[front cover]
FEBRUARY 28, 1999
ANNUAL REPORT
- -----------------
AMERICAN CENTURY
[graphic of stairs]
PRIME MONEY MARKET
[american century logo(reg.sm)]
American
Century
[inside front cover]
AMERICAN CENTURY KEEPS WITH TRADITION
- --------------------------------------------------------------------------------
FOLLOWING BENHAM'S FOOTSTEPS
On March 1, we made it easier for you to do business with us. We simplified our
organizational structure by eliminating the venerable Benham and Twentieth
Century names, and putting all our funds under American Century. The name change
will not affect your funds' investment management--the proven Benham investment
philosophy, experienced portfolio management teams, and legacy of innovation and
high-quality performance remain.
CONSISTENT, SOLID PERFORMANCE--We'll continue to adhere to the investment
practices that have helped our fixed-income funds perform so well over the
years. In 1998, two-thirds of American Century bond funds beat their peer group
average, according to Lipper, Inc.
CONSISTENT INVESTMENT PHILOSOPHY--American Century fixed-income funds will
continue to offer a "pure play" on their sector of the market, as they did under
Benham.
CONTINUITY OF THE MANAGEMENT TEAM--The investment process is not all that
remains the same; we've retained our core team of experienced fixed-income
portfolio managers.
* Experience--The more than 35 fixed-income investment professionals at
American Century have an average of nine years of investment management
experience.
* Bigger and better--Since American Century was formed, we've doubled the
size of the original Benham management team in our Mountain View,
California office.
TRADITION OF INNOVATION--Like Benham before it, American Century is a leader in
fixed-income fund innovation. For example, we introduced a total of four new
fixed-income funds in the last three years, including the first no-load
inflation-adjusted bond fund.
We continue to run our fixed-income operation from our offices in Mountain View,
California, which is also home to our walk-in Investor Center.
We look forward to continuing to meet your fixed-income investment needs in the
Benham tradition.
WHAT'S NEW . . .
We now classify our funds in easy-to-remember categories based on objective
and risk. The four objective categories are: CAPITAL PRESERVATION, INCOME,
GROWTH AND INCOME, and GROWTH. The three risk categories are: CONSERVATIVE,
MODERATE, and AGGRESSIVE. This new classification system makes it easier for
investors to identify which funds are right for them.
Turn to the inside back cover of this report to see a list of the funds
classified by objective and risk. For definitions of the fund categories, see
the Glossary.
Past performance is no guarantee of future results.
[left margin]
PRIME MONEY MARKET
(BPRXX)
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Our Message to You
- --------------------------------------------------------------------------------
/photo of James E. Stowers III and James E. Stowers, Jr./
James E. Stowers III, seated, with James E. Stowers, Jr.
During the year ended February 28, 1999, the U.S. financial markets
experienced a dramatic shift in expectations that caused inflation predictions
and interest rates to seesaw. When we addressed you six months ago in Prime's
semiannual report, the economic outlook appeared grim--financial problems in
Asia, Russia, and Latin America sent the domestic stock market reeling and
pushed U.S. bond yields to record lows. Volatility was so rampant that the
Federal Reserve (the U.S. central bank) cut short-term interest rates for the
first time in three years to bolster the economy and help stabilize markets
worldwide.
Three interest rate cuts by the Fed in six weeks appeared to bolster
investor confidence, which, in turn, helped produce a dramatic stock market
rebound. By February, the most widely followed U.S. stock market indices resumed
hitting new highs after a six-month hiatus. The stock market's revival and the
strongest quarterly economic surge in two years caused inflation fears to
return. Interest rates rose reflexively, even though inflation remained at its
lowest level in a dozen years.
Investors who couldn't quite stomach the market upheavals, or simply had
short-term financial goals or liquidity needs to meet, found money market funds
such as Prime a relatively stable place for their money. Prime is one of nine
money market funds offered by American Century, which has provided these capital
preservation and portfolio diversification funds for savers and investors since
1972. The nine funds range from the top credit quality of Treasury bills to the
higher yields of short-term corporate debt to the tax-exempt income of municipal
securities.
We've recently made some changes in the way we classify our funds that we
hope will make it easier for you to identify and select the money market, bond,
stock, and other funds that best meet your investment needs. We reorganized our
entire family of 71 funds based on investment goals and risk levels (see the
front and back inside covers of this report for more details).
In addition, to help you better understand your fund, Prime Money Market
shareholders will receive a new simplified prospectus in July. This document
will provide the fund information you need in clear and straightforward
language, and it includes helpful tips and definitions of investment terms.
We want your experience with American Century to be rewarding, and we
appreciate your continued confidence in us.
Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
[right margin]
Table of Contents
Report Highlights ........ 2
Frequently Asked Questions 3
PRIME MONEY MARKET
Performance Information .. 4
Portfolio at a Glance .... 4
Management Q&A ........... 5
Portfolio Composition
by Security Type ...... 5
Portfolio Composition
by Credit Rating ...... 6
Schedule of Investments .. 7
FINANCIAL STATEMENTS
Statement of Assets and
Liabilities ........... 11
Statement of Operations .. 12
Statements of Changes
in Net Assets ......... 13
Notes to Financial
Statements ............ 14
Financial Highlights ..... 17
Report of Independent
Accountants ........... 19
OTHER INFORMATION
Share Class and Retirement
Account Information ... 20
Background Information
Investment Philosophy
and Policies ....... 21
Comparative Indices ... 21
Lipper Rankings ....... 21
Credit Rating
Guidelines ......... 21
Investment Team
Leaders ............ 21
Glossary ................. 22
www.americancentury.com 1
Report Highlights
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MARKET PERSPECTIVE
* Late in 1998, when it appeared that global economic turmoil might push the
U.S. economy toward recession, the Federal Reserve (the Fed) cut short-term
interest rates.
* As a result of the Fed's rate cuts--the first in nearly three years--yields
on money market securities headed sharply lower.
* Although the U.S. economy was bolstered by the Fed's interest rate cuts, it
remains vulnerable to financial events overseas.
* In light of somewhat mixed economic signals, we think that for now, the Fed
is likely to maintain the same "wait-and-see" approach toward interest rates
that it's taken so far this year.
MANAGEMENT Q&A
* Prime continued to perform well, finishing among the top 20% of its Lipper
peers for the year ended February 28, 1999, based on total return.
* An overall decline in interest rates provided the backdrop for the decline
in the fund's 7-day current yield, which slipped from 5.08% at the end of
August 1998 to 4.49% by the end of February.
* We lengthened the fund's weighted average maturity a bit, extending to
around 70 days between late October and early December. That extension
helped us maintain a higher yield while enhancing returns.
* Because we believed that rates would remain unchanged for the near future,
we continued to extend Prime's average maturity through February,
lengthening to 82 days.
* We extended the average maturity by adding high-quality certificates of
deposit (CDs) issued by international banks to the portfolio, while
decreasing Prime's commercial paper (CP) holdings. The net result was a
substantial increase in the portfolio's overall credit quality.
* Going forward, we don't expect the Fed to change rates anytime soon, so we
will probably keep Prime's average maturity longer than its historical norm.
* To accomplish that strategy, we expect to maintain our concentration in CDs,
which should also help to maintain the portfolio's high credit quality.
[left margin]
"PRIME CONTINUED TO PERFORM WELL, FINISHING AMONG THE TOP 20% OF ITS LIPPER
PEERS FOR THE YEAR ENDED FEBRUARY 28, 1999, BASED ON TOTAL RETURN."
PRIME MONEY MARKET(1)
(BPRXX)
TOTAL RETURNS: AS OF 2/28/99
6 Months 2.40%(2)
1 Year 5.07%
NET ASSETS: $2.9 billion
7-DAY CURRENT YIELD: 4.49%
INCEPTION DATE: 11/17/93
(1) Investor Class.
(2) Not annualized.
See Total Returns on page 4.
Investment terms are defined in the Glossary on pages 22 and 23.
2 1-800-345-2021
Money Market Funds--Frequently Asked Questions
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CAN I MAKE DIRECT DEPOSITS INTO MY MONEY MARKET FUND ACCOUNT?
Yes. You can arrange for direct deposit of your paycheck, Social Security
check, Treasury Direct interest payment, military allotment, or payments from
other government agencies. Give us a call, and we will send you the necessary
information to set it up.
WHAT IS THE HOLDING PERIOD ON NEW DEPOSITS INTO MY ACCOUNT?
Generally, there is an eight-business-day holding period for deposited
funds (initial investments in a new account are held for 15 calendar days).
There is a one-business-day holding period for U.S. Treasury checks, money
orders, and travelers' checks.
IS THERE A LIMIT ON THE NUMBER OF CHECKS I CAN WRITE ON MY MONEY MARKET ACCOUNT?
No. You can write as many checks as you like at no charge, as long as each
check is for $100 or more.
IS THERE AN EASY WAY TO MOVE MONEY FROM MY MONEY MARKET FUND INTO A STOCK OR
BOND FUND?
Yes. Moving money between funds is called an exchange, and there is no
limit on the number of exchanges you can make out of a money market fund
account. However, there is a limit of six exchanges per calendar year out of
stock and bond fund accounts.
Exchanges can be made by:
* visiting our Web site at
www.americancentury.com*
* using our Automated Information Line (1-800-345-8765)*
* calling an Investor Relations Representative at 1-800-345-2021*
* writing us a letter
HOW DO I DECIDE WHETHER A TAXABLE MONEY MARKET FUND OR A TAX-FREE MONEY MARKET
FUND IS RIGHT FOR ME?
The most important factor to consider is your tax bracket. Tax-free money
market funds typically offer lower yields than taxable funds, but you pay no
federal income taxes on the income from a tax-free fund.
If you are in one of the higher federal income tax brackets, taxes will eat
up a big part of your income from a taxable money market fund, so a tax-free
investment may be better for you. If you're in a lower tax bracket, then you can
usually earn more in a taxable fund even after taxes are deducted.
We can help you figure it out. If you give us a call and tell us what tax
bracket you're in, we can tell you whether you're likely to earn more after-tax
income in a tax-free or a taxable money market fund.
IF YOU HAVE ANY QUESTIONS ABOUT OUR MONEY MARKET FUNDS, CALL US TOLL FREE AT
1-800-345-2021 OR E-MAIL US AT OUR WEB SITE, WWW.AMERICANCENTURY.COM.
* Before an investor can make an exchange via calling an Investor Relations
Representative, using our Automated Information Line, or via our Web site, the
shareholder must have first provided us with authorization, in writing, to do
so.
[right margin]
A FASTER AND EASIER WAY TO DEPOSIT MUTUAL FUND DISTRIBUTIONS
If you prefer to get your fund dividend or capital gains distributions sent to
you instead of reinvesting them, there are a couple of ways that you can get
access to this money faster than waiting for a check in the mail:
* YOU CAN HAVE DISTRIBUTIONS DEPOSITED DIRECTLY INTO YOUR MONEY MARKET
ACCOUNT. The money will be deposited the same day that the distributions
are paid.
* DISTRIBUTIONS CAN BE SENT ELECTRONICALLY TO YOUR BANK ACCOUNT. The money
will be available in your bank account within three days.
Contact our Investor Relations Representatives to set up either of these
options.
www.americancentury.com 3
Prime Money Market--Performance
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<TABLE>
<CAPTION>
TOTAL RETURNS AS OF FEBRUARY 28, 1999
INVESTOR CLASS (INCEPTION 11/17/93) ADVISOR CLASS (INCEPTION 8/28/98)
PRIME 90-DAY TREASURY MONEY MARKET INSTRUMENT FUNDS(2) PRIME 90-DAY TREASURY
MONEY MARKET BILL INDEX AVERAGE RETURN FUND'S RANKING MONEY MARKET BILL INDEX
------------ ---------- -------------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) ............ 2.40% 2.20% 2.25% -- 2.27% 2.20%
1 YEAR ................. 5.07% 4.77% 4.76% 57 OUT OF 312 -- --
==============================================================================================================================
AVERAGE ANNUAL RETURNS
==============================================================================================================================
3 YEARS ................ 5.13% 5.03% 4.84% 46 OUT OF 271 -- --
5 YEARS ................ 5.18% 5.07% 4.84% 17 OUT OF 203 -- --
LIFE OF FUND ........... 5.09% 4.98%(3) 4.74%(3) 15 OUT OF 197(3) 2.31%(1) 2.20%(4)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) According to Lipper Inc., an independent mutual fund ranking service.
(3) Since 11/30/93, the date nearest the class's inception for which data are
available.
(4) Since 8/31/98, the date nearest the class's inception for which data are
available.
See pages 20-22 for more information about share classes, returns, the
comparative index, and Lipper fund rankings.
PORTFOLIO AT A GLANCE
2/28/99 2/28/98
NUMBER OF ISSUERS 67 58
WEIGHTED AVERAGE
MATURITY 82 DAYS 65 DAYS
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.58% 0.50%
YIELDS AS OF FEBRUARY 28, 1999
INVESTOR CLASS
7-DAY CURRENT YIELD 4.49%
7-DAY EFFECTIVE YIELD 4.59%
Past performance does not guarantee future results.
Money market funds are neither insured nor guaranteed by the FDIC or any other
government agency.
Yields will fluctuate, and although the fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
fund. The 7-day yield more closely reflects earnings of the fund than the total
return.
4 1-800-345-2021
Prime Money Market--Q&A
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/photo of John Walsh and Denise Tabacco/
An interview with John Walsh and Denise Tabacco, portfolio managers on the
Prime Money Market fund investment team.
HOW DID THE FUND PERFORM FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999?
Prime continued to perform well, finishing among the top 20% of its Lipper
peers. For the fiscal year, Prime's Investor Class shares returned 5.07%,
compared with the 4.76% average return of the 312 "Money Market Instrument
Funds" tracked by Lipper Inc. Prime's longer-term returns are similarly strong.
(See the previous page for other fund performance comparisons.)
DESPITE PRIME'S SOLID PERFORMANCE, ITS YIELD DROPPED OVER THE LAST SIX MONTHS.
WHY?
An overall decline in interest rates provided the backdrop for the decline
in the fund's 7-day current yield, which slipped from 5.08% at the end of August
1998 to 4.49% by the end of February.
Interest rates tend to fall when the economy weakens--lower interest rates
help stimulate growth. When it appeared that global economic turmoil might push
the U.S. economy toward recession, the Federal Reserve (the Fed) lowered
short-term interest rates last year. And not just once, but three times between
late September and mid-November, reducing short-term rates a total of 75 basis
points (0.75%--a basis point equals 0.01%).
As a result of those reductions, yields on money market securities headed
sharply lower.
IN LIGHT OF THE DECLINE IN INTEREST RATES, HOW DID YOU POSITION PRIME'S WEIGHTED
AVERAGE MATURITY (WAM)?
We lengthened the fund's WAM a bit, extending to around 70 days between
late October and early December. (WAM indicates the average time until the
securities in a portfolio mature, weighted by dollar amount.) That extension
helped us maintain a higher yield for Prime because generally speaking,
long-term securities yield more than short-term ones. The longer WAM was also
one of the main factors leading to the fund's solid return for the period.
We've maintained Prime's longer WAM thus far in 1999, but for different
reasons. Global economies stabilized somewhat in early 1999, and with that
stabilization came a change in the Fed's stance toward interest rates--in
Congressional testimony during February, the Fed's chairman hinted that the U.S.
central bank had officially shifted from a rate-lowering bias to a neutral one.
Because that increased the likelihood that rates would remain unchanged for
the near future, we continued to extend Prime's WAM, lengthening to 82 days by
the end of February.
[right margin]
"AN OVERALL DECLINE IN INTEREST RATES PROVIDED THE BACKDROP FOR THE DECLINE IN
THE FUND'S YIELD, WHICH SLIPPED FROM 5.08% AT THE END OF AUGUST 1998 TO 4.49% BY
THE END OF FEBRUARY."
[pie charts - data below]
PORTFOLIO COMPOSITION BY SECURITY TYPE
AS OF FEBRUARY 28, 1999
Commercial Paper 62%
Variable-Rate Notes 19%
CDs 11%
Asset-Backed Securities 4%
Other 4%
AS OF AUGUST 31, 1998
Commercial Paper 71%
Variable-Rate Notes 18%
CDs 5%
Asset-Backed Securities 5%
Other 1%
Security types are defined on pages 22 and 23.
www.americancentury.com 5
Prime Money Market--Q&A
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(Continued)
HOW DID YOU ACCOMPLISH THE SHIFT IN PRIME'S WAM?
The first step was to reallocate some of the proceeds from the portfolio's
maturing commercial paper (CP). As some of the securities matured, we allowed
Prime's CP exposure to fall from roughly 71% at the end of August 1998 to about
62% by the end of February. (See the charts on the previous page.)
We used the proceeds to double the portfolio's exposure to certificates of
deposit (CDs). Because many of the CDs we added were on the long end of Prime's
investment spectrum--maturing in about one year--we were able to extend the WAM.
By the end of February, roughly 11% of Prime's portfolio was invested in CDs, up
from around 5% at the end of August last year.
WHAT IMPACT DID THAT STRATEGY HAVE ON PRIME'S OVERALL CREDIT QUALITY?
The increase in CDs and the decrease in CP substantially raised the
portfolio's overall credit quality. (See the table at left.) That's because most
of the CDs we added were issued by international banks with solid credit
ratings. By the end of February, about 96% of the fund's holdings were A-1+, up
significantly from about 64% six months ago.
GOING FORWARD, WHAT'S YOUR OUTLOOK FOR INTEREST RATES AND THE U.S. ECONOMY?
The U.S. economy was bolstered by the Fed's interest rate cuts but remains
vulnerable to financial events overseas. Consumer confidence and spending remain
one of the main drivers of the economy, which expanded at an annualized 6%
during the final quarter of 1998--the fastest quarterly expansion in over two
years. Nevertheless, there's still some mild weakness in the corporate and
manufacturing sectors, and inflation remains tame.
In light of those somewhat mixed signals, we think that the Fed is likely
to maintain the same "wait-and-see" approach toward interest rates that it's
taken so far this year. That argues for greater overall interest rate stability
for the near term. But because market expectations can significantly impact
interest rates, we could see some intermittent bouts of volatility as investors
attempt to gauge inflation prospects and future Fed actions.
GIVEN THAT OUTLOOK, WHAT ARE YOUR IMMEDIATE PLANS FOR PRIME?
Steady as she goes for now. Because we don't expect the Fed to change rates
anytime soon, we will probably keep Prime's WAM longer than its historical norm.
That should help enhance the fund's yield and add to returns. To accomplish that
strategy, we expect to keep our concentration in CDs, which should also help to
maintain the portfolio's high overall credit quality.
[left margin]
"BECAUSE MANY OF THE CDS WE ADDED WERE ON THE LONG END OF PRIME'S INVESTMENT
SPECTRUM --MATURING IN ABOUT ONE YEAR-- WE WERE ABLE TO EXTEND THE WAM."
PORTFOLIO COMPOSITION BY CREDIT RATING
% OF FUND INVESTMENTS
AS OF AS OF
2/28/99 8/31/98
A-1+ 96% 64%
A-1 4% 34%
A-2 -- 2%
Ratings provided by Standard & Poor's. See Credit Rating Guidelines on page 21
for more information.
"BECAUSE WE DON'T EXPECT THE FED TO CHANGE RATES ANYTIME SOON, WE WILL PROBABLY
KEEP PRIME'S WAM LONGER THAN ITS HISTORICAL NORM."
6 1-800-345-2021
Prime Money Market--Schedule of Investments
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FEBRUARY 28, 1999
Principal Amount Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER(1)--62.4%
AUTOMOBILES & AUTO PARTS--0.6%
$ 17,000,000 BMW U.S. Capital Corp., 4.80%,
4/29/99 $ 16,866,267
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BANKING--12.6%
25,000,000 Abbey National North America
Corp., 4.76%, 6/7/99 24,675,919
22,000,000 ANZ (Delaware) Inc., 5.03%,
3/17/99 21,950,818
10,000,000 Banco de Galicia y Buenos Aires
S.A. de C.V., 4.86%, 8/19/99
(LOC: Bayerische Hypo-Und
Vereinsbank, A.G.) 9,769,150
17,000,000 BIL North America, Inc., 4.98%,
4/7/99 16,912,989
5,000,000 First Union National Bank, 4.80%,
8/19/99 4,886,000
42,500,000 Generale Bank, Inc., 4.83%-4.89%,
4/7/99-4/26/99 42,236,652
20,000,000 Lloyds Bank Plc, 4.81%, 7/7/99 19,657,956
100,000,000 National Australia Bank Ltd. SA,
4.77%-4.99%,
3/22/99-5/24/99 99,325,512
84,286,000 Spintab-Swedmortgage AB,
4.84%-5.06%,
4/12/99-8/13/99 83,260,246
40,000,000 Unibanco-Uniao de Bancos
Brasileiros S.A. Grand Cayman,
5.45%-5.48%,
4/15/99-6/28/99 (LOC:
Bayerische Hypo-Und
Vereinsbank, A.G.) 39,502,694
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362,177,936
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CHEMICALS & RESINS--1.0%
30,000,000 du Pont (E.I.) de Nemours & Co.,
4.87%, 5/27/99 29,646,925
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CREDIT CARD & TRADE RECEIVABLES--6.8%
65,000,000 Corporate Receivables Corp.,
4.83%-5.25%,
3/3/99-5/5/99 (Acquired
11/9/98-2/11/99,
Cost $64,236,154)(2) 64,717,113
132,000,000 Dakota Certificates (Citibank),
4.79%-5.10%,
3/12/99-6/2/99 (Acquired
12/10/98-2/18/99, Cost
$130,290,930)(2) 130,995,372
---------------
195,712,485
---------------
ENERGY (PRODUCTION & MARKETING)--13.1%
5,000,000 Chevron Transport Corp., 4.84%,
4/8/99 (Acquired 2/19/99,
Cost $4,967,733)(2) 4,974,456
Principal Amount Value
- --------------------------------------------------------------------------------
$ 44,000,000 Chevron Transport Corp.,
4.84%-5.09%,
3/4/99-5/20/99 $ 43,871,507
34,000,000 Chevron U.K. Investment PLC,
4.84%-5.00%,
3/19/99-4/27/99 33,811,732
62,000,000 Equilon Enterprises LLC,
4.79%-5.09%,
3/12/99-4/28/99 61,725,118
66,000,000 Motiva Enterprises LLC,
5.11%-5.18%,
3/4/99-3/11/99 65,935,582
74,350,000 Petrobras International Finance
Co., 4.82%-5.05%,
3/9/99-9/8/99 (LOC:
Barclays Bank PLC) 73,703,973
94,468,000 Sand Dollar Funding LLC,
4.83%-4.87%,
3/12/99-4/29/99 (Acquired
1/7/99-1/26/99, Cost
$93,465,537)(2) 94,051,525
---------------
378,073,893
---------------
FINANCIAL SERVICES--19.4%
15,000,000 Deutsche Bank Financial, Inc.,
4.83%, 5/11/99 (Acquired
2/10/99, Cost $14,818,875)(2) 14,857,113
54,000,000 Falcon Asset Securities Corp.,
4.86%-4.88%,
3/15/99-4/20/99 (AMBAC)
(Acquired 2/17/99-2/26/99,
Cost $53,707,576)(2) 53,761,082
10,000,000 Finans Funding Corp. II, 4.85%,
6/3/99 9,873,361
30,000,000 Garanti Funding Corp. I, 4.78%,
8/2/99 (LOC: Bayerische
Hypo-Und Vereinsbank, A.G.) 29,386,567
24,000,000 Garanti Funding Corp. II,
4.79%-4.80%,
7/29/99-7/30/99 23,519,425
80,300,000 General Electric Capital Corp.,
4.59%-5.46%,
3/1/99-6/25/99 79,705,055
61,000,000 General Electric Financial
Assurance Holdings,
4.84%-4.90%,
3/9/99-5/17/99 60,635,842
45,000,000 Morgan Stanley Dean Witter,
Discover & Co., 4.80%-5.23%,
3/5/99-4/5/99 44,867,553
10,000,000 Toyota Motor Credit Corp., 4.85%,
3/3/99 9,997,305
71,650,000 Transamerica Asset Funding Corp.,
4.86%-5.20%,
3/12/99-5/13/99 (Acquired
12/7/98-2/26/99, Cost
$70,840,404)(2) 71,131,464
See Notes to Financial Statements
www.americancentury.com 7
Prime Money Market--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
FEBRUARY 28, 1999
Principal Amount Value
- --------------------------------------------------------------------------------
$ 25,000,000 WCP Funding Inc., 4.81%,
5/4/99 (AMBAC) (Acquired
2/1/99, Cost $24,692,694)(2) $ 24,786,222
138,505,000 Windmill Funding Corp.,
4.84%-5.13%,
3/2/99-4/16/99 (LOC: ABN
Amro Bank N.V.) (Acquired
12/17/98-2/25/99, Cost
$137,138,363)(2) 137,886,358
---------------
560,407,347
---------------
INDUSTRIAL--0.3%
8,000,000 Siebe plc, 4.92%, 3/1/99
(Acquired 10/23/98, Cost
$7,858,960)(2) 8,000,000
---------------
INSURANCE--7.0%
95,200,000 Marsh & McLennan Companies,
Inc., 5.18%-5.38%,
3/24/99-5/21/99 (Acquired
8/26/98-11/12/98, Cost
$92,446,515)(2) 94,530,507
57,000,000 Prudential Funding Corp., 4.79%,
4/22/99-4/30/99 56,571,561
50,000,000 SAFECO Corp., 4.91%-5.15%,
3/8/99-4/19/99 (Acquired
12/4/98-1/5/99, Cost
$49,284,296)(2) 49,771,781
---------------
200,873,849
---------------
PRINTING & PUBLISHING--0.2%
5,000,000 Reed Elsevier Inc., 4.83%,
3/26/99 (Acquired 12/31/98,
Cost $4,942,979)(2) 4,983,229
---------------
RUBBER & PLASTICS--0.5%
16,000,000 Formosa Plastics Corp. USA,
4.85%, 4/13/99 (LOC: Bank
of America N.T & S.A.) 15,907,311
---------------
UTILITIES--0.9%
25,000,000 National Rural Utilities
Cooperative Finance Corp.,
4.95%, 4/26/99 24,807,500
---------------
TOTAL COMMERCIAL PAPER 1,797,456,742
---------------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES(3)--1.6%
25,000,000 FFCB Discount Notes, 4.75%,
12/27/99 24,007,118
23,000,000 FNMA Discount Notes, 4.50%,
6/18/99 22,686,625
---------------
TOTAL U.S. GOVERNMENT AGENCY
DISCOUNT NOTES 46,693,743
---------------
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES(3)--1.9%
$ 20,000,000 FHLB, 5.63%, 5/5/99 $ 20,029,493
5,600,000 FNMA MTN, 5.63%, 5/5/99 5,605,710
5,000,000 FNMA MTN, 6.29%, 5/7/99 5,011,229
25,000,000 SLMA MTN, 5.05%, 1/19/00 25,000,000
---------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES 55,646,432
---------------
CORPORATE DEBT--13.7%
BANKING--0.3%
10,000,000 Banc One Corp. MTN, VRN,
4.78%, 3/2/99, resets weekly
off the Federal Funds rate plus
0.03% with no caps 9,998,249
---------------
FINANCIAL SERVICES--4.0%
30,000,000 Abbey National Treasury
Services PLC MTN, VRN,
4.77%, 3/15/99, resets
monthly off the 1-month
LIBOR minus
0.165% with no caps 29,990,942
30,000,000 Credit Suisse First Boston Inc.
MTN, VRN, 5.00%, 3/1/99,
resets daily off the
Federal Funds rate plus
0.11% with no caps
(Acquired 4/15/98-
7/23/98, Cost $30,000,000)(2) 30,000,000
20,000,000 General Electric Capital Corp.
MTN, Series A, VRN, 5.14%,
3/4/99, resets
quarterly off the 3-month
LIBOR minus 0.135% with
no caps 19,997,190
25,000,000 General Electric Capital Corp.,
VRN, 4.89%, 4/16/99, resets
quarterly off the 3-month LIBOR
minus 0.08% with no
caps 25,000,000
10,000,000 Merrill Lynch & Co., Inc. MTN,
Series B, VRN, 5.21%,
4/6/99, resets quarterly off the
3-month LIBOR plus 0.15%
with no caps 10,002,032
---------------
114,990,164
---------------
INSURANCE--9.4%
100,000,000 General American Life Insurance
Company, VRN, 5.14%, 3/1/99,
resets monthly off the 1-month
LIBOR plus 0.20% with no caps
(Acquired 1/3/97-7/7/97, Cost
$100,000,000)(2) 100,000,000
See Notes to Financial Statements
8 1-800-345-2021
Prime Money Market--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
FEBRUARY 28, 1999
Principal Amount Value
- --------------------------------------------------------------------------------
$ 45,000,000 Jackson National Life Insurance
Co., VRN, 5.13%, 3/10/99,
resets monthly off the 1-month
LIBOR plus 0.19% with no
caps (Acquired 6/10/98, Cost
$45,000,000)(2) $ 45,000,000
55,000,000 Transamerica Life Insurance Co.,
VRN, 5.07%, 3/1/99, resets
monthly off the 1-month
LIBOR plus 0.13% with no caps
(Acquired 11/4/98, Cost
$55,000,000)(2) 55,000,000
70,400,000 Travelers Insurance Company (The),
VRN, 4.98%, 3/9/99-3/22/99,
resets monthly off the 1-month
LIBOR plus 0.04% with no caps
(Acquired 5/22/98-6/8/98,
Cost $70,400,000)(2) 70,400,000
---------------
270,400,000
---------------
TOTAL CORPORATE DEBT 395,388,413
---------------
ASSET-BACKED SECURITIES--4.0%
98,213 Americredit Automobile Receivables Trust,
Series 1998 B, Class A1 SEQ, 5.63%,
6/12/99 98,213
8,329,312 Americredit Automobile Receivables Trust,
Series 1998 C, Class A1 SEQ, 5.64%,
9/12/99 8,329,312
18,108,874 Americredit Automobile Receivables Trust,
Series 1998 D, Class A1 SEQ, 5.20%,
11/12/99 18,108,874
13,000,000 Americredit Automobile Receivables Trust,
Series 1999 A, Class A1 SEQ, 4.98%,
3/12/00 13,000,000
7,357,887 Caterpillar Financial Asset Trust,
Series 1998 A, Class A1 SEQ,
5.64%, 7/26/99 7,357,887
23,462,134 Ford Credit Auto Owner Trust,
Series 1999 A, Class A1 SEQ,
5.01%, 7/15/99 23,462,134
20,144,319 Household Automobile Revolving Trust I,
Series 1998-1, Class A1 SEQ,
5.33%, 12/17/99 20,144,319
23,000,000 WFS Financial Owner Trust,
Series 1999 A, Class A1 SEQ,
5.01%, 2/20/00 (FSA) 23,000,000
---------------
TOTAL ASSET-BACKED SECURITIES 113,500,739
---------------
CERTIFICATES OF DEPOSIT--11.3%
41,500,000 Abbey National Treasury Services
PLC, 5.04%, 2/8/00 41,487,844
Principal Amount Value
- --------------------------------------------------------------------------------
$ 18,500,000 Bayerische Landesbank
Girozentrale (New York), 4.94%,
11/19/99 $ 18,499,913
28,000,000 Commerzbank AG (New York),
5.08%, 9/28/99 28,005,650
60,000,000 Deutsche Bank AG, (New York)
5.70%-5.74%,
3/5/99-5/12/99 59,996,618
75,000,000 National Westminster Bank PLC
(New York), 4.98%-5.06%,
1/10/00-2/9/00 74,983,173
51,000,000 Royal Bank of Canada (New
York), 5.07%-5.12%,
2/10/00-2/18/00 50,983,744
13,000,000 Union Bank of California, 5.00%,
5/3/99 13,000,000
38,600,000 Westdeutsche Landesbank (New
York), 4.90%-5.13%,
9/15/99-10/12/99 38,609,934
---------------
TOTAL CERTIFICATES OF DEPOSIT 325,566,876
---------------
BANK NOTES--5.1%
22,000,000 American Express Centurion Bank,
VRN, 4.88%, 3/9/99-3/16/99,
resets monthly off the
1-month LIBOR
minus 0.06% with no caps 22,000,000
21,000,000 American Express Centurion Bank,
VRN, 4.88%, 3/18/99, resets
monthly off the 1-month LIBOR
minus 0.055% with no caps 21,000,000
10,000,000 American Express Centurion Bank,
VRN, 4.97%, 3/8/99, resets
monthly off the 1-month LIBOR
plus 0.03% with no caps 10,000,921
25,000,000 First National Bank of Chicago,
4.85%, 5/19/99 25,000,000
25,000,000 KeyBank N.A., VRN, 4.89%,
3/23/99, resets monthly off
the 1-month LIBOR minus
0.045% with no caps 24,997,918
15,000,000 U.S. Bank NA Minnesota, VRN,
4.82%, 3/17/99, resets
monthly off the 1-month LIBOR
minus 0.12% with no caps 14,998,382
30,000,000 U.S. Bank NA Minnesota, VRN,
4.88%, 3/8/99, resets monthly
off the 1-month LIBOR minus
0.06% with no caps 29,996,431
---------------
TOTAL BANK NOTES 147,993,652
---------------
TOTAL INVESTMENT SECURITIES--100.0% $2,882,246,597
===============
See Notes to Financial Statements
www.americancentury.com 9
Prime Money Market--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
FEBRUARY 28, 1999
NOTES TO SCHEDULE OF INVESTMENTS
AMBAC = AMBAC Assurance Corporation
FFCB = Federal Farm Credit Bank
FHLB = Federal Home Loan Bank
FNMA = Federal National Mortgage Association
FSA = Financial Security Assurance Inc.
LIBOR = London Interbank Offered Rate
LOC = Letter of Credit
MTN = Medium Term Note
SLMA = Student Loan Marketing Association
resets = The frequency with which a security's coupon changes, based on current
market conditions or an underlying index. The more frequently a security resets,
the less risk the investor is taking that the coupon will vary significantly
from current market rates.
VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Rate shown is effective
February 28, 1999.
(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 or is a private placement 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,
1999, was $1,054,846,222 which represented 36.9% of net assets. Restricted
securities considered illiquid represent 6.0% of net assets.
(3) The rates for U.S. Government Agency Discount Notes are the yield to
maturity at purchase. The rates for other U.S. Government Agency securities
are the stated coupon rates.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the principal amount of each investment
* the amortized cost of each investment
* the percentage of total investments in each industry, as applicable
* the percent and dollar breakdown of each investment category
See Notes to Financial Statements
10 1-800-345-2021
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
FEBRUARY 28, 1999
ASSETS
Investment securities, at value
(amortized cost and
cost for federal income tax purposes) ................ $ 2,882,246,597
Cash ................................................... 4,988,271
Interest receivable .................................... 10,128,723
---------------
2,897,363,591
---------------
LIABILITIES
Disbursements in excess
of demand deposit cash ............................... 15,126,095
Payable for capital shares redeemed .................... 25,108,138
Accrued management fees (Note 2) ....................... 1,305,027
Distribution and service fee
payable (Note 2) ..................................... 1,217
Dividends payable ...................................... 721,928
Payable for trustees' fees
and expenses ......................................... 6,019
---------------
42,268,424
---------------
Net Assets ............................................. $ 2,855,095,167
===============
NET ASSETS CONSIST OF:
Capital paid in ........................................ $ 2,855,451,853
Accumulated net realized loss
on investment transactions ........................... (356,686)
---------------
$ 2,855,095,167
===============
Investor Class
Net assets ............................................. $ 2,851,880,307
Shares outstanding ..................................... 2,852,236,973
Net asset value per share .............................. $ 1.00
Advisor Class
Net assets ............................................. $ 3,214,860
Shares outstanding ..................................... 3,214,880
Net asset value per share .............................. $ 1.00
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF ASSETS AND LIABILITIES--This statement details
what the fund owns (assets), what it owes (liabilities), and its net assets as
of the last day of the period. If you subtract what the fund owes from what it
owns, you get the fund's net assets. For each class of shares, the net assets
divided by the total number of shares outstanding gives you the price of an
individual share, or the net asset value per share.
NET ASSETS are also broken down by capital (money invested by shareholders); and
net gains earned on investments but not yet paid to shareholders or net losses
on investments (known as realized gains or losses). This breakdown tells you the
value of net assets that are performance-related, such as investment gains or
losses, and the value of net assets that are not related to performance, such as
shareholder investments and redemptions.
See Notes to Financial Statements
www.americancentury.com 11
Statement of Operations
- --------------------------------------------------------------------------------
YEAR ENDED FEBRUARY 28, 1999
INVESTMENT INCOME
Income:
Interest ............................................... $ 118,945,493
-------------
Expenses (Note 2):
Management fees ........................................ 12,859,387
Distribution fees -- Advisor Class ..................... 3,673
Service fees -- Advisor Class .......................... 3,673
Trustees' fees and expenses ............................ 78,852
-------------
Total expenses ....................................... 12,945,585
Amount waived .......................................... (360,585)
-------------
Net expenses ......................................... 12,585,000
-------------
Net investment income .................................. 106,360,493
-------------
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments ....................... (18,522)
-------------
Net Increase in Net Assets
Resulting from Operations ............................ $ 106,341,971
=============
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF OPERATIONS--This statement breaks out how the
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.
Fund OPERATIONS include:
* income earned from investments
* management fees and other expenses
* gains or losses from selling investments (known as realized gains or losses)
See Notes to Financial Statements
12 1-800-345-2021
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
YEARS ENDED FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
Increase in Net Assets 1999 1998
OPERATIONS
Net investment income .................... $ 106,360,493 $ 67,224,070
Net realized gain (loss)
on investments ......................... (18,522) 24,038
--------------- ---------------
Net increase in net assets
resulting from operations .............. 106,341,971 67,248,108
--------------- ---------------
DISTRIBUTIONS TO
SHAREHOLDERS From net investment income:
Investor Class ......................... (106,293,927) (67,224,070)
Advisor Class .......................... (66,566) --
--------------- ---------------
Decrease in net assets
from distributions ..................... (106,360,493) (67,224,070)
--------------- ---------------
CAPITAL SHARE
TRANSACTIONS (NOTE 3)
Net increase in net assets
from capital share transactions ........ 1,437,803,002 205,296,326
--------------- ---------------
Net increase in net assets ............... 1,437,784,480 205,320,364
NET ASSETS
Beginning of period ...................... 1,417,310,687 1,211,990,323
--------------- ---------------
End of period ............................ $ 2,855,095,167 $ 1,417,310,687
=============== ===============
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
the fund's net assets changed over the past two reporting periods. It details
how much the fund grew or shrank as a result of:
* operations--a summary of the Statement of Operations from the previous page
for the most recent period
* distributions--income distributed to shareholders
* share transactions--shareholders' purchases, reinvestments, and redemptions
Net assets at the beginning of the period plus the sum of operations,
distributions to shareholders and capital share transactions result in net
assets at the end of the period.
See Notes to Financial Statements
www.americancentury.com 13
Notes to Financial Statements
- --------------------------------------------------------------------------------
FEBRUARY 28, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Investment Trust (the trust) is registered
under the Investment Company Act of 1940 as an open-end management investment
company. Prime Money Market Fund (the fund) is the only fund issued by the
trust. The fund seeks the highest level of current income consistent with
preservation of capital. The fund buys high quality (first tier), U.S. dollar
denominated money market instruments and other short-term obligations of banks,
governments, and corporations. The fund is authorized to issue two classes of
shares: the Investor Class and the Advisor Class. The two classes of shares
differ principally in their respective shareholder servicing and distribution
expenses and arrangements. All shares of the fund represent an equal pro rata
interest in the assets of the class to which such shares belong, and have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except for class specific expenses and exclusive rights to vote on
matters affecting only individual classes. Sale of the Advisor Class commenced
August 28, 1998. The following significant accounting policies are in accordance
with generally accepted accounting principles; these principles may require the
use of estimates by fund management.
SECURITY VALUATIONS -- Securities are valued at amortized cost, which
approximates current market value. When valuations are not readily available,
securities are valued at fair value as determined in accordance with procedures
adopted by the Board of Trustees.
SECURITY TRANSACTIONS -- Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.
INVESTMENT INCOME -- Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums. Discounts and
premiums are accreted/amortized daily on a straight-line basis.
INCOME TAX STATUS -- It is the fund's policy to distribute all taxable
income and to otherwise qualify as a regulated investment company under the
provisions of the Internal Revenue Code. Accordingly, no provision has been made
for federal or state income taxes.
DISTRIBUTIONS -- Distributions from net investment income are declared and
credited daily and distributed monthly. The fund does not expect to realize any
long-term capital gains, and accordingly, does not expect to pay any capital
gains distributions.
Accumulated net realized capital loss carryovers of $356,686 (expiring in
2001 through 2007) may be used to offset future taxable gains.
ADDITIONAL INFORMATION -- Funds Distributor, Inc. (FDI) is the trust's
distributor. Certain officers of FDI are also officers of the trust.
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The trust has entered into a Management Agreement with American Century
Investment Management, Inc. (ACIM) that provides the fund with investment
advisory and management services in exchange for a single, unified management
fee per class. Expenses excluded from this agreement are brokerage, taxes,
portfolio insurance, interest, fees and expenses of the Trustees who are not
considered "interested persons" as defined in the Investment Company Act of 1940
(including counsel fees) and extraordinary expenses. The fee is calculated daily
and paid monthly. It consists of an Investment Category Fee based on the average
net assets of the funds in a specific fund's investment category and a Complex
Fee based on the average net assets of all the funds managed by ACIM. The rates
for the Investment Category Fee range from 0.2570% to 0.3700% and the rates for
the Complex Fee (Investor Class) range from 0.2900% to 0.3100%. The Advisor
Class is 0.2500% less at each point within the range. For the year ended
February 28, 1999, the effective annual Investor Class management fee net of
amount waived, was 0.58%. ACIM waived expenses which exceeded 0.50% of average
daily net assets through May 31, 1998.
The Board of Trustees has adopted the Advisor Class Master Distribution and
Shareholder Services Plan (the plan), pursuant to Rule 12b-1 of the Investment
Company Act of 1940. The plan provides that the fund will pay ACIM an annual
distribution fee equal to 0.25% and annual service fee equal to 0.25%. The fees
are computed daily and paid monthly based on the Advisor Class's average daily
closing net assets during the previous month. The distribution fee provides
compensation for distribution expenses incurred by financial intermediaries in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers,
14 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
FEBRUARY 28, 1999
and financial institutions that have entered into sales agreements with respect
to shares of the fund. The service fee provides compensation for shareholder and
administrative services rendered by ACIM, its affiliates or independent third
party providers. Fees incurred by the fund under the plan during the period
August 28, 1998 through February 28, 1999 were $7,346.
Certain officers and Trustees of the trust are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the trust's investment manager, ACIM, and the
trust's transfer agent, American Century Services Corporation.
- --------------------------------------------------------------------------------
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the fund were as follows (unlimited number of shares
authorized):
SHARES AMOUNT
INVESTOR CLASS
Year ended February 28, 1999
Sold ................................... 4,559,290,594 $ 4,559,290,594
Issued in connection with
acquisition (Note 4) ................. 1,201,153,326 1,201,069,659
Issued in reinvestment
of distributions ..................... 100,856,205 100,856,205
Redeemed ............................... (4,426,628,336) (4,426,628,336)
--------------- ---------------
Net increase ........................... 1,434,671,789 $ 1,434,588,122
=============== ===============
Year ended February 28, 1998
Sold ................................... 2,330,994,339 $ 2,330,994,339
Issued in reinvestment
of distributions ..................... 63,902,564 63,902,564
Redeemed ............................... (2,189,600,577) (2,189,600,577)
--------------- ---------------
Net increase ........................... 205,296,326 $ 205,296,326
=============== ===============
ADVISOR CLASS
Period ended February 28, 1999(1)
Sold ................................... 1,319,681 $ 1,319,681
Issued in connection with
acquisition (Note 4) ................. 2,242,355 2,242,355
Issued in reinvestment
of distributions ..................... 65,984 65,984
Redeemed ............................... (413,140) (413,140)
Net increase ........................... 3,214,880 $ 3,214,880
(1) August 28, 1998 (acquisition date -- see Note 4) through February 28, 1999.
www.americancentury.com 15
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
4. REORGANIZATION PLAN
On August 28, 1998, Prime Money Market Fund (Prime) acquired all of the net
assets of the American Century - Benham Cash Reserve Fund (Cash Reserve),
pursuant to a plan of reorganization approved by the acquired fund's
shareholders on August 7, 1998. Prime is the surviving fund for the purposes of
maintaining the financial statements and performance history in the
post-reorganization.
The acquisition was accomplished by a tax-free exchange of 1,201,153,326
shares of Prime Investor Class for 1,201,153,326 shares of Cash Reserve Investor
Class outstanding on August 28, 1998 and 2,242,355 shares of Prime Advisor Class
for 2,242,355 shares of Cash Reserve Advisor Class outstanding on August 28,
1998. Immediately before the acquisition, the net assets of Prime were
$1,641,758,871, consisting only of the Investor Class. The net assets of Cash
Reserve immediately before the acquisition were $1,203,312,014, consisting of
$1,201,069,659 Investor Class net assets and $2,242,355 Advisor Class net
assets. Immediately after the acquisition, the combined net assets of the fund
were $2,845,070,885, which consisted of $2,842,828,530 Investor Class net assets
and $2,242,355 Advisor Class net assets.
Prime acquired capital loss carryforwards of $83,667. These acquired
capital loss carryforwards are subject to limitations on their use under the
Internal Revenue Code, as amended.
5. SUBSEQUENT EVENTS
The following name change became effective March 1, 1999:
==================================================================
NEW NAME FORMER NAME
==================================================================
FUND: Prime Money Market Fund American Century - Benham Prime Money
Market Fund
16 1-800-345-2021
<TABLE>
<CAPTION>
Prime Money Market--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED FEBRUARY 28 (EXCEPT AS NOTED)
Investor Class
1999 1998 1997 1996(1) 1995
PER-SHARE DATA
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- ------------- -------------
Income From Investment Operations
Net Investment Income .......... 0.05 0.05 0.05 0.06 0.05
------------- ------------- ------------- ------------- -------------
Distributions
From Net Investment Income ..... (0.05) (0.05) (0.05) (0.06) (0.05)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Year ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= ============= =============
Total Return(2) ................ 5.07% 5.29% 5.04% 5.60% 4.93%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .......... 0.58% 0.50% 0.50% 0.48% 0.04%
Ratio of Operating Expenses
to Average
Net Assets (Before Expense Waiver) 0.60% 0.63% 0.63% 0.62% 0.71%
Ratio of Net Investment Income
to Average Net Assets .......... 4.91% 5.17% 4.92% 5.43% 5.28%
Ratio of Net Investment Income
to Average Net Assets
(Before Expense Waiver) ........ 4.89% 5.04% 4.79% 5.29% 4.61%
Net Assets, End of Year
(in thousands) ................. $ 2,851,880 $ 1,417,311 $ 1,211,990 $ 1,270,653 $ 1,509,863
</TABLE>
(1) Year ended February 29, 1996.
(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income
* income distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
See Notes to Financial Statements
www.americancentury.com 17
Prime Money Market--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
Advisor Class
1999(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ......... $1.00
---------
Income From Investment Operations
Net Investment Income ...................... 0.02
---------
Distributions
From Net Investment Income ................. (0.02)
---------
Net Asset Value, End of Period ............... $1.00
=========
Total Return(2) ............................ 2.31%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ...................... 0.85%(3)
Ratio of Net Investment Income
to Average Net Assets ...................... 4.53%(3)
Net Assets, End of Period
(in thousands) ............................. $3,215
(1) August 28, 1998 (acquisition date -- see Note 4) through February 28, 1999.
(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(3) Annualized.
See Notes to Financial Statements
18 1-800-345-2021
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of the Prime Money Market Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of portfolio investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Prime Money Market Fund,
formerly the American Century - Benham Prime Money Market Fund, (the "Fund") at
February 28, 1999, and the results of its operations for the year then ended,
the changes in its net assets and the financial highlights for each of the two
years in the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. The financial highlights for each of the three
years in the period ended February 28, 1997, were audited by other auditors,
whose report, dated April 4, 1997, expressed an unqualified opinion on those
highlights. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
February 28, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Kansas City, Missouri
March 29, 1999
www.americancentury.com 19
Share Class and Retirement Account Information
- --------------------------------------------------------------------------------
SHARE CLASSES
Two classes of shares are authorized for sale by the fund: Investor Class
and Advisor Class.
INVESTOR CLASS shareholders do not pay any commissions or other fees for
purchase of fund shares directly from American Century. Investors who buy
Investor Class shares through a broker-dealer may be required to pay the
broker-dealer a transaction fee. THE PRICE AND PERFORMANCE OF THE INVESTOR CLASS
SHARES ARE LISTED IN NEWSPAPERS. NO OTHER CLASS IS CURRENTLY LISTED.
ADVISOR CLASS shares are sold through banks, broker-dealers, insurance
companies, and financial advisors. Advisor Class shares are subject to a 0.50%
Rule 12b-1 service and distribution fee. Half of that fee is available to pay
for recordkeeping and administrative services, and half is available to pay for
distribution services provided by the financial intermediary through which the
Advisor Class shares are purchased. The total expense ratio of the Advisor Class
is 0.25% higher than the total expense ratio of the Investor Class.
Both classes of shares represent a pro rata interest in the fund and
generally have the same rights and preferences.
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at American Century. Even if you plan to rollover the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Exchange/Redemption form or an IRS Form W-4P. Call American Century for either
form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.
20 1-800-345-2021
Background Information
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INVESTMENT PHILOSOPHY AND POLICIES
American Century offers 38 fixed-income funds, ranging from money market
funds to long-term bond funds and including both taxable and tax-exempt funds.
Each fund is managed to provide a "pure play" on a specific sector of the
fixed-income market. To ensure adherence to this principle, the basic structure
of each fund's portfolio is tied to a specific market index. Fund managers
attempt to add value by making modest portfolio adjustments based on their
analysis of prevailing market conditions. Investment decisions are made by
management teams, which meet regularly to discuss market analysis and investment
strategies.
In addition to these principles, each fund has its own investment policies
PRIME MONEY MARKET is a money market fund that seeks to provide interest
income by investing in a diversified portfolio of short-term money market
securities. The fund must maintain a weighted average maturity of 90 days or
less.
An investment in Prime Money Market is neither insured nor guaranteed by
the FDIC or any other government agency. Yields will fluctuate, and although the
fund seeks to preserve the value of your investment at $1 per share, it is
possible to lose money by investing in the fund.
COMPARATIVE INDICES
The following index is used in the report for fund performance comparisons.
It is not an investment product available for purchase.
The 90-DAY TREASURY BILL INDEX is derived from secondary market interest
rates as published by the Federal Reserve Bank.
LIPPER RANKINGS
LIPPER INC. is an independent mutual fund ranking service that groups funds
according to their investment objectives. Rankings are based on average annual
returns for each fund in a given category for the periods indicated. Rankings
are not included for periods less than one year.
The Lipper category for the Prime Money Market fund is:
MONEY MARKET INSTRUMENT FUNDS--funds that intend to maintain a stable net
asset value and that invest in high-quality financial instruments rated in the
top two grades with dollar-weighted average maturities of less than 90 days.
CREDIT RATING GUIDELINES
Credit quality (the issuer's financial strength and the likelihood of
timely payment of interest and principal) is a key factor in fixed-income
investment analysis. Credit ratings issued by independent rating and research
companies such as Standard & Poor's help quantify credit quality--the stronger
the issuer, the higher the credit rating. In turn, credit quality and ratings
greatly influence the prices and yields of fixed-income securities--high ratings
mean higher prices and less current income (yield) as compensation for risk.
But credit ratings are subjective. They reflect the opinions of the rating
agencies that issue them and are not absolute standards of quality. Furthermore,
high credit ratings do not guarantee good investment performance
[right margin]
INVESTMENT TEAM LEADERS
PORTFOLIO MANAGERS
JOHN WALSH
DENISE TABACCO
CREDIT RESEARCH MANAGER
GREG AFIESH
www.americancentury.com 21
Glossary
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RETURNS
* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.
* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year returns, please refer to the "Financial
Highlights" on pages 17-18.
YIELDS
* 7-DAY CURRENT YIELD is calculated based on the income generated by an
investment in the fund over a seven-day period and is expressed as an annual
percentage rate.
* 7-DAY EFFECTIVE YIELD is calculated similarly, although this figure is
slightly higher than the fund's 7-Day Current Yield because of the effects of
compounding. The 7-Day Effective Yield assumes that income earned from the
fund's investments is reinvested and generating additional income.
PORTFOLIO STATISTICS
* NUMBER OF ISSUERS--the number of entities that issued securities held by the
fund on a given date.
* WEIGHTED AVERAGE MATURITY (WAM)--a measure of the sensitivity of a
fixed-income portfolio to interest rate changes. WAM indicates the average time
until the securities in the portfolio mature, weighted by dollar amount. The
longer the WAM, the more interest rate exposure and sensitivity the portfolio
has.
* EXPENSE RATIO--the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)
TYPES OF MONEY MARKET SECURITIES
* ASSET-BACKED SECURITIES--debt securities that represent ownership in a pool of
receivables, such as credit card debt, auto loans, or mortgages.
* CERTIFICATES OF DEPOSIT (CDS)--CDs represent a bank's obligation to repay
money deposited with it for a specified period of time. Different types of CDs
have different issuers. For example, Yankee CDs are issued by U.S. branches of
foreign banks, and Eurodollar CDs are issued in London by Canadian, European,
and Japanese banks.
* COMMERCIAL PAPER (CP)--short-term debt issued by large corporations to raise
cash and to cover current expenses in anticipation of future revenues. The
maximum maturity for CP is 270 days, although most CP is issued in a one- to
50-day maturity range. CP rates generally track those of other widely traded
money market instruments, such as Treasury bills and certificates of deposit,
but they are also influenced by the maturity date and the size and credit rating
of the issuer.
* VARIABLE-RATE NOTES (VRNS)--debt securities whose interest rates change when a
designated base rate changes. The base rate is often the federal funds rate, the
90-day Treasury bill rate, or the London Interbank Offered Rate (LIBOR). VRNs
are considered derivatives because they "derive" their
22 1-800-345-2021
Glossary
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(Continued)
interest rates from their designated base rates. However, VRNs are not "risky"
derivatives--their behavior is similar to that of their designated base rates.
The SEC has recognized this similarity and does not consider VRNs to be
inappropriate investments for money market funds.
* U.S. GOVERNMENT AGENCY SECURITIES--debt securities issued by U.S. government
agencies (such as the Federal Farm Credit Bank and the Federal Home Loan Bank).
Some agency securities are backed by the full faith and credit of the U.S.
government, while most are guaranteed only by the issuing agency. These
securities are issued with maturities ranging from three months to 30 years.
Money market funds invest in these securities when they have remaining
maturities of 13 months or less.
FUND CLASSIFICATIONS
INVESTMENT OBJECTIVE
The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.
* CAPITAL PRESERVATION--Offers taxable and tax-free money market funds for
relative stability of principal and liquidity, allowing maximum portfolio
diversification.
* INCOME--Offers funds that can provide current income and competitive yields,
as well as a strong and stable foundation and generally lower volatility levels
than stock funds.
* GROWTH & INCOME--Offers funds that emphasize both growth and income,
diversification, varying capitalization sizes, and different investment styles
and strategies.
* GROWTH--Offers funds with a focus on capital appreciation and long-term
growth, generally providing high return potential with corresponding high price
fluctuation risk.
RISK
The classification of funds by risk category is based on quantitative historical
measures as well as qualitative prospective measures. It is not intended to be a
precise indicator of future risk or return levels. The degree of risk within
each category can vary significantly, and some fund returns have historically
been higher than more aggressive funds or lower than more conservative funds.
Please be aware that the fund's category may change over time. Therefore, it is
important that you read a fund's prospectus or fund profile carefully before
investing to ensure its objectives, policies and risk potential are consistent
with your needs.
* CONSERVATIVE--these funds generally provide lower return potential with either
low or minimal price fluctuation risk.
* MODERATE-- these funds generally provide moderate return potential with
moderate price fluctuation risk.
* AGGRESSIVE-- these funds generally provide high return potential with
corresponding high price fluctuation risk.
www.americancentury.com 23
Notes
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24 1-800-345-2021
[inside back cover]
===============================================================================
INVESTMENT OBJECTIVE - CAPITAL PRESERVATION
===============================================================================
RISK LEVEL - CONSERVATIVE
TAXABLE MONEY MARKETS TAX-FREE MONEY MARKETS
Premium Capital Reserve FL Municipal Money Market
Prime Money Market CA Municipal Money Market
Premium Government Reserve CA Tax-Free Money Market
Government Agency Tax-Free Money Market
Money Market
Capital Preservation
===============================================================================
INVESTMENT OBJECTIVE - INCOME
===============================================================================
RISK LEVEL - AGGRESSIVE
TAXABLE BONDS TAX-FREE BONDS
Target 2025* CA High-Yield Municipal
Target 2020* High-Yield Municipal
Target 2015*
Target 2010*
High-Yield
International Bond
RISK LEVEL - MODERATE
TAXABLE BONDS TAX-FREE BONDS
Long-Term Treasury CA Long-Term Tax-Free
Target 2005* Long-Term Tax-Free
Bond CA Insured Tax-Free
Premium Bond
RISK LEVEL - CONSERVATIVE
TAXABLE BONDS TAX-FREE BONDS
Intermediate-Term Bond CA Intermediate-Term Tax-Free
Intermediate-Term Treasury AZ Intermediate-Term Municipal
GNMA FL Intermediate-Term Municipal
Inflation-Adjusted Treasury Intermediate-Term Tax-Free
Limited-Term Bond CA Limited-Term Tax-Free
Target 2000* Limited-Term Tax-Free
Short-Term Government
Short-Term Treasury
===============================================================================
INVESTMENT OBJECTIVE - GROWTH AND INCOME
===============================================================================
RISK LEVEL - AGGRESSIVE
DOMESTIC EQUITY
Small Cap Quantitative
Small Cap Value
RISK LEVEL - MODERATE
ASSET ALLOCATION/BALANCED DOMESTIC EQUITY SPECIALTY
Strategic Allocation -- Equity Growth Utilities
Aggressive Equity Index Real Estate
Balanced Tax-Managed Value
Strategic Allocation -- Income & Growth
Moderate Value
Strategic Allocation -- Equity Income
Conservative
===============================================================================
INVESTMENT OBJECTIVE - GROWTH
===============================================================================
RISK LEVEL - AGGRESSIVE
DOMESTIC EQUITY SPECIALTY INTERNATIONAL
New Opportunities Global Gold Emerging Markets
Giftrust(reg.sm) International Discovery
Vista International Growth
Heritage Global Growth
Growth
Ultra
Select
RISK LEVEL - MODERATE
SPECIALTY
Global Natural Resources
The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.
The classification of funds by risk category is based on quantitative historical
measures as well as qualitative prospective measures. It is not intended to be a
precise indicator of future risk or return levels. The degree of risk within
each category can vary significantly, and some fund returns have historically
been higher than more aggressive funds or lower than more conservative funds.
Please be aware that a fund's category may change over time. Therefore, it is
important that you read a fund's prospectus or fund profile carefully before
investing to ensure its objectives, policies and risk potential are consistent
with your needs.
For a definition of fund categories, see the Glossary.
* While listed within the Income investment objective, the Target funds do not
pay current dividend income. Income dividends are distributed once a year in
December. The Target funds are listed in all three risk categories due to the
dramatic price volatility investors may experience during certain market
conditions. If held to their target dates, however, they can offer a
conservative, dependable way to invest for a specific time horizon.
Please call for a prospectus or profile on any American Century fund. These
documents contain important information including charges and expenses, and you
should read them carefully before you invest or send money.
[back cover]
[american century logo(reg.sm)]
American
Century
P.O. BOX 419200
KANSAS CITY, MISSOURI 64141-6200
WWW.AMERICANCENTURY.COM
INVESTOR RELATIONS
1-800-345-2021 OR 816-531-5575
AUTOMATED INFORMATION LINE
1-800-345-8765
FAX: 816-340-7962
TELECOMMUNICATIONS DEVICE FOR THE DEAF
1-800-634-4113 OR 816-444-3485
BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS
1-800-345-3533
AMERICAN CENTURY INVESTMENT TRUST
INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
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American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES
9904 Funds Distributor, Inc.
SH-BKT-15981 (c)1999 American Century Services Corporation
