Century Tower I,
4500 Main Street, Kansas City, Missouri on Friday, August 7, 1998 at 10:00 a.m.
(Central time) for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an
Agreement and Plan of Reorganization and the transactions contemplated
thereby, including:
(a) the transfer of substantially all of the assets and
liabilities of Cash Reserve to the American Century-Benham
Prime Money Market Fund, an investment portfolio of American
Century Investment Trust, as described in the attached proxy
statement ("Prime") in exchange for shares in Prime; and
(b) the distribution of Prime's shares to the shareholders of Cash
Reserve according to their respective interests.
ITEM 2. To transact such other business as may properly come
before the Special Meeting or any adjournment(s) thereof.
The proposed reorganization, the Agreement and Plan of Reorganization
and related matters are described in the attached Combined Prospectus/Proxy
Statement.
Shareholders of record as of the close of business on May 15, 1998, are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
PLEASE EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE THE ACCOMPANYING
PROXY CARD, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF AMERICAN
CENTURY MUTUAL FUNDS, INC. PLEASE RETURN YOUR PROXY CARD EVEN IF YOU ARE
PLANNING TO ATTEND THE MEETING. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY
SUBMITTING A WRITTEN NOTICE OF REVOCATION, OR A SUBSEQUENTLY EXECUTED PROXY, OR
BY ATTENDING THE MEETING AND VOTING IN PERSON.
/s/ Patrick A. Looby
Patrick A. Looby
Secretary
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June 8, 1998
COMBINED PROSPECTUS/PROXY STATEMENT
of
AMERICAN CENTURY MUTUAL FUNDS, INC.
and
AMERICAN CENTURY INVESTMENT TRUST
June 8, 1998
This Combined Prospectus/Proxy Statement is furnished in connection
with the solicitation of votes by the Board of Directors of American Century
Mutual Funds, Inc. on behalf of its Cash Reserve Fund, in connection with a
Special Meeting of Shareholders to be held on Friday, August 7, 1998 at 10:00
a.m. (Central time) at American Century Tower I, 4500 Main Street, Kansas City,
Missouri.
At the Special Meeting, shareholders of the American Century-Benham
Cash Reserve Fund ("Cash Reserve") are being asked to approve the combination of
their fund into the American Century-Benham Prime Money Market Fund, a series of
American Century Investment Trust ("Prime").
The funds are similarly managed diversified, open-end mutual funds that
invest in a similar mix of fixed income securities. The purpose of the
reorganization is to achieve management and operational efficiencies by
combining these similar funds. Each fund has shares registered with the
Securities and Exchange Commission.
This Combined Prospectus/Proxy Statement constitutes the Proxy
Statement of your fund for the Special Meeting of Shareholders and a prospectus
for the Prime shares that are to be issued to you in connection with the
reorganization. It is intended to give you the information you need to consider
and vote on the proposed reorganization. You should retain this document for
future reference. A Statement of Additional Information, dated June 1, 1998,
about Prime has been filed with the Commission [to be filed pursuant to Rule
485(b) prior to the effectiveness of this Registration Statement] and is
incorporated into this document by reference. A copy of the Statement of
Additional Information may be obtained without charge upon request by calling or
writing to us at the address or telephone number set forth below.
The principal executive offices of Cash Reserve and Prime are located
at American Century Investments, 4500 Main Street, P. O. Box 419200, Kansas
City, Missouri 64141-6200. The funds' telephone number is 1-800-345-2021.
A copy of Prime's prospectus accompanies this document and is
incorporated into it by reference.
The information contained in this Combined Prospectus/Proxy Statement
is required by rules of the Securities and Exchange Commission, and some of it
is highly technical. If you have any questions about these materials or how to
vote your shares, please call us at 1-800-345-2021.
LIKE ALL MUTUAL FUND SHARES, THE SECURITIES OF THE PRIME FUND HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS COMBINED
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
No person has been authorized to give any information or to make any
representations other than those contained in this Combined Prospectus/Proxy
Statement and in the materials expressly incorporated herein by reference. If
given or made, such other information or representations must not be relied upon
as having been authorized by Cash Reserve, Prime or anyone affiliated with
American Century Investments.
PLEASE NOTE THAT THE SPECIAL MEETING OF SHAREHOLDERS WILL BE A BUSINESS
MEETING ONLY AND IS NOT A SHAREHOLDER SEMINAR.
TABLE OF CONTENTS
IMPORTANT INFORMATION YOU SHOULD CONSIDER.....................................
COMPARISON OF CERTAIN INFORMATION REGARDING THE FUNDS.........................
RISK FACTORS..................................................................
TRANSACTION AND OPERATING EXPENSE INFORMATION.................................
ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION.........................
Summary of Plan of Reorganization....................................
Description of the Securities of Prime...............................
Reasons Supporting the Reorganization................................
Federal Income Tax Consequences......................................
Capitalization.......................................................
INFORMATION ABOUT THE FUNDS...................................................
Prime and Cash Reserve...............................................
Fundamental Investment Restrictions..................................
INFORMATION RELATING TO VOTING MATTERS........................................
General Information..................................................
Voting and Revocation of Proxies.....................................
Record Date..........................................................
Quorum...............................................................
Shareholder Vote Required............................................
Cost of Proxy Solicitation...........................................
Certain Shareholders.................................................
Appraisal Rights.....................................................
Annual Meetings......................................................
ADDITIONAL INFORMATION........................................................
LITIGATION....................................................................
FINANCIAL STATEMENTS..........................................................
OTHER BUSINESS................................................................
SHAREHOLDER INQUIRIES.........................................................
MANAGEMENT'S DISCUSSION.......................................................
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COMPARISON OF CERTAIN INFORMATION
REGARDING THE FUNDS
The following chart is provided to show a comparison of certain key
attributes of Cash Reserve with Prime. For additional information about the
funds, see the section titled "Information About the Funds" starting at page ___
below.
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Cash Reserve Prime
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Type of Fund Money Market Fund Money Market Fund
Investment Objective Seeks to obtain maximum current Seeks the highest level of
income consistent with the current income consistent with
preservation of principal and preservation of capital
maintenance of liquidity
Investment Policies Pursues its objective by Pursues its objective by
investing in money market investing in money market
instruments and other short-term instruments and other short-term
obligations of banks, obligations of banks,
corporations and governments corporations and governments
Weighted Average Portfolio 90 days 90 days
Maturity
Credit Quality High quality securities only High quality securities only
Investor Class Total Expense 0.60% 0.60%
Ratio
Advisor Class Total Expense 0.85% 0.85%
Ratio
Distribution Policy Same as Prime Dividends are declared daily,
paid monthly
Purchases and Exchanges Same as Prime See pages 11-13 of accompanying
Prospectus
Redemption Policies Same as Prime See page 13 of accompanying
Prospectus
Investment Advisor American Century Investment ACIM
Management, Inc. ("ACIM")
Transfer Agent American Century Services American Century Services
Corporation Corporation
Distributor Funds Distributor, Inc. Funds Distributor, Inc.
Custodians Chase Manhattan Bank Chase Manhattan Bank
Independent Auditors Deloitte & Touche LLP Coopers & Lybrand
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RISK FACTORS
Because each of the funds has the same investment objective and shares
substantially similar investment policies, approaches and procedures, your Board
of Directors does not believe that the reorganization exposes shareholders of
Cash Reserve to any new or different risks than they are exposed to as
shareholders of Cash Reserve. For a discussion of the various investment
policies, approaches and procedures of Prime, and the risks associated
therewith, please see the accompanying Prospectus beginning at page 7.
TRANSACTION AND OPERATING EXPENSE INFORMATION
The tables below compare various shareholder transaction and annual
fund operating expenses of Cash Reserve as of its most recent fiscal year end
(October 31, 1997) and Prime as of its most recent fiscal year end (February 28,
1998). After the reorganization, the expense levels of the surviving fund will
be the same as those shown for Prime.
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Cash
Reserve Prime
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SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ......................... none none
Maximum Sales Load Imposed on Reinvested Dividends .............. none none
Deferred Sales Load ............................................. none none
Redemption Fee .................................................. none(1) none(1)
Exchange Fee .................................................... none none
ANNUAL FUND OPERATING EXPENSES - INVESTOR CLASS
(as a percentage of net assets)
Management Fees ................................................. 0.60% 0.60%
12b-1 Fees ...................................................... none none
Other Expenses .................................................. 0.00%(2) 0.00%(2)
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Total Fund Operating Expenses ................................... 0.60% 0.60%
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EXAMPLE:
You would pay the following expenses 1 year $ 6 $ 6
on a $1,000 investment, assuming a 5% 3 years 19 19
annual return and redemption at the 5 years 33 33
end of each time period. 10 years 75 75
ANNUAL FUND OPERATING EXPENSES - ADVISOR CLASS
(as a percentage of net assets)
Management Fees ................................................. 0.35% 0.35%
12b-1 Fees ...................................................... 0.50% 0.50%
Other Expenses .................................................. 0.00%(2) 0.00%(2)
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Total Fund Operating Expenses ................................... 0.85% 0.85%
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EXAMPLE:
You would pay the following expenses 1 year $ 9 $ 9
on a $1,000 investment, assuming a 5% 3 years 27 27
annual return and redemption at the 5 years 47 47
end of each time period. 10 years 105 105
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(1) Redemption proceeds sent by wire are subject to a $10 processing
charge.
(2) Other Expenses, which include the fees and expenses (including legal
counsel fees) of those directors who are not "interested persons" as
defined in the Investment Company Act, were less than 0.01 of 1% of
average net assets for the funds' most recent fiscal year.
The purpose of the above tables is to help you compare the various
costs and expenses that shareholders bear, directly or indirectly, as a result
of owning shares of the funds. The example set forth above assumes reinvestment
of all dividends and distributions and uses a 5% annual rate of return as
required by Securities and Exchange Commission regulations. NEITHER THE 5% RATE
OF RETURN NOR THE EXPENSES SHOWN SHOULD BE CONSIDERED INDICATIONS OF PAST OR
FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN.
ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION
SUMMARY OF PLAN OF REORGANIZATION
Subject to receipt of shareholder approval, the reorganization will be
carried out pursuant to the terms of the Agreement and Plan of Reorganization
between the funds. The following is a brief summary of some of the important
terms of that Agreement.
EFFECTIVE TIME OF THE REORGANIZATION. The Agreement requires that the
exchange of assets for stock take place after the close of business on one
business day but before (or as of) the opening of business on the next business
day (the "Effective Time"). It is currently anticipated that the reorganization
will take place after the close of business on August 28, 1998, but before (or
as of) the opening of business on August 31, 1998. However, the Agreement gives
the officers of the funds the flexibility to choose another date.
EXCHANGE OF ASSETS. After the close of business on August 28th, the
funds will determine the value of their assets and liabilities in the same
manner as described on page 17 in the enclosed Prime Prospectus. The assets and
liabilities of the Cash Reserve will then be transferred to Prime in exchange
for that number of full and fractional shares (rounded to the third decimal
place) that have the same aggregate net asset value as the value of the net
assets received in the exchange. Cash Reserve will retain enough cash to pay any
unpaid dividends payable by it.
LIQUIDATING DISTRIBUTIONS AND TERMINATION OF CASH RESERVE. Immediately
after the exchange of its assets for the Prime shares, Cash Reserve will
distribute pro rata all of the shares received in the exchange to its
shareholders of record at the Effective Time. All of the outstanding shares of
Cash Reserve will be redeemed and canceled and their stock books closed. As a
result, Cash Reserve shareholders will become shareholders of Prime.
SHAREHOLDER APPROVAL. Consummation of the reorganization requires
approval of Cash Reserve's shareholders.
REPRESENTATIONS AND WARRANTIES. The Agreement contains representations
and warranties made by Cash Reserve to Prime concerning Cash Reserve's formation
and existence under applicable state law, its power to consummate the
reorganization, its qualification as a "regulated investment company" under
applicable tax law, the registration of its shares under federal law and other
matters that are customary in a reorganization of this type. The representations
and warranties terminate at the Effective Time.
CONDITIONS TO CLOSING. The Agreement contains conditions to closing the
proposed reorganization for the benefit of each fund. The conditions to closing
the reorganization requires approval by Cash Reserve shareholders, that all
representations of the funds be true in all material respects, receipt of the
legal opinion described on page __ below under the caption "Federal Income Tax
Consequences," and other matters that are customary in a reorganization of this
type.
TERMINATION OF AGREEMENT. The Agreement may be terminated by a fund as
a result of a failure by the other fund to meet one of its conditions to
closing, or by mutual consent.
GOVERNING LAW. The Agreement states that it is to be interpreted under
Massachusetts law, the state of organization of Prime.
DESCRIPTION OF THE SECURITIES OF PRIME
Prime is a series of shares offered by American Century Investment
Trust. Each series is commonly referred to as a mutual fund. The assets
belonging to each series of shares are held separately by the custodian.
American Century Investment Trust is a Massachusetts business trust,
which means its activities are overseen by a Board of Trustees rather than a
Board of Directors. The function of the Board of Trustees is the same as the
function of the Board of Directors of Cash Reserve.
Like Cash Reserve, Prime currently offers two classes of shares, the
Investor Class and the Advisor Class, although it may offer additional classes
in the future. The Investor Class of shares of Prime have no up-front charges,
commissions or 12b-1 fees. The Advisor Class of shares have no up-front fees,
charges or commissions, but carry a 0.50% 12b-1 fee to pay for shareholder
services and distribution costs.
Your Board of Directors believes there are no material differences
between the rights of a Cash Reserve shareholder and the rights of a Prime
shareholder. Each share, irrespective of series or class of a series, is
entitled to one vote for each dollar of net asset value applicable to such share
on all questions, except for those matters that must be voted on separately by
the series or class of a series affected. Matters affecting only one class of a
series are voted upon only by that series or class.
Shares have non-cumulative voting rights, which means that the holders
of more than 50% of the votes cast in an election of trustees can elect all of
the trustees if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Trustees.
Unless required by the Investment Company Act of 1940, it is not
necessary for Prime to hold annual meetings of shareholders. As a result,
shareholders may not vote each year on the election of trustees or the
appointment of auditors. However, pursuant to each fund's bylaws, the holders of
at least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders.
REASONS SUPPORTING THE REORGANIZATION
The reasons supporting the combination of these funds are described in
the Q&A at the front of this document. Prime and Cash Reserve both commenced
operations before the combination of the Benham family of mutual funds and the
Twentieth Century family of mutual funds. Although the funds were similar at the
time of the Benham/Twentieth Century merger, they have become even more similar
as a result of the integration of the two investment advisory firms and the
appointment of the same portfolio management team for both funds. As a result of
the redundancy of these two funds in its fund line-up, American Century believes
that combining Cash Reserve with Prime will create operational and management
efficiencies. In addition, the combination will help eliminate customer
confusion regarding which fund to choose.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the reorganization is subject to the condition that we
receive a legal opinion to the effect that for federal income tax purposes (i)
no gain or loss will be recognized by you, Cash Reserve or Prime, (ii) your
basis in the Prime shares that you receive will be the same as your basis in the
Cash Reserve shares held by you immediately prior to the reorganization, and
(iii) your holding period for the Prime shares will include your holding period
for your Cash Reserve shares.
We have not sought a tax ruling from the Internal Revenue Service, but
are relying upon the opinion of counsel referred to above. That opinion is not
binding on the IRS and does not preclude them from taking a contrary position.
The opinion does not cover state or local taxes and you should consult your own
advisers concerning the potential tax consequences.
The Agreement and Plan of Reorganization provides that Cash Reserve
will declare dividends prior to the reorganization which, together with all
previous dividends, will have the effect of distributing to the Cash Reserve
shareholders all undistributed ordinary income earned up to and including the
effective time of the reorganization. The distribution is necessary to ensure
that the reorganization will not create tax consequences to Cash Reserve. The
distributions to shareholders generally will be taxable to the extent ordinary
distributions are taxable to such shareholders.
CAPITALIZATION
As of March 31, 1998, (i) the capitalization of the Investor Class of
Cash Reserve and Prime are $1,149,158,609 and $1,432,842,728, respectively, and
the pro forma capitalization of Prime after the merger, as adjusted to give
effect to the reorganization, is $2,582,001,337; and (ii) the capitalization of
the Advisor Class of Cash Reserve is $3,333,856. As of March 31, 1998, the
Advisor Class of Prime had no assets. If consummated, the capitalization of
Prime will be different at the effective time of the reorganization as a result
of daily share purchase and redemption activity in the funds.
INFORMATION ABOUT THE FUNDS
Complete information about Prime and Cash Reserve is contained in their
respective Prospectuses. The Prime Prospectus is included with this
Prospectus/Proxy Statement, and the Cash Reserve Prospectus is available to you
by calling us at 1-800-345-2021. The content of both Prospectuses is
incorporated into this document by reference. Below is a list of types of
information about Prime and Cash Reserve and the pages in their Prospectuses
where the information can be found.
<TABLE>
INFORMATION ABOUT THE CAN BE FOUND ON THE
FOLLOWING ITEMS FOLLOWING PAGES
- --------------------- -----------------------------------------------------------
Cash Cash
Prime Prime Reserve Reserve
Investor Advisor Investor Advisor
Class Class Class Class
----- ----- ----- -----
<S> <C> <C> <C> <C>
Condensed financial
information
See "Financial Highlights" page 5 page __ page 5 page 5
Organization, proposed
operation, investment
objective and policies
See "Further Information
about American
Century" page 22 page __ page 20 page 16
"Investment Polices of
the Fund" pages 6-9 page __ page 6 page 7
"Other Investment
Practices, Their
Characteristics
and Risks" page 9 page __ pages 6-8 pages 7-9
Management
See "Management-Investment
Management" page 19 page __ pages 18-19 page 14
Dividend and distribution
policies and tax consequences
See "Distributions" page 18 page __ pages 16-17 pages 12-13
"Taxes" pages 18-19 page __ pages 17-18 pages 13-14
"Net asset value"
See "When Share Price
is Determined" page 17 page __ page 16 page 12
Transaction and operating
expenses
See "Transaction and
Operating Expense
Table" page 4 page __ page 4 page 4
Distribution of shares
See "Distribution of Fund
Shares" page 21 page __ pages 19-20 page 15
"Transfer and
Administrative
Services" page 20 page __ page 19 page 15
Cash Cash
Prime Prime Reserve Reserve
Investor Advisor Investor Advisor
Class Class Class Class
----- ----- ----- -----
Minimum initial and
subsequent investments
See "How to Open An
Account" pages 11-12 N/A pages 10-11 N/A
"How to Purchase and
Sell American
Century Funds" N/A N/A N/A page 11
Voting rights and restrictions
of shareholders
See "Further Information
About American Century" page 22 page __ page 20 page 16
Redemption procedures
and policies
See "How to Redeem Shares" page 13 page __ page 12 page 11
"Redemption of Shares
in Low-Balance
Accounts" page 14 page __ pages 12-13 N/A
</TABLE>
FUNDAMENTAL INVESTMENT RESTRICTIONS
Neither Cash Reserve nor Prime may change its investment objectives or
any of its investment policies designated as "fundamental" in its Prospectus or
Statement of Additional Information without shareholder approval. As stated
above, the funds have substantially similar investment objectives, policies and
strategies.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Combined Prospectus/Proxy Statement is being furnished in
connection with the solicitation of proxies by the Board of Directors of Cash
Reserve. Proxies may be solicited by officers and employees of the investment
advisor of the funds, their affiliates and employees. It is anticipated that the
solicitation of proxies will be primarily by mail, telephone, facsimile or
personal interview. Authorizations to execute proxies may be obtained by
telephonic or electronically transmitted instructions in accordance with
procedures designed to authenticate the shareholder's identity and to confirm
that the shareholder has received the Combined Prospectus/Proxy Statement and
proxy card. If you have any questions regarding voting your shares or the proxy,
please call us at 1-800-345-2021.
VOTING AND REVOCATION OF PROXIES
The fastest and most convenient way to vote your shares is to complete,
sign and mail the enclosed proxy voting card to us in the enclosed envelope.
This will help us obtain a quorum for the meeting and avoid the cost of
additional proxy solicitation efforts. In addition, you may vote by faxing both
sides of the completed proxy card to 1-888-796-9932, or by calling D.F. King,
our proxy solicitor, at 1-800-488-8095. If you return your proxy to us, we will
vote it EXACTLY as you tell us. If you simply sign the card and return it, we
will follow the recommendation of the Board of Directors and vote "FOR" the
reorganization.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by submitting a written notice of revocation, or a subsequently
executed proxy, or by attending the meeting and voting in person.
RECORD DATE
Only shareholders of record at the close of business on May 15, 1998
will be entitled to vote at the meeting. On that date, the number of votes
outstanding and entitled to be voted at the meeting or any adjournment of the
meeting for the Investor Class was ________________; and for the Advisor Class
was _________________.
QUORUM
A quorum is the number of shareholders legally required to be at a
meeting in order to conduct business. The quorum for the Special Shareholders
Meeting is 50% of the outstanding shares of Cash Reserve entitled to vote at the
meeting. Shares may be represented in person or by proxy. Proxies properly
executed and marked with a negative vote or an abstention will be considered to
be present at the meeting for the purposes of determining the existence of a
quorum for the transaction of business. If a quorum is not present at the
meeting, or if a quorum is present at the meeting but sufficient votes are not
received to approve the Agreement and Plan of Reorganization, the persons named
as proxies may propose one or more adjournments of the meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those shares affected by the adjournment that are represented
at the meeting in person or by proxy. If a quorum is not present, the persons
named as proxies will vote those proxies for which they are required to vote FOR
the Agreement and Plan of Reorganization in favor of such adjournments, and will
vote those proxies for which they are required to vote AGAINST such proposals
against any such adjournments.
SHAREHOLDER VOTE REQUIRED
The Agreement and Plan of Reorganization must be approved by the
holders of a majority of the outstanding votes of each class of Cash Reserve in
accordance with the provisions of its Articles of Incorporation and the
requirements of the Investment Company Act of 1940. The term "majority of the
outstanding shares" means more than 50% of its outstanding shares.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees that cannot be voted on a proposal
because instructions have not been received from the beneficial owners) will be
counted for purposes of determining whether or not a quorum is present for
purposes of convening the meeting. Abstentions and broker non-votes will,
however, be considered to be a vote against the Agreement and Plan of
Reorganization.
The approval of the reorganization by the shareholders of Prime is not
being solicited because their approval is not legally required.
COST OF PROXY SOLICITATION
The cost of the proxy solicitation and shareholder meeting will be
borne by American Century Investment Management, Inc. and NOT by the
shareholders of the funds.
CERTAIN SHAREHOLDERS
The following tables list, as of May 15, 1998, the names, addresses and
percentage of ownership of each person who owned of record or is known by either
fund to own beneficially 5% or more of any class of Cash Reserve or Prime. The
percentage of shares to be owned after consummation of the reorganization is
based upon their holdings and the outstanding shares of both funds on May 15,
1998. Beneficial ownership information is not required to be disclosed to the
funds, so to the extent that information is provided below, it is done so using
the best information that the funds have been provided.
Number of Percent of Percent Owned After
Shareholder Name and Address Shares Owned Ownership Reorganization
- ---------------------------- ------------ --------- -------------------
- ---------------------------- ------------ --------- -------------------
- ---------------------------- ------------ --------- -------------------
[At May 15, 1998, the directors and officers of the issuer of Cash
Reserve, as a group, owned less than 1% of the outstanding shares of Cash
Reserve. At May 15, 1998, the trustees and officers of the issuer of Prime, as a
group, owned less than 1% of the outstanding shares of Prime.]
APPRAISAL RIGHTS
Shareholders of Cash Reserve are not entitled to any rights of share
appraisal under its Articles of Incorporation, or under the laws of the State of
Maryland.
Shareholders have, however, the right to redeem their fund shares until
the reorganization, and thereafter, shareholders may redeem from Prime shares
received in the reorganization. Any such redemption will be made at Prime's net
asset value as determined in accordance with its then-current prospectus.
ANNUAL MEETINGS
Prime does not intend to hold annual meetings of shareholders.
Shareholders of Prime have the right to call a special meeting of shareholders
and such meeting will be called when requested in writing by the holders of
record of 10% or more of the fund's votes. To the extent required by law,
American Century Investment Trust will assist in shareholder communications on
such matters.
Cash Reserve does not intend to hold an annual meeting of shareholders
this year for the election of directors or the ratification of the appointment
of auditors.
ADDITIONAL INFORMATION
Information about Cash Reserve is incorporated into this document by
reference from its Prospectus and Statement of Additional Information, each
dated March 1, 1998, and information about Prime is incorporated herein by
reference from its Prospectus and Statement of Additional Information, each
dated June 1, 1998 [to be filed pursuant to Rule 485(b) prior to the
effectiveness of this Registration Statement], copies of each of which may be
obtained without charge by calling one of our Investor Services Representatives
at 1-800-345-2021.
Reports and other information filed by Cash Reserve and Prime may be
inspected and copied at the Public Reference Facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such materials may
be obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates or by accessing the Web site maintained by the SEC
(www.sec.gov).
<PAGE>
LITIGATION
Neither Cash Reserve nor Prime is involved in any litigation or
proceeding.
FINANCIAL STATEMENTS
The financial highlights and financial statements for Cash Reserve for
the fiscal year ended October 31, 1997 are contained in its Annual Report to
Shareholders and in the Prospectus and incorporated by reference in the
Statement of Additional Information dated March 1, 1998. The report on the
financial highlights for the fiscal years 1993, 1994, 1995 and 1996 are included
in its Annual Report to Shareholders for the fiscal year ended October 31, 1996.
Each such Annual Report, Prospectus and Statement of Additional Information is
incorporated by reference into this Combined Prospectus/Proxy Statement. The
financial highlights and the financial statements for Prime for the fiscal year
ended February 28, 1998 are contained in its Annual Report to Shareholders and
in the Prospectus and incorporated by reference in the Statement of Additional
Information dated June 1, 1998 [each to be filed prior to the effectiveness of
this Registration Statement]. The report on the financial highlights for the
fiscal years 1994, 1995, 1996 and 1997 are included in its Annual Report to
Shareholders for the fiscal year ended February 28, 1997. Each such Annual
Report, Prospectus and Statement of Additional Information is incorporated by
reference in this Combined Prospectus/Proxy Statement.
The audited financial statements of Cash Reserve for the fiscal year
ended October 31, 1997, contained in its Annual Report and incorporated by
reference in this Combined Prospectus/Proxy Statement, have been audited by
Deloitte & Touche LLP, independent auditors, as indicated in their report with
respect thereto and are incorporated herein in reliance on their report given
upon the authority of such firm as experts in accounting and auditing.
The audited financial statements of Prime for the fiscal year ended
February 28, 1998 contained in its Annual Report [to be filed prior to the
effectiveness of this Registration Statement] and incorporated by reference in
this Combined Prospectus/Proxy Statement, have been audited by Coopers &
Lybrand, independent public accountants, as indicated in their report with
respect thereto and are incorporated herein in reliance on their report given
the authority of such firm as experts in accounting and auditing.
OTHER BUSINESS
The Board of Directors is not aware of any other business to be brought
before the meeting. However, if any other matters come before the meeting, it is
the intention that proxies that do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to us at the address or
telephone number set forth on the cover page of this Combined Prospectus/Proxy
Statement.
SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN EACH ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. PLEASE RETURN YOUR PROXY CARD EVEN IF YOU
ARE PLANNING TO ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
<PAGE>
MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
PRIME
The following are excerpts of management's discussion of fund
performance from the Annual Report dated February 28, 1998, of Prime [to be
filed prior to the effectiveness of this Registration Statement]. For a complete
copy of the report, please call us at 1-800-345-2021.
REPORT HIGHLIGHTS
o According to Lipper Analytical Services, the fund outperformed the average
money market fund during the 12 months ended February 28, 1998.
o We left the fund's portfolio in a neutral position (weighted average maturity
around 55 days) for most of the period. This reflected the prevailing
uncertainty about the future direction of interest rates.
o The financial crisis in Southeast Asia had a minimal impact on the fund. We
significantly reduced the fund's remaining Japanese holdings and replaced
them with higher-quality U.S. securities.
o To help maintain the fund's above-average yield, we continued to search for
attractively valued variable-rate notes (VRNs), whose yields are typically
higher than fixed-rate securities. VRNs are debt securities whose interest
rates change when a designated base rate changes.
o We believe interest rates should remain stable in the near term. We don't
think the Federal Reserve will change interest rates while U.S. economic
strength and Asian economic weakness continue to offset each other.
o As long as interest rates remain stable, we plan to maintain the fund's
weighted average maturity at around 55-60 days. In addition, we'll diversify
away from financial services and bank holdings by looking for attractively
priced commercial paper backed by U.S. industrial companies.
o The fund's fee waiver--which caps expenses at 0.50% of average daily net
assets--expires on May 31, 1998, and the fee will rise 0.10% to 0.60%. The
slightly higher fee could cause a small decline in the fund's yield.
PRIME MONEY MARKET
Total Returns: AS OF 2/28/98
6 Months 2.62%*
1 Year 5.29%
7-Day Current Yield: 5.17%
Net Assets: $1.4 billion
(AS OF 2/28/98)
Inception Date: 11/17/93
Ticker Symbol: BPRXX
* Not annualized.
OUR MESSAGE TO YOU
[Photo of James E. Stowers, Jr. and James E. Stowers III]
This has been an eventful year for the financial markets and for
American Century. The Benham Prime Money Market Fund performed well during the
12 months ended February 28, 1998, providing very competitive money market
returns. Short-term interest rates remained relatively stable despite a robust
U.S. economy.
As many of you may know, we gained a powerful business partner this
past January when J.P. Morgan became a substantial minority shareholder in
American Century. J.P. Morgan has been in business over 150 years, serving
institutions, governments and individuals with complex financial needs. The new
business partnership is very exciting, and will allow both companies to offer
investors a highly diverse menu of investment options and services.
Many of you may also know that Jim Benham, founder of the Benham Group,
retired in December. With the integration of Benham and Twentieth Century
successfully completed, Jim felt it was time to step back from the business.
Much of the Benham culture has become a part of American Century, including the
educational investor seminar program Jim created. Two of his sons, Jim A. Benham
and Tim Benham, remain with the company to carry on the Benham tradition.
We would also like to let you know what we're doing about the year 2000
issue, which refers to the possible inability of computer systems to distinguish
between the years 1900 and 2000. Like other financial companies, a significant
percentage of our computer operations involves some type of date comparison or
date calculation. Although much of our system is already year 2000 compliant, we
are aggressively addressing the problem, and anticipate the project should be
completed by the end of November, 1998.
In closing, we are proud to note that 1998 marks the 40th year since
American Century launched its first mutual funds. Not many fund companies can
claim a 40-year track record, or a fund family that includes nearly 70 stock,
bond, money market and combination (stock and bond) funds that provide investors
with such a wide range of choice and flexibility. Whatever your financial goals,
we believe American Century has an outstanding lineup of funds to help you reach
them.
Thank you for your investment.
Sincerely,
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE & PORTFOLIO INFORMATION
AVERAGE ANNUAL RETURNS
6 MONTHS 1 YEAR 3 YEARS LIFE OF FUND(2)
TOTAL RETURNS AS OF
FEBRUARY 28, 1998(1)
<S> <C> <C> <C> <C>
Prime Money Market 2.62% 5.29% 5.31% 5.09%
90-Day Treasury Bill Index 2.13% 4.75% 5.12% 4.92%(3)
Average Money Market Instrument Fund(4) 2.43% 4.93% 5.03% 4.69%
Fund's Ranking Among Money Market
Instrument Funds(3) -- 43 out of 306 40 out of 245 10 out of 207
- ----------
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Inception date was November 17, 1993.
(3) Returns since 11/30/93, the date nearest the fund's inception for which data
are available.
(4) According to Lipper Analytical Services.
YIELDS AS OF FEBRUARY 28, 1998 PORTFOLIO AT A GLANCE
7-DAY 7-DAY 2/28/98 2/28/97
CURRENT EFFECTIVE Number of Issuers 58 49
YIELD YIELD Weighted Average
Maturity 65 days 54 days
Prime Money Market 5.17% 5.30% Expense Ratio 0.50% 0.50%
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.
MANAGEMENT Q&A
An interview with John Walsh and Denise Tabacco, portfolio managers on the
Benham Prime Money Market fund investment team.
How did the fund perform during the year ended February 28, 1998?
The fund performed well, providing a higher level of income than the average
money market fund. For the 12-month period, the fund had a total return of
5.29%, compared with the 4.93% average return of the 306 "Money Market
Instrument Funds" tracked by Lipper Analytical Services. (See the Total Returns
table on the previous page for other fund performance comparisons).
How was the fund positioned during the period?
We consider a weighted average maturity of 50-60 days to be a neutral position
for the fund, the target we use when we're unsure about the future direction of
interest rate movements. We moved the fund from a slightly defensive position in
the first several months of the period to a more neutral stance for the
remainder of the year. After beginning the fiscal year with an average maturity
of around 45 days, we shortened to a more defensive posture of between 30-40
days in May when we were concerned that the Federal Reserve would raise interest
rates to reduce inflationary pressures. We wanted to improve our ability to
translate those potentially higher rates into higher yields for the fund. Over
the next couple of months, however, the inflation threat subsided and the Fed
held interest rates steady. As a result, we extended average maturity to 60 days
in July. Given an uncertain outlook for interest rates stemming from the
countervailing forces of an economic slowdown in Southeast Asia and a strong
U.S. economy, we maintained a 60-day average maturity until late November.
Average maturity dipped in December, reflecting a temporary scarcity of
attractively priced, longer-maturity paper. When supply bounced back, we
extended average maturity back out to about 60 days at the end of 1997, where it
remained until the end of the period.
Did the financial problems in Southeast Asia have any impact on the fund?
Prime's Japanese holdings were limited to securities backed by industrial
companies, such as Mitsubishi, so the fund was able to avoid the problems that
plagued securities issued by Japanese banks and other financial institutions.
Our conservative investment approach led us to cut back on even the
industrial-backed holdings. That resulted in a slightly lower yield for the
fund, since the Japanese holdings generally offered higher yields than the U.S.
commercial paper and asset-backed securities that replaced them.
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 2/28/98)
Commercial Paper 69%
Floating-Rate Notes 16%
Asset-Backed Securities 9%
CDs 4%
Other 2%
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 8/31/97)
Commercial Paper 71%
Floating-Rate Notes 18%
U.S. Government
Agency Securities 7%
CDs 3%
Asset-Backed Securities 1%
Given the reduction of higher-yielding Japanese holdings, what strategies did
you pursue to maintain the fund's yield?
We continued to search for attractively valued variable rate notes (VRNs), whose
yields are typically higher than fixed-rate securities. When choosing VRNs, a
primary factor we consider is how the market anticipates Fed actions and how
that affects short-term interest rates. For example, some VRNs are tied to the
London Interbank Offered Rate (LIBOR). Others are tied to the Fed Funds Rate.
The yields on LIBOR-related securities tend to anticipate Fed actions, rising
before interest rate hikes and falling in advance of rate cuts. When we believe
the Fed is poised to raise interest rates, we typically choose securities tied
to the LIBOR to capture the higher yields as early as possible. Conversely, when
we think that the Fed is poised to reduce rates, we lean toward VRNs tied to the
Fed Funds Rate since their yields typically stay higher longer than the yields
of LIBOR-related securities.
What's your outlook for interest rates over the next six months?
We believe rates should remain stable over the near term, though market
sentiment is currently divided. On one hand, the strength of the U.S.
economy--as evidenced by very low unemployment, strong retail sales and low
inventories--has the potential to re-ignite inflationary pressures and force the
Fed to raise rates. On the other hand, we don't know if the economic slowdown in
Southeast Asia has had its full impact on the U.S. economy. If problems in Asia
translate into slower U.S. economic growth, the Fed could cut rates.
Given that outlook, how will you manage the fund over the next six months?
We plan to maintain the fund's average maturity at around 60 days until there is
definitive and sustained evidence of the direction of U.S. economic growth,
inflation and interest rates. Additionally, we'll look for attractively priced
commercial paper backed by U.S. industrial companies to diversify away from
financial services and bank holdings. Another factor that could have a slight
impact on future performance is a scheduled change in the fund's management fee.
As we've mentioned in past reports, Prime has benefited from a fee waiver that
capped expenses at 0.50% of average daily net assets. This fee waiver expires on
May 31, 1998, and the fee will rise 0.10% to 0.60%, in line with fees currently
charged by other American Century money market funds and their competitors. The
slightly higher fee could cause a small decline in the fund's yield. We
anticipate no further fee increases in the near future.
PORTFOLIO COMPOSITION BY CREDIT RATING (as of 2/28/98)
A-1+ 71%
A-1 29%
PORTFOLIO COMPOSITION BY CREDIT RATING (as of 8/31/97)
A-1+ 80%
A-1 16%
A-2 2%
Unrated U.S. Government Agency Securities 2%
<PAGE>
PART B
AMERICAN CENTURY MUTUAL FUNDS, INC.
American Century Investments
4500 Main Street
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021
AMERICAN CENTURY INVESTMENT TRUST
American Century Investments
4500 Main Street
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021
Statement of Additional Information
1998 Special Meeting of Shareholders of American Century Mutual Funds, Inc.
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Proxy Statement/Prospectus dated June
8, 1998 for the Special Meeting of Shareholders to be held on August 7, 1998.
Copies of the Combined Proxy Statement/Prospectus may be obtained at no charge
by calling American Century Mutual Funds, Inc. at 1-800-345-2021.
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Proxy Statement/Prospectus.
Further information about Prime is contained in and incorporated by
reference to its Statement of Additional Information dated June 1, 1998, [ to be
filed pursuant to Rule 485(b) prior to the effectiveness of this Registration
Statement]. The audited financial statements and related independent
accountant's report for Prime contained in the Annual Report dated February 28,
1998 [to be filed prior to the effectiveness of this Registration Statement] are
incorporated herein by reference. No other parts of the Annual Report are
incorporated by reference herein.
Further information about Cash Reserve is contained in and incorporated
by reference to its Statement of Additional Information dated March 1, 1998. The
audited financial statements and related independent accountant's report for
Cash Reserve contained in its Annual Report dated October 31, 1996 are
incorporated herein by reference. No other parts of the Annual Report are
incorporated by reference herein.
The date of this Statement of Additional Information is June 8, 1998.
TABLE OF CONTENTS
General Information...........................................................
Pro Forma Financial Statements................................................
GENERAL INFORMATION
The Shareholders of Cash Reserve are being asked to approve or
disapprove an Agreement and Plan of Reorganization (the "Reorganization
Agreement") dated as of _______, 1998 between the American Century Investment
Trust and American Century Mutual Funds, Inc. and the transactions contemplated
thereby. The Reorganization Agreement contemplates the transfer of substantially
all of the assets and liabilities of Cash Reserve to Prime in exchange for full
and fractional shares representing interests in Prime. The shares issued by
Prime will have an aggregate net asset value equal to the aggregate net asset
value of the shares of Cash Reserve that are outstanding immediately before the
effective time of the Reorganization.
Following the exchange, Cash Reserve will make a liquidating
distribution of Prime shares to shareholders. Each shareholder owning shares of
Cash Reserve at the effective time of the reorganization will receive shares of
Prime of equal value, plus the right to receive any unpaid dividends that were
declared before the effective time of the reorganization on Cash Reserve shares.
The Special Meeting of Shareholders to consider the Reorganization
Agreement and the related transactions will be held at 10:00 a.m. Central time
on August 7, 1998 at American Century Tower I, 4500 Main Street, Kansas City,
Missouri. For further information about the transaction, see the Combined Proxy
Statement/Prospectus.
<PAGE>
Pro Forma Combining
Benham Prime Money Market Fund and
Benham Cash Reserve Fund
<TABLE>
<CAPTION>
Schedule of Investments
FEBRUARY 28, 1998
<S> <C> <C> <C> <C> <C> <C>
Benham Benham
Prime Benham Prime Benham
Money Cash Pro Money Cash Pro
Market Reserve Forma Market Reserve Forma
Fund Fund Combined Fund Fund Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Value Value Value
COMMERCIAL PAPER(1)
BANKING--17.4%
$32,000,000 -- $32,000,000 Abbey National North
America Corp.,
5.43%-5.50%, 3/31/98-
4/21/98 $31,816,109 -- $31,816,109
20,500,000 6,675,000 27,175,000 Bank of Nova Scotia,
5.43%-5.45%, 4/8/98-
4/9/98 20,380,836 6,636,953 27,017,789
15,000,000 5,000,000 20,000,000 Bankers Trust New York
Corp.,
5.37%-5.60%, 4/16/98-
7/15/98 14,695,700 4,964,223 19,659,923
20,000,000 -- 20,000,000 Banque Nationale de
Paris (Canada),
5.48%-5.73%, 3/9/98-
4/13/98 19,921,811 -- 19,921,811
39,000,000 -- 39,000,000 BIL North America, Inc.,
5.45%-5.46%, 3/25/98-
5/13/98 38,754,164 -- 38,754,164
-- 4,210,343 4,210,343 Chase Manhattan Bank
USA, N.A.,
5.40%, 5/26/98 -- 4,156,030 4,156,030
10,000,000 10,000,000 20,000,000 Cofco Capital Corp.,
5.75%, 3/5/98
(LOC: Credit Suisse
First Boston) 9,993,611 9,993,611 19,987,222
57,290,000 38,500,000 95,790,000 Corporate Receivables
Corp., 5.44%-5.53%,
3/5/98-5/21/98 (LOC:
Citibank, N.A.)
(Acquired 1/6/98
through 2/19/98,
Cost $94,806,939)(2) 56,916,385 38,277,210 95,193,595
-- 10,000,000 10,000,000 Demir Funding Corp. I,
Series A, Tranche B,
5.50%, 4/13/98 (LOC:
Bayerische Vereinsbank
A.G.) -- 9,934,306 9,934,306
7,000,000 10,000,000 17,000,000 Galicia Funding Corp.,
Series B,
5.78%, 3/4/98
(LOC: Bayerische
Vereinsbank A.G.) 6,996,628 9,995,184 16,991,812
50,000,000 11,000,000 61,000,000 Garanti Funding Corporation,
5.40%-5.58%, 3/4/98-7/27/98
(LOC: Bayerische
Vereinsbank A.G.) 49,477,953 10,927,016 60,404,969
12,850,000 -- 12,850,000 IMI Funding Corp. (U.S.A.),
5.75%, 3/2/98-3/18/98 12,833,381 -- 12,833,381
12,000,000 45,000,000 57,000,000 National Australia
Funding (Delaware), Inc.,
5.41%-5.43%, 4/21/98-
5/26/98 11,907,690 44,567,658 56,475,348
8,000,000 -- 8,000,000 Pemex Capital, Inc.,
5.58%, 4/22/98
(LOC: Societe Generale) 7,935,520 -- 7,935,520
20,000,000 -- 20,000,000 Westdeutsche Landesbank
Girozentrale,
5.47%, 4/2/98 19,902,756 -- 19,902,756
===================================
301,532,544 139,452,191 440,984,735
===================================
BUILDING & HOME IMPROVEMENTS--0.4%
-- 10,000,000 10,000,000 Cemex, S.A. de C.V.,
5.46%, 5/14/98
(LOC: Credit Suisse
First Boston) -- 9,887,767 9,887,767
COMMUNICATIONS SERVICES--0.9%
5,000,000 19,000,000 24,000,000 Ameritech Capital
Funding Corp.,
5.43%, 4/10/98 4,969,834 18,885,367 23,855,201
DIVERSIFIED COMPANIES--3.5%
44,000,000 45,000,000 89,000,000 Mitsubishi International Corp.,
5.50%-5.65%, 4/20/98-
5/20/98 43,539,167 44,597,041 88,136,208
FINANCIAL SERVICES--21.7%
-- 28,000,000 28,000,000 BT Alex. Brown Inc.,
5.39%, 7/15/98-8/26/98 -- 27,297,169 27,297,169
1,000,000 -- 1,000,000 Charta Corporation,
5.50%, 3/19/98 (AMBAC)
(Acquired 2/13/98,
Cost $994,806)(2) 997,250 -- 997,250
60,200,000 20,000,000 80,200,000 Dakota Certificates
(Citibank),
Series 1995-7,
5.45%-5.75%, 3/3/98-
5/18/98
(Acquired 12/12/97
through 2/18/98,
Cost $79,188,045)(2) 59,876,826 19,903,950 79,780,776
47,000,000 20,000,000 67,000,000 Ford Motor Credit Co.
Puerto Rico, Inc.,
5.45%-5.53%,
4/9/98-5/15/98 46,635,558 19,877,111 66,512,669
-- 10,000,000 10,000,000 Ford Motor Credit Co.,
5.50%, 3/12/98 -- 9,983,195 9,983,195
39,500,000 9,000,000 48,500,000 General Electric
Capital Corp.,
5.37%-5.68%,
3/2/98-6/5/98 39,232,257 8,871,120 48,103,377
24,000,000 8,000,000 32,000,000 General Electric
Capital Services, Inc.,
5.40%-5.47%,
4/3/98-5/29/98 23,856,260 7,893,200 31,749,460
45,000,000 42,000,000 87,000,000 General Electric
Financial Assurance
Holdings, 5.45%-5.49%,
3/6/98-4/6/98 44,933,863 41,777,500 86,711,363
24,100,000 46,000,000 70,100,000 General Motors
Acceptance Corp.,
5.46%-5.75%,
3/10/98-7/31/98 23,944,485 45,364,663 69,309,148
-- 23,500,000 23,500,000 Siemens Capital Corp.,
5.50%, 6/19/98 -- 23,105,070 23,105,070
27,000,000 -- 27,000,000 Toyota Motor Credit Corp.,
5.73%-5.77%,
3/3/98-3/27/98 26,953,168 -- 26,953,168
35,000,000 35,000,000 70,000,000 WCP Funding Inc.,
5.43%-5.47%,
4/7/98-4/24/98
(AMBAC)
(Acquired 1/15/98
through
2/5/98, Cost
$69,252,813)(2) 34,778,429 34,826,861 69,605,290
-- 10,000,000 10,000,000 Wachovia Corp., 5.48%,
3/18/98 -- 9,974,122 9,974,122
===================================
301,208,096 248,873,961 550,082,057
===================================
HOUSEHOLD AUDIO & VIDEO--0.5%
12,313,000 -- 12,313,000 Panasonic Finance
America, 5.54%, 3/6/98
(Acquired 10/9/97,
Cost $12,032,565)(2) 12,303,525 -- 12,303,525
=================================
INSURANCE--2.7%
9,400,000 -- 9,400,000 American Family
Financial Services, Inc.,
5.47%, 3/5/98 9,394,287 -- 9,394,287
8,500,000 10,000,000 18,500,000 Prudential Funding
Corp.,
5.47%-5.50%,
3/11/98-4/14/98 8,443,173 9,984,722 18,427,895
20,000,000 20,000,000 40,000,000 SAFECO Corp., 5.47%-5.76%,
3/12/98-4/15/98
(Acquired 12/15/97-1/15/98,
Cost $39,434,450)(2) 19,914,025 19,952,000 39,866,025
================================
37,751,485 29,936,722 67,688,207
================================
MACHINERY & EQUIPMENT--0.7%
-- 16,600,000 16,600,000 Dover Corp., 5.47%,
3/6/98 (Acquired
1/22/98, Cost
$16,491,641)(2) -- 16,587,400 16,587,400
================================
METALS & MINING--0.8%
9,000,000 -- 9,000,000 RTZ America Inc.,
5.53%, 3/20/98
(Acquired 9/19/97,
Cost $8,748,385)(2) 8,973,733 -- 8,973,733
-- 12,000,000 12,000,000 Rio Tinto America
Inc., 5.46%, 5/15/98 -- 11,863,500 11,863,500
===============================
8,973,733 11,863,500 20,837,233
===============================
PETROLEUM REFINING--3.7%
18,900,000 11,100,000 30,000,000 Chevron Transport Corp.,
5.44%-5.50%,
3/18/98-6/16/98 18,715,196 11,071,171 29,786,367
40,000,000 23,000,000 63,000,000 Chevron U.K. Investment
PLC,
5.43%-5.75%,
3/10/98-4/6/98 39,861,109 22,964,933 62,826,042
================================
58,576,305 34,036,104 92,612,409
================================
RETAIL--1.1%
10,133,000 17,800,000 27,933,000 Southland Corp.,
5.42%-5.48%, 3/23/98-
8/18/98 (LOC: Ito-
Yokado Co. Ltd.) 10,054,765 17,693,648 27,748,413
================================
RUBBER & PLASTICS--1.4%
15,000,000 20,000,000 35,000,000 Formosa Plastics
Corp. USA,
5.50%-5.54%,
6/4/98-6/25/98
(LOC: Bank of America
N.T. & S.A.) 14,782,292 19,642,978 34,425,270
================================
SECURITY BROKERS & DEALERS--11.2%
10,000,000 -- 10,000,000 Bear Stearns Co., Inc.,
5.46%, 5/13/98 9,889,283 -- 9,889,283
40,000,000 21,000,000 61,000,000 Credit Suisse First
Boston, Inc.,
5.41%-5.46%,
4/22/98-5/19/98 39,623,977 20,793,505 60,417,482
37,000,000 24,000,000 61,000,000 Goldman Sachs Group
L.P.,
5.42%-5.70%,
4/15/98-5/14/98 36,604,707 23,796,871 60,401,578
45,000,000 18,000,000 63,000,000 Merrill Lynch &
Co., Inc.,
5.46%-5.73%,
3/9/98-7/31/98 44,436,373 17,958,150 62,394,523
51,000,000 41,500,000 92,500,000 Morgan Stanley Dean
Witter, Discover & Co.,
5.40%-5.49%,
4/17/98-7/29/98 50,332,075 41,038,946 91,371,021
===================================
180,886,415 103,587,472 284,473,887
===================================
SOVEREIGN GOVERNMENTS & AGENCIES--0.8%
-- 20,000,000 20,000,000 Kingdom of Sweden,
5.55%, 3/2/98 -- 19,996,916 19,996,916
===================================
UTILITIES--1.4%
10,000,000 25,000,000 35,000,000 National Rural
Utilities Cooperative
Finance Corp., 5.45%-5.64%,
3/13/98-4/24/98 9,931,875 24,926,973 34,858,848
================================
TOTAL COMMERCIAL PAPER--68.2% 984,510,036 739,968,040 1,724,478,076
=====================================
OTHER CORPORATE DEBT
25,000,000 25,000,000 50,000,000 Abbey National Treasury
Services, VRN, 5.51%, 3/16/98,
resets monthly off the 1-month
LIBOR minus 0.12% with
no caps 24,995,296 24,995,297 49,990,593
20,000,000 20,000,000 40,000,000 American Express
Centurion Bank, VRN, 5.57%,
3/11/98, resets monthly off
the 1-month LIBOR minus 0.06% with
no caps 20,000,000 20,000,000 40,000,000
15,000,000 -- 15,000,000 American Express
Centurion Bank, VRN,
5.60%, 3/12/98, resets
monthly off the 1-month
LIBOR minus 0.03%
with no caps 15,000,546 -- 15,000,546
-- 20,000,000 20,000,000 First Bank, N.A.,
VRN, 5.59%, 6/17/98,
resets monthly off the
1-month LIBOR minus
0.95% with no caps -- 19,997,420 19,997,420
50,000,000 40,000,000 90,000,000 General American Life,
VRN, 5.82%, 3/1/98, resets
monthly off the 1-month LIBOR
plus 0.20% with no caps
(Acquired 1/3/97,
Cost $90,000,000)(2) 50,000,000 40,000,000 90,000,000
-- 10,000,000 10,000,000 General American Life,
VRN, 5.82%, 3/1/98,
resets monthly off the
1-month LIBOR plus 0.20%
with no caps
(Acquired 7/7/97,
Cost $10,000,000)(2) -- 10,000,000 10,000,000
25,000,000 -- 25,000,000 General Electric
Capital Corp., VRN,
5.54%, 4/21/98, resets
quarterly off the 3-month
LIBOR minus 0.09%
with no caps 25,000,000 -- 25,000,000
15,000,000 12,000,000 27,000,000 Key Bank N.A., VRN,
5.68%, 3/2/98, resets
daily off the Federal
Funds rate plus 0.07% with
no caps 14,996,126 11,996,901 26,993,027
-- 10,000,000 10,000,000 Merrill Lynch & Co., Inc.
MTN, Series B,
VRN, 5.84%, 4/15/98, resets
quarterly off the 3-month
LIBOR plus 0.25%
with no caps -- 10,003,764 10,003,764
47,000,000 47,000,000 94,000,000 Transamerica Occidental
Life Insurance Co.,
VRN, 5.625%, 3/2/98,
resets monthly off the
1-month LIBOR with no
caps (Acquired 6/30/97, Cost
$94,000,000)(2) 47,000,000 47,000,000 94,000,000
11,700,000 11,700,000 23,400,000 Travelers Insurance
Company (The),
VRN, 5.68%, 3/9/98,
resets monthly off the
1-month LIBOR plus
0.05% with no caps
(Acquired 6/9/97, Cost
$23,400,000)(2) 11,700,000 11,700,000 23,400,000
23,500,000 23,500,000 47,000,000 Travelers Insurance
Company (The),
VRN, 5.68%, 3/23/98,
resets monthly off the
1-month LIBOR plus
0.05% with no caps
(Acquired 5/23/97, Cost
$47,000,000)(2) 23,500,000 23,500,000 47,000,000
-- 15,000,000 15,000,000 U.S. Bank N.A.,
Minnesota, VRN,
5.49%, 3/18/98, resets monthly
off the 1-month LIBOR minus
0.13% with no caps -- 14,994,314 14,994,314
================================
TOTAL OTHER CORPORATE DEBT--18.4% 232,191,968 234,187,696 466,379,664
===================================
ASSET-BACKED SECURITIES
23,500,000 23,500,000 47,000,000 ABSIT, VRN,
Series 1997 C, Class N,
5.625%, 3/16/98,
resets monthly off
the 1-month LIBOR with
no caps
(LOC: Goldman Sachs
Group L.P.)
(Acquired 6/11/97,
Cost $47,000,000)(2) 23,500,000 23,500,000 47,000,000
5,903,334 5,903,334 11,806,668 Americredit Automobile
Receivables Trust,
Series 1997 C, Class A1,
5.66%, 9/5/98 (FSA) 5,903,334 5,903,334 11,806,668
7,349,378 7,349,378 14,698,756 Americredit Automobile
Receivables Trust,
Series 1997 D, Class A1,
5.80%, 11/5/98 (FSA) 7,349,378 7,349,378 14,698,756
3,251,427 3,251,427 6,502,854 Barnett Auto Trust,
Series 1997 A,
Class A1, 5.65%,
10/15/98
(Acquired 9/18/97,
Cost $6,502,854)(2) 3,251,427 3,251,427 6,502,854
10,315,769 10,315,769 20,631,538 Capital Equipment
Receivables Trust,
Series 1997-1, Class A1,
5.79%, 12/15/98 10,315,769 10,315,769 20,631,538
11,000,000 9,000,000 20,000,000 Chase Manhattan
Auto Owner Trust,
Series 1998 A, Class A1,
5.55%, 3/12/99 11,000,000 9,000,000 20,000,000
5,245,042 5,245,042 10,490,084 Ford Credit Auto
Owner Trust,
Series 1997 B,
Class A1, 5.75%,
10/15/98 5,245,042 5,245,042 10,490,084
20,000,000 20,000,000 40,000,000 Ford Credit Auto
Owner Trust,
Series 1998 A,
Class A1, 5.55%,
2/15/99 20,000,000 20,000,000 40,000,000
14,000,000 15,000,000 29,000,000 Racers Series
1997-MM-8-5, VRN,
5.61%, 3/30/98, resets
monthly off the
1-month LIBOR
minus 0.02% with
no caps
(LOC: National West-
minster Bank PLC)
(Acquired 8/29/97,
Cost $29,000,000)(2) 14,000,000 15,000,000 29,000,000
================================
TOTAL ASSET-BACKED SECURITIES--7.9% 100,564,950 99,564,950 200,129,900
==================================
CERTIFICATES OF DEPOSIT
-- 10,000,000 10,000,000 Caisse Nationale de
Credit Agricole,
5.90%, 8/11/98 -- 10,000,000 10,000,000
10,000,000 -- 10,000,000 Chase Manhattan Corp.
5.56%, 7/7/98 10,000,000 -- 10,000,000
20,000,000 10,000,000 30,000,000 Bayerische Landesbank
Girozentrale,
5.66%, 2/22/99 20,000,000 10,000,000 30,000,000
-- 5,000,000 5,000,000 National Westminster
Bank PLC,
5.86%, 3/10/98 -- 4,999,957 4,999,957
13,000,000 -- 13,000,000 Rabobank Nederland,
5.43%-5.99%,
3/24/98-1/12/99 12,980,541 -- 12,980,541
14,000,000 11,000,000 25,000,000 Royal Bank of
Canada - New York,
5.55%, 2/11/99 13,992,167 10,993,845 24,986,012
=================================
TOTAL CERTIFICATES OF DEPOSIT--3.7% 56,972,708 35,993,802 92,966,510
=================================
BANK NOTES--1.8%
35,000,000 17,675,000 52,675,000 BankBoston Corp.,
5.59%-5.83%, 4/9/98-
7/8/98 35,000,000 11,000,000 46,000,000
=================================
TOTAL INVESTMENT SECURITIES--100.0% $1,409,239,662 $1,120,714,488 $2,529,954,150
============================================
Notes to Schedule of Investments
AMBAC = AMBAC Assurance Corporation
FSA = Financial Security Assurance Inc.
LIBOR = London Interbank Offered Rate
LOC = Letter of Credit
VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Rate shown is
effective February 28, 1998.
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.
(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 February 28, 1998, was
$670,210,448, which represented 26.4% of net assets.
See Notes to Financial Statements
<PAGE>
BENHAM PRIME MONEY MARKET FUND
BENHAM CASH RESERVE FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
February 28, 1998 (Unaudited)
Benham
Prime Benham Pro
Money Cash Forma
Market Reserve Combined
Fund Fund Adjustments (Note 1)
ASSETS
Investment securities,
at amortized cost.. $1,409,239,662 $1,120,714,488 $2,529,954,150
Cash ................. 12,464,116 6,500,771 18,964,887
Receivable for
capital shares sold... 0 1,371 1,371
Interest receivable... 1,906,726 1,780,442 3,687,168
- ------------------------------------------------------------------------------------------
1,423,610,504 1,128,997,072 0 2,552,607,576
- ------------------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess
of demand deposit cash.. 4,193,481 0 4,193,481
Payable for investments
Purchased .............. 0 0 0
Payable for capital
shares redeemed......... 1,365,778 9,422,160 10,787,938
Dividends payable ........ 195,084 159,044 354,128
Accrued management fee ... 543,835 436,185 196,225(1) 1,176,245
Payable for distribution fee..... 0 562 0 562
Payable for shareholder
service fee.................... 0 562 0 562
Accrued expenses and other
liabilities....................1,639 3,536 0 5,175
--------- ---------- ------- ----------
6,299,817 10,022,049 196,225 16,518,091
--------- ---------- ------- ----------
Net Assets Applicable
to Outstanding
Shares ............ $1,417,310,687 $1,118,975,023 ($196,225) $2,536,089,485
==========================================================================================
CAPITAL SHARES (NOTE 3)
Outstanding.......... 1,417,565,184 1,119,059,421 2,536,624,605
==========================================================================================
Net Asset Value Per Share... $1.00 $1.00 $1.00
==========================================================================================
NET ASSETS CONSIST OF:
Capital paid in........ $1,417,565,184 $1,119,060,177 ($196,225) 2,536,429,136
Undistributed net
investment loss.......... -- (849) (849)
Accumulated undistributed
net realized gain (loss)
from investment
transactions ............ (254,497) (84,305) (338,802)
- ------------------------------------------------------------------------------------------
$1,417,310,687 $1,118,975,023 ($196,225) $2,536,089,485
==========================================================================================
Investor Class
Net assets .......... $1,417,310,687 N/A $1,115,853,130(2)$2,533,163,817
Shares outstanding
(Note 3) .......... 1,417,565,184 N/A 1,116,133,749(2) 2,533,698,933
Net asset value
per share ......... $1.00 N/A $1.00
Par value ........... N/A N/A N/A
Advisor Class
Net assets .......... N/A N/A $2,925,668(2) $2,925,668
Shares outstanding (Note 3)... N/A N/A 2,925,668(2) 2,925,668
Net asset value per share..... N/A N/A $1.00
Par value ........... N/A N/A $0.01
Investor Class
Net assets .......... N/A $1,116,049,355 ($1,116,049,355)(2) $0
Shares outstanding (Note 3)... N/A 1,116,133,749 (1,116,133,749)(2) 0
Net asset value per share..... N/A $1.00 N/A
Par value ........... N/A N/A N/A
Advisor Class
Net assets .......... N/A $2,925,668 ($2,925,668)(2) $0
Shares outstanding (Note 3)... N/A 2,925,672 (2,925,672)(2) 0
Net asset value per share .... N/A $1.00 $1.00 N/A
Par value ........... N/A N/A N/A N/A
(1) Adjustment restates Prime Money Market Fund accrued management fees to
reflect the unitary fee structure of the proposed reorganized entity and
the discontinuance of Prime's voluntary fee waiver.
(2) Adjustment to reflect the issuance of Prime shares in exchange for shares
of Cash Reserve. Also, includes adjustment to reflect the additional
management fee accrual to the Investor Class.
See Notes to Pro Forma Financial Statements
<PAGE>
BENHAM PRIME MONEY MARKET FUND
BENHAM CASH RESERVE FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
Benham
Prime Benham Pro
Money Cash Forma
Market Reserve Combined
Fund Fund Adjustments (Note 1)
- ---------------------------------($ in Thousands)----------------------------------------
INVESTMENT INCOME
Income:
Interest ................ $73,727,790 $68,655,938 $0 $142,383,728
Expenses:
Management fees............. 7,739,363 7,285,652 (1) 15,025,015
Investment advisory fees ... 6,282,235 -- (6,282,235)(1) 0
Transfer agency
fees...................... 765,989 -- (765,989)(1) 0
Administrative
fees...................... 476,721 -- (476,721)(1) 0
Printing and postage......... 255,358 -- (255,358)(1) 0
Custodian fees............... 92,513 -- (92,513)(1) 0
Trustees' fees and
expenses................... 66,163 11,349 (11,349)(1) 66,163
Registration and
filing fees................ 52,224 -- (52,224)(1) 0
Auditing and legal
fees....................... 23,907 -- (23,907)(1) 0
Distribution fee
--Advisor Class............ 2,153 0 2,153
Shareholder service fees
--Advisor Class............ 2,153 0 2,153
Other operating
expenses................... 79,339 -- (79,339)(1) 0
Total expenses.............8,094,449 7,755,018 (753,983) 15,095,484
- ------------------------------------------------------------------------------------------
Amount waived...............(1,590,729) (87,349) 1,678,078 (1) 0
- ------------------------------------------------------------------------------------------
Net expenses.............. 6,503,720 7,667,669 924,095 15,095,484
- ------------------------------------------------------------------------------------------
Net investment income.......67,224,070 60,988,269 (924,095) 127,288,244
- ------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)........ (4,990)
- ------------------------------------------------------------------------------------------
Change in net unrealized
appreciation (depreciation) .. --
- ------------------------------------------------------------------------------------------
Net realized and
unrealized gain
(loss) on investments ........ 0 (4,990) 0 0
- ------------------------------------------------------------------------------------------
Net Increase in Net
Assets Resulting from
Operations............ $67,224,070 $60,983,279 ($924,095) $127,288,244
==========================================================================================
(1) Adjustment restates the management fee to reflect the combined net assets of
the Prime and Cash Reserve Funds and the expiration of Prime's fee waiver. Note
that Prime implemented the unified fee structure on August 1, 1997.
<PAGE>
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination-The unaudited Pro Forma Combining Schedule of
Investments, Pro Forma Combining Statement of Assets and Liabilities and
Pro Forma Combining Statement of Operations reflect the accounts of the
American Century - Benham Prime Money Market Fund and American Century -
Benham Cash Reserve Fund, at and for the year ended February 28, 1998.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the non-surviving fund, American Century - Benham
Cash Reserve Fund, in exchange for shares of the surviving entity, American
Century - Benham Prime Money Market Fund.
In accordance with generally accepted accounting principles, the historical
cost of investment securities will be carried forward to the surviving fund
and the results of operations for pre-combination periods for the surviving
fund will not be restated. The pro forma statements do not reflect the
expenses of either fund in carrying out its obligation under the Agreement
and Plan of Reorganization. Under the terms of the Plan of Reorganization,
the combination of the funds will be treated as a tax-free business
combination and accordingly will be accounted for by a method of accounting
for tax-free mergers of investment companies (sometimes referred to as the
pooling without restatement method).
The Pro Forma Combining Schedule of Investments, Statement of Assets and
Liabilities and Statement of Operations should be read in conjunction with
the historical financial statements of the funds included or incorporated
by reference in the Statement of Additional Information.
2. Portfolio Valuation-Securities are valued at amortized cost, which
approximates current value. When valuations are not readily available,
securities are valued at fair value as determined in accordance with
procedures adopted by the Board of Directors.
3. Capital Shares-The pro forma net asset value per share assumes the issuance
of shares of the surviving fund which would have been issued at February
28, 1998, in connection with the proposed reorganization. The number of
shares assumed to be issued is equal to the net asset value of shares of
the non-surviving fund, as of February 28, 1998, divided by the net asset
value per share of the shares of the surviving fund as of February 28,
1998. The pro forma total number of shares outstanding for the combined
fund consists of the following at February 28, 1998:
Additional Shares
Combined Total Outstanding Shares of Assumed Issued
Fund Shares Surviving Fund in Reorganization
---- ------ -------------- -----------------
Benham Prime
Money Market 2,533,698,933 1,417,565,184 1,116,133,749
</TABLE>
<PAGE>
PART C OTHER INFORMATION
Item 15 Indemnification
As stated in Article VII, Section 3 of the Amended and Restated
Declaration of Trust, incorporated herein by reference to Exhibit 1 to
the Registration Statement, "The Trustees shall be entitled and
empowered to the fullest extent permitted by law to purchase insurance
for and to provide by resolution or in the Bylaws for indemnification
out of Trust assets for liability and for all expenses reasonably
incurred or paid or expected to be paid by a Trustee of officer in
connection with any claim, action, suit, or proceeding in which he or
she becomes involved by virtue of his or her capacity or former
capacity with the Trust. The provisions, including any exceptions and
limitations concerning indemnification, may be set forth in detail in
the Bylaws or in a resolution adopted by the Board of Trustees."
Registrant hereby incorporates by reference, as though set forth fully
herein, Section 7 of the Distribution Agreement, to Exhibit 6 of
Post-Effective Amendment No. 28 to the Registration Statement of
American Century Target Maturities Trust filed on January 30, 1998.
Registrant hereby incorporates by reference, as though set forth fully
herein, Article VI of the Registrant's Bylaws, amended on March 9,
1998, appearing as Exhibit 2 to Post-Effective Amendment No. 23 to the
Registration Statement of American Century Municipal Trust filed on
March 26, 1998.
Item 16 Exhibits
(1) (a) Amended and Restated Declaration of Trust, dated June 16,
1993 and amended May 31, 1995, is incorporated herein by
reference to Exhibit 1 of Post-Effective Amendment No. 3 filed on
April 24, 1996.
(b) Amendment to the Declaration of Trust dated October 21, 1996,
is incorporated herein by reference to Exhibit 1b of
Post-Effective Amendment No. 5 filed on June 27, 1997.
(2) Amended and Restated Bylaws, dated March 9, 1998, are
incorporated herein by reference to Exhibit 2 of Post-Effective
Amendment No. 23 to the Registration Statement of American
Century Municipal Trust filed on March 26, 1998.
(3) Not applicable.
(4) Agreement and Plan of Reorganization is filed herein.
(5) Not applicable.
(6) (a) Management Agreement - Investor Class between American
Century Investment Trust and American Century Investment
Management, Inc., dated August 1, 1997, is incorporated herein by
reference to Exhibit 5a of Post-Effective Amendment No. 33 to the
Registration Statement of American Century Government Income
Trust, filed on July 31, 1997.
(b) Management Agreement - Advisor Class between American Century
Investment Trust and American Century Investment Management,
Inc., dated August 1, 1997, is incorporated herein by reference
to Exhibit 5b of Post-Effective Amendment No. 27 to the
Registration Statement of American Century Target Maturities
Trust, filed on August 28, 1997.
(7) Distribution Agreement between American Century Investment Trust
and Funds Distributor, Inc., dated January 15, 1998, is
incorporated herein by reference to Exhibit 6 of Post-Effective
Amendment No. 28 to the Registration Statement of American
Century Target Maturities Trust, filed on January 30, 1998.
(8) Not applicable.
(9) Global Custody Agreement between The Chase Manhattan Bank and the
Twentieth Century and Benham funds, dated August 9, 1996, is
incorporated herein by reference to Exhibit 8 to Post-Effective
Amendment No. 31 of American Century Government Income Trust
filed on February 7, 1997.
(10) (a) Master Distribution and Shareholder Services Plan of American
Century Government Income Trust, American Century International
Bond Fund, American Century Target Maturities Trust and American
Century Quantitative Equity Funds (Advisor Class) dated August 1,
1997, is incorporated herein by reference to Exhibit 15 of
Post-Effective Amendment No. 27 to the Registration Statement of
American Century Target Maturities Trust filed on August 28,
1997.
(b) Multiple Class Plan of American Century California Tax-Free
and Municipal Funds, American Century Government Income Trust,
American Century International Bond Funds, American Century
Investment Trust, American Century Municipal Trust, American
Century Target Maturities Trust and American Century Quantitative
Equity Funds dated August 1, 1997, is incorporated herein by
reference to Exhibit 18 of Post-Effective Amendment No. 27 to the
Registration Statement of American Century Target Maturities
Trust, filed on August 28, 1997.
(11) Opinion and Consent of Counsel as to the legality of the
securities being registered is filed herein.
(12) Opinion and Consent of Counsel as to the tax matters and
consequences to shareholders (to be filed by amendment).
(13) Transfer Agency Agreeement between American Century Investment
Trust and American Century Services Corporation dated August 1,
1997, is incorporated herein by reference to Exhibit 9 of
Post-Effective Amendment No. 33 to the Registration Statement of
American Century Government Income Trust filed on July 31, 1997.
(14) (a) Consent of Deloitte & Touche LLP is filed herein.
(b) Consent of Coopers & Lybrand is filed herein.
(c) Consent of Baird, Kurtz and Dobson (to be filed by
amendment).
(d) Consent of KPMG Peat Marwick (to be filed by amendment).
(15) Not applicable.
(16) Power of Attorney dated January 15, 1998 is filed herein.
(17) (a) Form of Proxy is filed herein.
(b) Prospectus dated March 1, 1998, for American Century - Benham
Cash Reserve Fund filed as part of Post-Effective Amendment No.
78 to the Registration Statement of American Century Mutual
Funds, Inc. on February 26, 1998, is incorporated herein by
reference.
(c) Statement of Additional Information dated March 1, 1998, for
American Century - Benham Cash Reserve Fund filed as part of
Post-Effective Amendment No. 78 to the Registration Statement of
American Century Mutual Funds, Inc. on February 26, 1998, is
incorporated herein by reference.
(d) Prospectus dated July 1, 1997, for American Century - Benham
Prime Money Market Fund filed as a part of Post-Effective
Amendment No. 5 to the Registration Statement of American Century
Investment Trust on June 27, 1997, is incorporated herein by
reference.
(e) Statement of Additional Information dated July 1, 1997,
revised August 1, 1997, for American Century - Benham Prime Money
Market Fund filed pursuant to Rule 497(e) on July 30, 1997, is
incorporated herein by reference.
(f) Annual Report dated October 31, 1997, for American Century -
Benham Cash Reserve Fund filed on December 29, 1997, is
incorporated herein by reference.
(g) Annual Report dated October 31, 1996, for American Century -
Benham Cash Reserve Fund filed on December 23, 1996, is
incorporated herein by reference.
(h) Annual Report dated February 28, 1997, for American Century -
Benham Prime Money Market Fund filed on April 23, 1997, is
incorporated herein by reference.
(i) Semiannual Report dated August 31, 1997, for American Century
- Benham Prime Money Market Fund filed on October 29, 1997, is
incorporated herein by reference.
Item 17 Undertakings
(a) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act of 1933, as amended,
the reoffering prospectus will contain the information called for
by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(b) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective amendment shall
be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(c) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of Kansas
City, State of Missouri, on the 17th day of April, 1998.
AMERICAN CENTURY INVESTMENT TRUST (Registrant)
By: /s/ Patrick A. Looby
Patrick A. Looby
Vice President
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Date
<S> <C> <C>
*Richard W. Ingram President, Principal April 17, 1998
- --------------------------------- Executive and Principal
Richard W. Ingram Financial Officer
*Maryanne Roepke Vice President, Treasurer April 17, 1998
- --------------------------------- and Principal Accounting
Maryanne Roepke Officer
*Albert A. Eisenstat Director April 17, 1998
- ---------------------------------
Albert A. Eisenstat
*Ronald J. Gilson Director April 17, 1998
- ---------------------------------
Ronald J. Gilson
*William M. Lyons Director April 17, 1998
- ---------------------------------
William M. Lyons
*Myron S. Scholes Director April 17, 1998
- ---------------------------------
Myron S. Scholes
*Kenneth E. Scott Director April 17, 1998
- ---------------------------------
Kenneth E. Scott
*Isaac Stein Director April 17, 1998
- ---------------------------------
Isaac Stein
*James E. Stowers III Director April 17, 1998
- ---------------------------------
James E. Stowers III
*Jeanne D. Wohlers Director April 17, 1998
- ---------------------------------
Jeanne D. Wohlers
</TABLE>
*By /s/ Patrick A. Looby
Patrick A. Looby
Attorney-in-Fact
EXHIBIT INDEX
EXHIBIT DESCRIPTION
EX-99.1a Amended and Restated Declaration of Trust, dated June 16, 1993
and amended May 31, 1995, is incorporated herein by reference to
Exhibit 1 of Post-Effective Amendment No. 3 filed on April 24,
1996.
EX-99.1b Amendment to the Declaration of Trust dated October 21, 1996, is
incorporated herein by reference to Exhibit 1b of Post-Effective
Amendment No. 5 filed on June 27, 1997.
EX-99.2 Amended and Restated Bylaws, dated March 9, 1998, are
incorporated herein by reference to Exhibit 2 of Post-Effective
Amendment No. 23 to the Registration Statement of American
Century Municipal Trust filed on March 26, 1998.
EX-99.4 Agreement and Plan of Reorganization is filed herein.
Ex-99.6a Management Agreement - Investor Class between American Century
Investment Trust and American Century Investment Management,
Inc., dated August 1, 1997, is incorporated herein by reference
to Exhibit 5a of Post-Effective Amendment No. 33 to the
Registration Statement of American Century Government Income
Trust, filed on July 31, 1997.
EX-99.6b Management Agreement - Advisor Class between American Century
Investment Trust and American Century Investment Management,
Inc., dated August 1, 1997, is incorporated herein by reference
to Exhibit 5b of Post-Effective Amendment No. 27 to the
Registration Statement of American Century Target Maturities
Trust, filed on August 28, 1997.
EX-99.7 Distribution Agreement between American Century Investment Trust
and Funds Distributor, Inc., dated January 15, 1998, is
incorporated herein by reference to Exhibit 6 of Post-Effective
Amendment No. 28 to the Registration Statement of American
Century Target Maturities Trust, filed on January 30, 1998.
EX-99.9 Global Custody Agreement between The Chase Manhattan Bank and the
Twentieth Century and Benham funds, dated August 9, 1996, is
incorporated herein by reference to Exhibit 8 to Post-Effective
Amendment No. 31 of American Century Government Income Trust
filed on February 7, 1997.
EX-99.10a Master Distribution and Shareholder Services Plan of American
Century Government Income Trust, American Century International
Bond Fund, American Century Target Maturities Trust and American
Century Quantitative Equity Funds (Advisor Class) dated August 1,
1997, is incorporated herein by reference to Exhibit 15 of
Post-Effective Amendment No. 27 to the Registration Statement of
American Century Target Maturities Trust filed on August 28,
1997.
EX-99.10b Multiple Class Plan of American Century California Tax-Free and
Municipal Funds, American Century Government Income Trust,
American Century International Bond Funds, American Century
Investment Trust, American Century Municipal Trust, American
Century Target Maturities Trust and American Century Quantitative
Equity Funds dated August 1, 1997, is incorporated herein by
reference to Exhibit 18 of Post-Effective Amendment No. 27 to the
Registration Statement of American Century Target Maturities
Trust, filed on August 28, 1997.
EX-99.11 Opinion and Consent of Counsel as to the legality of the
securities being registered is filed herein.
Ex-99.12 Opinion and Consent of Counsel as to the tax matters and
consequences to shareholders (to be filed by amendment).
EX-99.13 Transfer Agency Agreeement between American Century Investment
Trust and American Century Services Corporation dated August 1,
1997, is incorporated herein by reference to Exhibit 9 of
Post-Effective Amendment No. 33 to the Registration Statement of
American Century Government Income Trust filed on July 31, 1997.
EX-99.14a Consent of Deloitte & Touche LLP is filed herein.
EX-99.14b Consent of Coopers & Lybrand is filed herein.
EX-99.14c Consent of Baird, Kurtz and Dobson (to be filed by amendment).
EX-99.14d Consent of KPMG Peat Marwick (to be filed by amendment).
EX-99.16 Power of Attorney dated January 15, 1998 is filed herein.
EX-99.17a Form of Proxy is filed herein.
EX-99.17b Prospectus dated March 1, 1998, for American Century - Benham
Cash Reserve Fund filed as part of Post-Effective Amendment No.
78 to the Registration Statement of American Century Mutual
Funds, Inc. on February 26, 1998 , is incorporated herein by
reference.
EX-99.17c Statement of Additional Information dated March 1, 1998, for
American Century - Benham Cash Reserve Fund filed as part of
Post-Effective Amendment No. 78 to the Registration Statement of
American Century Mutual Funds, Inc. on February 26, 1998, is
incorporated herein by reference.
EX-99.17d Prospectus dated July 1, 1997, for American Century - Benham
Prime Money Market Fund filed as a part of Post-Effective
Amendment No. 5 to the Registration Statement of American Century
Investment Trust on June 27, 1997, is incorporated herein by
reference.
EX-99.17e Statement of Additional Information dated July 1, 1997, revised
August 1, 1997, for American Century - Benham Prime Money Market
Fund filed pursuant to Rule 497(e) on July 30, 1997, is
incorporated herein by reference.
EX-99.17f Annual Report dated October 31, 1997, for American Century -
Benham Cash Reserve Fund filed on December 29, 1997, is
incorporated herein by reference.
EX-99.17g Annual Report dated October 31, 1996, for American Century -
Benham Cash Reserve Fund filed on December 23, 1996, is
incorporated herein by reference.
EX-99.17h Annual Report dated February 28, 1997, for American Century -
Benham Prime Money Market Fund filed on April 23, 1997, is
incorporated herein by reference.
EX-99.17i Semiannual Report dated August 31, 1997, for American Century -
Benham Prime Money Market Fund filed on October 29, 1997, is
incorporated herein by reference.
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
AMERICAN CENTURY INVESTMENT TRUST
and
AMERICAN CENTURY MUTUAL FUNDS, INC.
DATED ------------------, 1998
TABLE OF CONTENTS
1. Transfer of Assets of Cash Reserve.....................................
2. Liquidating Distribution and Termination of Cash Reserve...............
3. Valuation Time.........................................................
4. Certain Representations, Warranties and Agreements of ACMF.............
5. Certain Representations, Warranties and Agreements of ACIT.............
6. Shareholder Action on Behalf of Cash Reserve...........................
7. Registration Statement and Proxy Solicitation Materials................
8. Effective Time of the Reorganization...................................
9. ACIT's Conditions......................................................
10. ACMF's Conditions......................................................
11. Tax Documents..........................................................
12. Further Assurances.....................................................
13. Termination of Representations and Warranties..........................
14. Termination of Agreement...............................................
15. Amendment and Waiver...................................................
16. Governing Law..........................................................
17. Successors and Assigns.................................................
18. Beneficiaries..........................................................
19. ACIT Liability.........................................................
20. ACMF Liability.........................................................
21. Notices................................................................
22. Expenses...............................................................
23. Entire Agreement.......................................................
24. Counterparts...........................................................
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION made as of ----------------, 1998
by and between American Century Investment Trust, a Massachusetts business trust
("ACIT"), and American Century Mutual Funds, Inc., a Maryland corporation
("ACMF").
WHEREAS, the parties desire that substantially all of the assets and
liabilities of the Cash Reserve portfolio of ACMF ("Cash Reserve") be
transferred to, and be acquired and assumed by, the Prime Money Market portfolio
of ACIT ("Prime") in exchange for shares of Prime which shall thereafter be
distributed by ACMF to the holders of shares of Cash Reserve, all as described
in this Agreement (the "Reorganization");
WHEREAS, the parties intend that the transfer of assets, assumption of
liabilities and distribution of shares in Cash Reserve be treated as a tax-free
reorganization under Section 368(a)(1)(C), 368(a)(1)(D) or 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties intend that in connection with the Reorganization
Cash Reserve shall be terminated and de-registered as described in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and subject to the terms and conditions hereof, and
intending to be legally bound hereby, ACMF and ACIT agree as follows:
1. TRANSFER OF ASSETS OF CASH RESERVE.
1.1. At the Effective Time (as defined in Section 8), ACMF shall
transfer and convey to ACIT, on behalf of Prime, all property
of every description, and all interests, rights, privileges
and powers of Cash Reserve other than cash in an amount
necessary to pay any unpaid dividends and distributions as
provided in Section 4.7 (such assets, the "Cash Reserve
Assets"). Simultaneously, ACIT shall, on behalf of Prime,
accept the Cash Reserve Assets and assume all known
liabilities, whether accrued, absolute, contingent or
otherwise, of Cash Reserve reflected in the calculation of
Cash Reserve's net asset value (the "Cash Reserve
Liabilities"). As a result, at and after the Effective Time:
(i) all assets of Cash Reserve shall become and be the assets
of Prime; and (ii) all known liabilities of Cash Reserve
reflected as such in the calculation of Cash Reserve's net
asset value shall attach to Prime as aforesaid and may
thenceforth be enforced against Prime to the extent as if the
same had been incurred by it. Without limiting the generality
of the foregoing, the Cash Reserve Assets shall include all
property and assets of any nature whatsoever, including,
without limitation, all cash, cash equivalents, securities,
other investments, claims and receivables (including dividend
and interest receivables) owned by Cash Reserve, and any
deferred or prepaid expenses shown as an asset on Cash
Reserve's books at the Effective Time, and all good will,
other intangible property and books and records belonging to
Cash Reserve. Recourse by any person for the Cash Reserve
Liabilities assumed by Prime shall, at and after the Effective
Time, be limited to Prime.
1.2. In exchange for the transfer of the Cash Reserve Assets and
the assumption of the Cash Reserve Liabilities, ACIT shall
simultaneously issue at the Effective Time to Cash Reserve a
number of full and fractional shares (to the third decimal
place) of Prime, all determined and adjusted as provided in
this Agreement. The number of shares of Prime so issued will
have an aggregate net asset value equal to the value of the
Cash Reserve Assets that are represented by shares of Cash
Reserve, the holders of which shall receive shares of Prime,
all determined and adjusted as provided in this Agreement.
1.3. The net asset values of shares of Prime and of Cash Reserve
shall be determined as of the Valuation Time, as defined in
Section 3.
1.4. The net asset value of shares of Prime shall be computed in
the manner set forth in Prime's then-current prospectus under
the Securities Act of 1933, as amended (the "1933 Act"). The
net asset value of the Cash Reserve Assets to be transferred
by ACMF shall be computed by ACMF and shall be subject to
adjustment by the amount, if any, agreed to by ACIT and ACMF.
In determining the value of the securities transferred by Cash
Reserve to Prime, each security shall be priced in accordance
with the policies and procedures of ACIT as described in its
then current prospectus and statement of additional
information and adopted by ACIT's Board of Trustees, which are
and shall be consistent with the policies now in effect for
ACMF. Price quotations and the security characteristics
relating to establishing such quotations shall be determined
by ACIT, provided that such determination shall be subject to
the approval of ACMF.
2. LIQUIDATING DISTRIBUTION AND TERMINATION OF CASH RESERVE.
Immediately after the Effective Time, Cash Reserve shall distribute in
complete liquidation pro rata to the record holders of its shares at
the Effective Time the shares of Prime to be received by the record
holders of Cash Reserve. In addition, each shareholder of record of
Cash Reserve shall have the right to receive any unpaid dividends or
other distributions that were declared before the Effective Time with
respect to the shares of Cash Reserve that are held by the shareholder
at the Effective Time. In accordance with instructions it receives from
ACMF, ACIT shall record on its books the ownership of shares of Prime
by the record holders of shares of Cash Reserve. All of the issued and
outstanding shares of Cash Reserve shall be redeemed and canceled on
the books of ACMF at the Effective Time and shall thereafter represent
only the right to receive the shares of Prime, and Cash Reserve's
transfer books shall be closed permanently. As soon as practicable
after the Effective Time, ACMF shall take all steps as shall be
necessary and proper to effect the dissolution of Cash Reserve under
federal and state law. After the Effective Time, ACMF shall not conduct
any business with respect to Cash Reserve except in connection with
Cash Reserve's liquidation and dissolution.
3. VALUATION TIME.
Subject to Section 1.4 hereof, the Valuation Time for the
Reorganization shall be as of 4:00 p.m. Eastern Time, on such date as
may be agreed by the duly authorized officers of both parties hereto.
4. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACMF.
ACMF, on behalf of itself and Cash Reserve, represents and warrants to,
and agrees with, ACIT as follows:
4.1. ACMF is a Maryland corporation duly created pursuant to its
Articles of Incorporation for the purpose of acting as a
management investment company under the 1940 Act and is
validly existing under the laws of, and duly authorized to
transact business in, the State of Maryland. Cash Reserve is
registered with the Securities and Exchange Commission (the
"SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"),
and such registration is in full force and effect.
4.2. It has power to own all of its properties and assets and,
subject to the approval of shareholders referred to herein, to
carry out and consummate the transactions contemplated hereby,
and has all necessary federal, state and local authorizations
to carry on its business as now being conducted and to
consummate the transactions contemplated by this Agreement.
4.3. This Agreement has been duly authorized, executed and
delivered by ACMF, and represents ACMF's valid and binding
contract, enforceable in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws of general
applicability relating to or affecting creditors' rights and
to general principles of equity. The execution and delivery of
this Agreement does not and will not, and the consummation of
the transactions contemplated by this Agreement will not,
violate ACMF's Articles of Incorporation, By-laws, or any
agreement or arrangement to which it is a party or by which it
is bound.
4.4. Cash Reserve has elected to qualify and has qualified as a
"regulated investment company" under Subtitle A, Chapter 1,
Subchapter M, Part I of the Code, as of and since its first
taxable year; has been a regulated investment company at all
times since the end of its first taxable year when it so
qualified; and qualifies and shall continue to qualify as a
regulated investment company until the Effective Time.
4.5. All federal, state, local and foreign income, profits,
franchise, sales, withholding, customs, transfer and other
taxes, including interest, additions to tax and penalties
(collectively, "Taxes") relating to the Cash Reserve Assets or
properly shown to be due on any return filed by Cash Reserve
with respect to taxable periods ending on or prior to, and the
portion of any interim period up to, the date hereof have been
fully and timely paid or provided for; and there are no
levies, liens, or other encumbrances relating to Taxes
existing, threatened or pending with respect to the Cash
Reserve Assets.
4.6. The financial statements of Cash Reserve for the fiscal year
ended October 31, 1997, audited by Deloitte & Touche LLP,
independent auditors, copies of which have been previously
furnished to ACIT, present fairly the financial position of
Cash Reserve as of October 31, 1997 and the results of its
operations for the year then ending, in conformity with
generally accepted accounting principles.
4.7. Prior to the Valuation Time, Cash Reserve shall have declared
a dividend or dividends, with a record date and ex-dividend
date prior to such Valuation Time, which, together with all
previous dividends, shall have the effect of distributing to
its shareholders all of its investment company taxable income,
if any, for the taxable periods or years ended on or before
Cash Reserve's most recent fiscal year end, and for the period
from said date to and including the Effective Time (computed
without regard to any deduction for dividends paid), and all
of its net capital gain, if any, realized in taxable periods
or years ended on or before Cash Reserve's fiscal year end and
for the period from said date to and including the Effective
Time.
4.8. At both the Valuation Time and the Effective Time, there shall
be no known liabilities of Cash Reserve, whether accrued,
absolute, contingent or otherwise, not reflected in the net
asset value per share of its outstanding shares.
4.9. There are no legal, administrative or other proceedings
pending or, to ACMF's knowledge threatened, against ACMF or
Cash Reserve which could result in liability on the part of
Cash Reserve.
4.10. Subject to the approval of shareholders, at both the Valuation
Time and the Effective Time, it shall have full right, power
and authority to sell, assign, transfer and deliver the Cash
Reserve Assets and, upon delivery and payment for the Cash
Reserve Assets as contemplated herein, Prime shall acquire
good and marketable title thereto, free and clear of all liens
and encumbrances, and subject to no restrictions on the
ownership or transfer thereof (except as imposed by federal or
state securities laws).
4.11. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by
ACMF of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"),
the 1940 Act, the rules and regulations under those Acts, and
state securities laws.
4.12. Insofar as the following relate to ACMF, the registration
statement filed by ACIT on Form N-14 relating to the shares of
Prime that will be registered with the SEC pursuant to this
Agreement, which, without limitation, shall include a proxy
statement of ACMF and the prospectus of ACIT with respect to
the transactions contemplated by this Agreement, and any
supplement or amendment thereto or to the documents contained
or incorporated therein by reference (the "N-14 Registration
Statement"), on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred
to herein and at the Effective Time: (i) shall comply in all
material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act, the rules and regulations
thereunder, and state securities laws, and (ii) shall not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in
this subsection shall apply only to statements in or omissions
from the N-14 Registration Statement made in reliance upon and
in conformity with information furnished by ACMF for use in
the N-14 Registration Statement.
4.13. All of the issued and outstanding shares of Cash Reserve have
been duly and validly issued, are fully paid and
non-assessable, and were offered for sale and sold in
conformity with all applicable federal and state securities
laws, and no shareholder of Cash Reserve has any preemptive
right of subscription or purchase in respect of such shares.
5. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACIT.
ACIT, on behalf of itself and Prime, represents and warrants to, and
agrees with, ACMF as follows:
5.1. ACIT is a Massachusetts business trust duly created pursuant
to a Declaration of Trust for the purpose of acting as a
management investment company under the 1940 Act and is
validly existing under the laws of, and duly authorized to
transact business in, the Commonwealth of Massachusetts. Prime
is registered with the SEC as an open-end management
investment company under the 1940 Act and such registration is
in full force and effect.
5.2. It has the power to own all of its properties and assets and
to carry out and consummate the transactions contemplated
herein, and has all necessary federal, state and local
authorizations to carry on its business as now being conducted
and to consummate the transactions contemplated by this
Agreement.
5.3. This Agreement has been duly authorized, executed and
delivered by ACIT, and represents ACIT's valid and binding
contract, enforceable in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws of general
applicability relating to or affecting creditors' rights and
to general principles of equity. The execution and delivery of
this Agreement did not, and the consummation of the
transactions contemplated by this Agreement will not, violate
ACIT's Declaration of Trust or By-laws or any agreement or
arrangement to which it is a party or by which it is bound.
5.4. Prime has elected to qualify, and has qualified, as a
"regulated investment company" under Subtitle A, Chapter 1,
Subchapter M, Part I of the Code, as of and since its first
taxable year; and has been a regulated investment company at
all times since the end of its first taxable year when it so
qualified and intends to continue to qualify as a regulated
investment company.
5.5. The financial statements of Prime for its fiscal year ended
March 31, 1998, audited by Coopers & Lybrand, independent
auditors, copies of which have been previously furnished to
ACMF, present fairly the financial position of Prime as of
March 31, 1998 and the results of its operations for the year
then ending, in conformity with generally accepted accounting
principles.
5.6. At both the Valuation Time and the Effective Time, there shall
be no known liabilities of Prime, whether accrued, absolute,
contingent or otherwise, not reflected in the net asset value
per share of its shares to be issued pursuant to this
Agreement.
5.7. There are no legal, administrative or other proceedings
pending or, to its knowledge, threatened against ACIT or Prime
that could result in liability on the part of ACIT or Prime.
5.8. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by
ACIT of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act, the 1934
Act, the 1940 Act, the rules and regulations under those Acts,
and state securities laws.
5.9. Insofar as the following relate to ACIT, the N-14 Registration
Statement on its effective date, at the time of any
shareholders' meetings referred to herein and at the Effective
Time: (i) shall comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act, the
rules and regulations thereunder, and state securities laws,
and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, however, that the representations and
warranties in this subsection shall apply only to statements
in or omissions from the N-14 Registration Statement made in
reliance upon and in conformity with information furnished by
ACIT for use in the N-14 Registration Statement.
5.10. The shares of Prime to be issued and delivered to Cash Reserve
for the account of record holders of shares of Cash Reserve
pursuant to the terms hereof shall have been duly authorized
as of the Effective Time and, when so issued and delivered,
shall be registered under the 1933 Act, duly and validly
issued, fully paid and non-assessable, and no shareholder of
ACIT shall have any preemptive right of subscription or
purchase in respect thereto.
6. SHAREHOLDER ACTION ON BEHALF OF CASH RESERVE.
6.1. As soon as practicable after the effective date of the N-14
Registration Statement, but in any event prior to the
Effective Time and as a condition to the Reorganization, the
Board of Directors of ACMF shall call, and ACMF shall hold, a
meeting of the shareholders of Cash Reserve for the purpose of
considering and voting upon:
6.1.1. Approval of this Agreement and the transactions
contemplated hereby, including, without limitation:
6.1.1.1. The transfer of the Cash Reserve Assets to
Prime, and the assumption by Prime of the
Cash Reserve Liabilities, in exchange for
shares of Prime, as described in this
Agreement; and
6.1.1.2. The liquidation of Cash Reserve through the
distribution to its record holders of shares
of the shares of Prime as described in this
Agreement; and
6.1.2. Such other matters as may be determined by the Board
of Directors or authorized officers of the parties.
6.2. Approval of this Reorganization Agreement by the shareholders
of Cash Reserve shall constitute the waiver of the application
of any fundamental policy of Cash Reserve that might be deemed
to prevent them from taking the actions necessary to
effectuate the Reorganization as described, and such policies,
if any, shall be deemed to have been amended accordingly.
7. REGISTRATION STATEMENT AND PROXY SOLICITATION MATERIALS.
The N-14 Registration Statement under the 1933 Act, including the
combined prospectus/proxy statement contained therein under the 1934
Act and 1940 Act proxy rules, shall be filed with the SEC as promptly
as practicable. ACIT and ACMF have cooperated and shall continue to
cooperate with each other, and have furnished and shall continue to
furnish each other with the information relating to themselves that is
required by the 1933 Act, the 1934 Act, the 1940 Act, the rules and
regulations under each of those Acts and state securities laws, to be
included in the N-14 Registration Statement.
8. EFFECTIVE TIME OF THE REORGANIZATION.
Delivery of the Cash Reserve Assets and the shares of Prime to be
issued pursuant to Section 1 and the liquidation of Cash Reserve
pursuant to Section 2 shall occur at the opening of business on the
next business day following the Valuation Time, or on such other date,
and at such place and time, as may be determined by the President or
any Vice President of each party hereto. The date and time at which
such actions are taken are referred to herein as the "Effective Time."
To the extent any of the Cash Reserve Assets are, for any reason, not
transferred at the Effective Time, ACMF shall cause such Cash Reserve
Assets to be transferred in accordance with this Agreement at the
earliest practicable date thereafter.
9. ACIT'S CONDITIONS.
The obligations of ACIT hereunder with respect to Prime shall be
subject to the following conditions precedent:
9.1. This Agreement and the transactions contemplated by this
Agreement shall have been approved by the shareholders of Cash
Reserve, in the manner required by law.
9.2. ACMF shall have duly executed and delivered to ACIT such bills
of sale, assignments, certificates and other instruments of
transfer ("Transfer Documents") as may be necessary or
desirable to transfer all right, title and interest of ACMF
and Cash Reserve in and to the Cash Reserve Assets. The Cash
Reserve Assets shall be accompanied by all necessary state
stock transfer stamps or cash for the appropriate purchase
price therefor.
9.3. All representations and warranties made in this Agreement
shall be true and correct in all material respects as if made
at and as of the Valuation Time and the Effective Time. As of
the Valuation Time and the Effective Time, there shall have
been no material adverse change in the financial position of
Cash Reserve since October 31, 1997 other than those changes
incurred in the ordinary course of business as an investment
company. No action, suit or other proceeding shall be
threatened or pending before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with, this Agreement or
the transactions contemplated herein.
9.4. ACIT shall have received an opinion of counsel acceptable to
ACMF, addressed to ACIT and ACMF in a form reasonably
satisfactory to them and dated the Effective Time,
substantially to the effect that for federal income tax
purposes: (i) the transfer of the Cash Reserve Assets
hereunder, and the assumption by Prime of the Cash Reserve
Liabilities, in exchange for shares of Prime, and the
distribution of said shares to the shareholders of Cash
Reserve, as provided in this Agreement, will constitute a
reorganization within the meaning of Section 368 of the Code,
and Cash Reserve and Prime will each be considered "a party to
a reorganization" within the meaning of Section 368(b) of the
Code; (ii) no gain or loss will be recognized by Cash Reserve
as a result of such transaction; (iii) no gain or loss will be
recognized by Prime as a result of such transaction; (iv) no
gain or loss will be recognized by the shareholders of Cash
Reserve on the distribution to them by Cash Reserve of shares
of Prime in exchange for their shares of Cash Reserve; (v) the
aggregate basis of Prime shares received by each shareholder
of Cash Reserve will be the same as the aggregate basis of the
shareholder's Cash Reserve shares immediately prior to the
transaction; (vi) the basis of the Cash Reserve Assets to
Prime will be the same as the basis of the Cash Reserve Assets
in the hands of Cash Reserve immediately prior to the
exchange; (vii) a shareholder's holding period for Prime
shares will be determined by including the period for which
the shareholder held the shares of Cash Reserve exchanged
therefor, provided that the shareholder held such shares of
Cash Reserve as a capital asset; and (viii) the holding period
of Prime with respect to the Cash Reserve Assets will include
the period for which the Cash Reserve Assets were held by Cash
Reserve.
9.5. The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any
proceeding seeking to enjoin consummation of the transactions
contemplated by this Agreement under Section 25(c) of the 1940
Act.
9.6. The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge
of ACIT, contemplated by the SEC, and the parties shall have
received all permits and other authorizations necessary under
state securities laws to consummate the transactions
contemplated by this Agreement.
9.7. The President or a Vice President of ACMF shall have certified
that ACMF has performed and complied in all material respects
with each of its agreements and covenants required by this
Agreement to be performed or complied with by it prior to or
at the Valuation Time and the Effective Time.
10. ACMF'S CONDITIONS.
The obligations of ACMF hereunder with respect to Cash Reserve shall be
subject to the following conditions precedent:
10.1. This Agreement and the transactions contemplated by this
Agreement shall have been approved by the shareholders of Cash
Reserve, in the manner required by law.
10.2. All representations and warranties of ACIT made in this
Agreement shall be true and correct in all material respects
as if made at and as of the Valuation Time and the Effective
Time. As of the Valuation Time and the Effective Time, there
shall have been no material adverse change in the financial
condition of Prime since March 31, 1998 other than those
changes incurred in the ordinary course of business as an
investment company. No action, suit or other proceeding shall
be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or
obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
10.3. ACMF shall have received an opinion of counsel acceptable to
ACMF, addressed to ACIT and ACMF in a form reasonably
satisfactory to them and dated the Effective Time, with
respect to the matters specified in Section 9.4.
10.4. The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending such
effectiveness shall have been instituted, or to the knowledge
of ACIT, contemplated by the SEC, and the parties shall have
received all permits and other authorizations necessary under
state securities laws to consummate the transactions
contemplated by this Agreement.
10.5. ACMF shall not sell or otherwise dispose of any shares of
Prime to be received in the transactions contemplated herein,
except in distribution to its shareholders as contemplated
herein.
10.6. The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any
proceeding seeking to enjoin consummation of the transactions
contemplated by this Agreement under Section 25(c) of the 1940
Act.
10.7. The President or a Vice President of ACIT shall have certified
that ACIT has performed and complied in all material respects
with each of its agreements and covenants required by this
Agreement to be performed or complied with by it prior to or
at the Valuation Time and the Effective Time.
11. TAX DOCUMENTS.
ACMF shall deliver to ACIT at the Effective Time confirmations or other
adequate evidence as to the adjusted tax basis of the Cash Reserve
Assets then delivered to Prime in accordance with the terms of this
Agreement.
12. FURTHER ASSURANCES.
Subject to the terms and conditions herein provided, each of the
parties hereto shall use its best efforts to take, or cause to be
taken, such action, to execute and deliver, or cause to be executed and
delivered, such additional documents and instruments, and to do, or
cause to be done, all things necessary, proper or advisable under the
provisions of this Agreement and under applicable law to consummate and
make effective the transactions contemplated by this Agreement.
13. TERMINATION OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the parties set forth in this
Agreement shall terminate at the Effective Time.
14. TERMINATION OF AGREEMENT.
14.1. This Agreement may be terminated prior to the Effective Time
by the Board of Trustees of ACIT or the Board of Directors of
ACMF, as provided below:
14.1.1. By ACIT if the conditions set forth in Section 9 are
not satisfied as specified in said Section;
14.1.2. By ACMF if the conditions set forth in Section 10 are
not satisfied as specified in said Section;
14.1.3. By the mutual consent of the parties.
14.2. If a party terminates this Agreement because one or more of
its conditions precedent have not been fulfilled, or if this
Agreement is terminated by mutual consent, this Agreement will
become null and void without any liability of either party or
any of their investment portfolios to the other; provided,
however, that if such termination is by ACIT pursuant to
Section 14.1.1 as a result of a breach by ACMF of any of its
representations, warranties or covenants in this Agreement, or
such termination is by ACMF pursuant to Section 14.1.2 as a
result of a breach by ACIT of any of its representations,
warranties or covenants in this Agreement, nothing herein
shall affect the non-breaching party's right to damages on
account of such other party's breach.
15. AMENDMENT AND WAIVER.
At any time prior to or (to the fullest extent permitted by law) after
approval of this Agreement by the shareholders of ACMF, (a) the parties
hereto may, by written agreement authorized by their respective Board
of Directors or Trustees, as the case may be, or their respective
Presidents or any Vice Presidents, and with or without the approval of
their shareholders, amend any of the provisions of this Agreement, and
(b) either party may waive any breach by the other party or the failure
to satisfy any of the conditions to its obligations (such waiver to be
in writing and executed by the President or Vice President of the
waiving party with or without the approval of such party's
shareholders).
16. GOVERNING LAW.
This Agreement and the transactions contemplated hereby shall be
governed, construed and enforced in accordance with the laws of
Massachusetts without giving effect to the conflicts of law principles
otherwise applicable therein.
17. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the respective successors and
permitted assigns of the parties hereto. This Agreement and the rights,
obligations and liabilities hereunder may not be assigned by either
party without the consent of the other party.
18. BENEFICIARIES.
Nothing contained in this Agreement shall be deemed to create rights in
persons not parties hereto, other than the successors and permitted
assigns of the parties.
19. ACIT LIABILITY.
19.1. The name "American Century Investment Trust" and "Trustees of
American Century Investment Trust" refer respectively to the
trust created and the trustees, as trustees but not
individually or personally, acting from time to time under an
Agreement and Declaration of Trust dated June 16, 1993, as
amended, which is hereby referred to and copies of which are
on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of
ACIT. The obligations of ACIT entered into in the name or on
behalf thereof by any of its trustees, representatives or
agents are made not individually, but in such capacities, and
are not binding upon any of the trustees, shareholders or
representatives of ACIT personally, but bind only the trust
property, and all persons dealing with any portfolio of ACIT
must look solely to the trust property belonging to such
portfolio for the enforcement of any claims against ACIT.
19.2. Both parties specifically acknowledge and agree that any
liability of ACIT under this Agreement with respect to Prime,
or in connection with the transactions contemplated herein
with respect to Prime, shall be discharged only out of the
assets of Prime and that no other portfolio of ACIT, if any,
shall be liable with respect thereto.
20. ACMF LIABILITY.
Both parties specifically acknowledge and agree that any liability of
ACMF under this Agreement with respect to Cash Reserve, or in
connection with the transactions contemplated herein with respect to
Cash Reserve, shall be discharged only out of the Cash Reserve Assets
and that no other portfolio of ACMF shall be liable with respect
thereto.
21. NOTICES.
All notices required or permitted herein shall be in writing and shall
be deemed to be properly given when delivered personally or by
telecopier to the party entitled to receive the notice or when sent by
certified or registered mail, postage prepaid, or delivered to a
nationally recognized overnight courier service, in each case properly
addressed to the party entitled to receive such notice at the address
or telecopier number stated below or to such other address or
telecopier number as may hereafter be furnished in writing by notice
similarly given by one party to the other party hereto:
If to American Century Investment Trust or American Century Mutual
Funds, Inc.:
Patrick A. Looby
4500 Main Street
Kansas City, Missouri 64111
22. EXPENSES.
Each party represents to the other that its expenses incurred in
connection with the Reorganization will be borne by American Century
Investment Management, Inc. or one or more of its affiliates.
23. ENTIRE AGREEMENT.
This Agreement embodies the entire agreement and understanding of the
parties hereto and supersedes any and all prior agreements,
arrangements and understandings relating to matters provided for
herein.
24. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers designated below as of the date
first written above.
AMERICAN CENTURY INVESTMENT TRUST
ATTEST:
- ----------------------------------------- By:----------------------------
AMERICAN CENTURY MUTUAL FUNDS, INC.
ATTEST:
- ----------------------------------------- By:----------------------------
Patrick A. Looby
Attorney At Law
4500 Main Street
Kansas City, Missouri 64111
Telephone (816) 340-4349
Telecopier (816) 340-4964
April 17, 1998
American Century Investment Trust
4500 Main Street
Kansas City, Missouri 64111
RE: Opinion Regarding the Legality of Shares of American Century
Investment Trust (the "Trust")
(Registration No. 811-7822)
Dear Ladies and Gentlemen:
I am counsel to American Century Investment Trust, and as such, I am
generally familiar with its affairs. Based upon that familiarity, and upon
examination of such documents as I deemed relevant, it is my opinion that the
issuance and sale of shares by the Trust in connection with the transactions
contemplated by the Registration Statement on Form N-14, of which this opinion
is an exhibit, has been duly and validly authorized by all appropriate action
and, upon the delivery thereof and payment therefor in accordance and in
connection with the reorganization, the shares will be legally issued, fully
paid and non assessable by the Trust.
For the record, it should be noted that I am an officer of American
Century Services Corporation, an affiliated corporation of American Century
Investment Management, Inc., the investment adviser of American Century
Investment Trust.
I hereby consent to the inclusion of this opinion with the filing of the
Registration Statement on Form N-14.
Sincerely,
/s/ Patrick A. Looby
Patrick A. Looby
Vice President and
Associate General Counsel
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form N-14 of American Century Investment Trust of our Independent Auditors'
Report dated December 3, 1997, appearing in the American Century - Benham Cash
Reserve Fund Annual Report for the fiscal year ended October 31, 1997, and to
the reference to us under the caption "Financial Statements" in the Combined
Prospectus/Proxy Statement, which is part of such Registration Statement.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Kansas City, Missouri
April 16, 1998
Consent of Independent Accountants
We consent to the reference to our firm under the caption "Financial Statements"
in this registration statement on Form N-14 (File No. 811-7822).
/s/Coopers & Lybrand L.L.P.
Kansas City, Missouri Coopers & Lybrand L.L.P.
April 17, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, AMERICAN CENTURY
INVESTMENT TRUST, hereinafter called the "Trust" and certain trustees and
officers of the Trust, do hereby constitute and appoint James E. Stowers, III,
William M. Lyons, Douglas A. Paul, and Patrick A. Looby, and each of them
individually, their true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys and agents may
deem necessary or advisable to enable the Trust to comply with the Securities
Act of 1933 and/or the Investment Company Act of 1940, as amended, and any rules
regulations, orders, or other requirements of the United States Securities and
Exchange Commission thereunder, in connection with the registration under the
Securities Act of 1933 and/or the Investment Company Act of 1940, as amended,
including specifically, but without limitation of the foregoing, power and
authority to sign the name of the Trust in its behalf and to affix its seal, and
to sign the names of each of such trustees and officers in their capacities as
indicated, to any amendment or supplement to the Registration Statement filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940, as amended, and to any instruments or
documents filed or to be filed as a part of or in connection with such
Registration Statement; the Registration Statement on Form N-14 and any
amendments or supplements thereto to be filed with the Securities and Exchange
Commission under the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and to any instruments or documents filed or to be filed as
part of or in connection with such Registration Statement; and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused this Power to be executed by its
duly authorized officers on this the 15th day of January, 1998.
AMERICAN CENTURY INVESTMENT TRUST
(A Massachusetts Business Trust)
By: /s/ Richard W. Ingram
Richard W. Ingram, President
SIGNATURE AND TITLE
/s/ James E. Stowers /s/ Isaac Stein
James E. Stowers, III Isaac Stein
Chairman Director
/s/ Albert A. Eisenstat /s/ Jeanne D. Wohlers
Albert A. Eisenstat Jeanne D. Wohlers
Director Director
/s/ Ronald J. Gilson /s/ William M. Lyons
Ronald J. Gilson William M. Lyons
Director Director
/s/ Myron S. Scholes /s/ Maryanne Roepke
Myron S. Scholes Maryanne Roepke
Director Treasurer
Attest:
/s/ Kenneth E. Scott
Kenneth E. Scott By:/s/ Douglas A. Paul
Director Douglas A. Paul, Secretary
FORM OF PROXY
American Century Mutual Funds
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF American Century
Mutual Funds, Inc. for use at a meeting of shareholders to be held at 10:00 a.m.
(Central time) on August 8, 1998 at American Century Tower I, 4500 Main Street,
Kansas City, Missouri.
I hereby appoint Patrick A. Looby and Charles A. Etherington, and each
of them, with full power of substitution as my proxy to vote at the meeting and
at all adjournments or postponements thereof, all shares of beneficial interest,
evidencing interests in the American Century - Benham Cash Reserve Fund ("Cash
Reserve") which I held of record on May 15, 1998, the record date for the
meeting, upon the following matters and upon any other matter which may come
before the meeting, in their discretion:
1. Proposal to approve an Agreement and Plan of Reorganization
and the transactions contemplated thereby, including: the
transfer of substantially all of the assets and liabilities
of Cash Reserve to the American Century - Benham Prime Money
Market Fund ("Prime"); the distribution of Prime shares to
the shareholders of Cash Reserve according to their
respective interests; and the termination under state law
and the Investment Company Act of 1940, as amended, of Cash
Reserve.
FOR AGAINST ABSTAIN
/ / / / / /
2. In their discretion, the parties are authorized to vote upon
such other business as may properly come before the meeting.
FOR AGAINST ABSTAIN
/ / / / / /
Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as GRANTING
authority to vote FOR Proposals 1 and 2.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney or as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: _____________________________________________
X____________________________________________________
Signature
X____________________________________________________
Signature, if held jointly
Please execute and return promptly in the enclosed envelope each accompanying
proxy card which is being solicited by your Board of Directors. Please return
your proxy card even if you are planning to attend the meeting. This is
important to ensure a quorum at the meeting. Proxies may be revoked at any time
before they are exercised by submitting to a written notice of revocation or a
subsequently executed proxy or by attending the meeting and voting in person.
