ANNUAL REPORT
[american century logo]
American
Century(sm)
NOVEMBER 30, 1996
AMERICAN
CENTURY
GROUP
Capital Manager
[front cover]
TABLE OF CONTENTS
Report Highlights ..................................1
Our Message to You .................................2
Period Overview ....................................3
Performance Information ............................5
Management Q & A ...................................6
Schedule of Investments ............................9
Statement of Assets and Liabilities ...............15
Statement of Operations ...........................16
Statements of Changes in Net Assets ...............17
Notes to Financial Statements .....................18
Financial Highlights ..............................21
Independent Auditors' Report ......................22
IRA/403(b) Information ............................23
Background Information
Investment Philosophy & Policies .............24
Comparative Indices ..........................24
Lipper Rankings ..............................24
Glossary ..........................................25
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, specialty investments and blended portfolios. To help you find
the funds that may meet your needs, American Century funds have been divided
into three groups based on investment style and objectives. These groups, which
appear below, are designed to help simplify your fund decisions.
American Century Investments -- Family of Funds
Benham Group American Century Group Twentieth Century Group
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Capital Manager
We welcome your comments or questions about this report. See the back cover for
ways to contact us by mail, phone or e-mail.
Twentieth Century and The Benham Group are registered marks of American Century
Services Corporation and Benham Management Corporation, respectively. American
Century is a service mark of American Century Services Corporation.
American Century Investments
REPORT HIGHLIGHTS
Period Overview
o U.S. stocks posted strong returns during the year ended November 30, 1996,
with the major stock indices returning more than 20%. However, large-cap
stocks had substantially higher returns than small-cap stocks.
o Despite a somewhat volatile year, U.S. bonds finished with slightly positive
returns. After suffering declines -during the first half of 1996, bonds
rebounded in October and November.
o Foreign stock returns were generally positive, although a strengthening U.S.
dollar reduced returns in many of these markets. Strong performers included
northern Europe and Hong Kong, while the two largest markets outside of the
U.S.--Japan and the U.K.--struggled.
o Foreign bond markets benefited from government deficit-reduction efforts and
interest rate cuts by many of the world's central banks. However, for U.S.
investors, the stronger dollar reduced foreign bond returns to the same level
as domestic bonds.
Capital Manager
o The fund outperformed its benchmark but underperformed its Lipper peer group
average during the fiscal year.
o The fund was consistently overweighted in foreign stocks during the year, but
we made several adjustments to its domestic holdings. We overweighted
domestic stocks and underweighted U.S. bonds early in the year, but we
reversed this position in the summer. By the end of the period, the fund
returned to a roughly neutral asset mix (except for an overweighted position
in foreign stocks).
o Going forward, we see more value overseas than we do domestically, so we plan
to overweight the fund's foreign investments while remaining neutral in its
U.S. holdings.
o Foreign stocks should benefit from improving global economies and increased
fiscal responsibility. We're more wary of the U.S. stock market, although we
see some value among small-cap stocks.
o We expect moderating economic growth to result in a fairly stable U.S. bond
market, but we are keeping an eye on inflation and congressional budget
reform.
Capital Manager
Total Returns:AS OF 11/30/96
6 Months 8.82%*
1 Year 15.58%
Net Assets:$83.0 million
(AS OF 11/30/96)
Inception Date: 12/1/94
Ticker Symbol: BCMFX
* Not annualized.
Annual Report Report Highlights 1
OUR MESSAGE TO YOU
[photo of James E. Stowers III and James M. Benham]
The fiscal year ended November 30, 1996, was an eventful one, both in the
global financial markets and for our company. The U.S. stock market rallied to
all-time highs in late spring and from late summer into fall. After a rocky
period in the first half of the year, U.S. bonds stabilized during the summer
and enjoyed a rebound in October and November. Foreign stock and bond markets
also produced positive returns during the period. In the following pages, our
investment management team provides further details about the markets and how
your fund was managed during the period.
On the corporate front, we completed the operational integration of Twentieth
Century and The Benham Group in September. As a result, you now have direct
access to a broader spectrum of funds and services.
We also changed the name of our company. On January 1, 1997, we began serving
you as American Century Investments, which reflects our expanded identity and
the independent thinking common to Twentieth Century and Benham. American
Century's fund family is divided into three groups--the Benham Group, the
American Century Group and the Twentieth Century Group. The Capital Manager fund
has moved into the American Century Group because the fund's investment
characteristics--diversification and asset allocation--match key attributes of
that group.
This report is the first in a new annual report format designed using your
input. We hope you find it more informative and easier to read. Another
informative resource is the American Century Web site. If you use a personal
computer and have Internet access, we've made it easier for you to download
information about American Century funds and access your fund accounts. With a
personal access code, you can view account balances, exchange money between
existing accounts and make additional investments. The Web site address is:
www.americancentury.com. We are one of the first fund companies to offer direct
on-line transactions via the Internet.
These are examples of how we continue to work to provide information and
services that are useful and convenient to investors in our funds. Thank you for
investing with us.
Sincerely,
/s/James E. Stowers III
James E. Stowers III
President and Chief Executive Officer
American Century Companies
/s/James M. Benham
James M. Benham
Vice Chairman
American Century Companies
2 Our Message to You American Century Investments
PERIOD OVERVIEW
U.S. Stocks
Repeating their 1995 performance, U.S. stocks posted strong returns in 1996.
For the year ended November 30, 1996, the major U.S. stock indices (such as the
S&P 500 and Nasdaq Composite) produced returns in excess of 20% and repeatedly
reached record highs throughout the year.
Strong corporate earnings growth was the main reason for the 1995 stock
rally, but this year's gains were driven primarily by incoming cash flows.
Investors poured more than $200 billion into stock mutual funds in 1996, nearly
doubling the record set in 1993. This remarkable demand pushed stock prices
higher and prompted a slew of stock offerings from both established and newly
public companies.
Although U.S. stock returns were strong across the board, changing investor
behavior led to a divergence between the performance of large-capitalization
stocks (such as those in the S&P 500) and small-capitalization stocks (such as
those in the Russell 2000). Evidence of weaker economic growth in the last three
months of the period fueled concerns about slowing earnings growth. As a result,
many investors migrated to the largest, most liquid companies available, and
this "flight to quality" pushed large-cap stocks up dramatically. Between
September and November, the S&P 500 surged by more than 16%, while the small-cap
Russell 2000 rose by less than 7% during the same period (see the accompanying
table for one-year returns).
Financial and consumer stocks were among the top-performing industry sectors,
along with selected technology shares. Lagging sectors included steel companies
and electric utility stocks.
U.S. Bonds
It was a "coupon-clipping" year in the U.S. bond market--slight bond price
losses during the year ended November 30 were largely offset by interest coupon
payments. For example, the two-year Treasury note posted a total return of 5.17%
during the period, while the 30-year Treasury bond returned 3.66% (see the
accompanying table for broad bond index returns).
However, the sedate returns masked some bond market volatility during the
period. After falling in late 1995, bond yields soared in the first and second
quarters of 1996 when signs of stronger economic growth sparked inflation fears.
The 30-year Treasury bond yield, which had fallen as low as 6% in January, rose
above 7% by May as the market priced in a short-term interest rate increase by
the Federal Reserve. This change in yield equated to a bond price decline of
more than 12%.
Bonds traded listlessly throughout the summer, reflecting the market's
uncertainty about the economic outlook. But the Fed held short-term interest
rates steady through the end of the period, and increasing evidence of
moderating economic growth ultimately convinced the bond market that a rate hike
was unnecessary. This conclusion sparked a substantial rebound in the bond
market--Treasury yields fell across the maturity spectrum throughout October and
November.
Mortgage-backed securities, with their higher yields, were the top-performing
fixed-income sector during the period. Among other bond sectors, corporate bonds
outperformed Treasury and government securities. The strengthening economy led
to improving business conditions and better credit quality among corporate
securities, which in turn enhanced the price gains of corporate bonds.
U.S. STOCK MARKET PERFORMANCE
For the one-year period ended November 30, 1996
S&P 500 27.87%
Russell 2000 16.52%
U.S. BOND MARKET PERFORMANCE
For the one-year period ended November 30, 1996
Salomon Brothers Broad
Investment Grade Bond Index 5.98%
Lehman Aggregate Bond Index 6.07%
Annual Report Period Overview 3
PERIOD OVERVIEW
Foreign Stocks
Global stock returns were mixed but generally positive during the year ended
November 30. Although a number of foreign equity markets experienced gains that
rivaled or exceeded those of the U.S. stock market, the Morgan Stanley EAFE(R)
Index--a broad measure of international stock performance--returned just 11.76%
(in U.S. dollar terms) during the period.
Part of the EAFE(R)'s underperformance relative to the U.S. stock market was
a result of the stronger U.S. dollar. The dollar rose by 6% against the German
mark and 13% against the Japanese yen during the year. But even if the currency
translation is eliminated (see the accompanying table), the EAFE(R)'s return
still fell short of the U.S. stock market's performance. The main reason was the
performance of the two largest EAFE(R) components, Japan and the United Kingdom.
These two markets, which together make up more than half of the EAFE(R),
produced fairly modest gains compared to those in the U.S. and elsewhere.
Among specific countries, the stock markets in northern Europe posted strong
gains, with the Netherlands, France and the Scandinavian countries each
returning more than 30%. Several Eastern European countries, including Poland
and the Czech Republic, also produced solid returns. Hong Kong was the top
performer among Asian markets, while the Venezuelan stock market led the
emerging markets with a return of over 200% during the period (reduced to just
under 100% by currency losses).
Foreign Bonds
In general, foreign bond markets outperformed the U.S. bond market during the
year ended November 30, but currency losses evened the score for U.S. investors.
The Salomon Brothers Non-U.S. World Government Bond Index, a broad index of
foreign bonds, posted a total return of 5.72% in U.S. dollar terms during the
one-year period, compared with a 5.98% return for the Salomon Brothers Broad
Investment Grade Bond Index, a broad index of domestic bonds. But in local
currencies, the foreign bond index returned 10.70%.
Many foreign bond markets, especially those in Europe, benefited from slow
economic growth and a trend toward fiscal responsibility. Most European
governments spent the past year lowering short-term interest rates while trying
to reduce their budget deficits before the European monetary union occurs in
1999. Lower rates and smaller deficits are both favorable for bond prices, and
market returns reflected these conditions.
The best performers during the one-year period were the "high-yielding"
countries in western Europe (Italy, Spain, Sweden). In the past, bond issuers in
these countries were forced to pay higher yields on their bonds because of the
threat of currency devaluations. However, the currency concerns are disappearing
because these countries are expected to join the European monetary union, which
will have a more stable currency. As a result, the yields in these countries are
converging with the rest of the continent. Two years ago, Italian 10-year bonds
were yielding around 12%, while comparable German bonds had a yield of 7%. More
recently, Italian bonds yielded about 8%, compared to a 6% yield for German
bonds. This spread should continue to narrow as Economic and Monetary Union
approaches.
FOREIGN STOCK MARKET PERFORMANCE
For the one-year period ended November 30, 1996
Morgan Stanley EAFE(R)Index (in U.S. dollars) 11.76%
Morgan Stanley EAFE(R)Index (in local currencies) 16.62%
FOREIGN BOND MARKET PERFORMANCE
For the one-year period ended November 30, 1996
Salomon Brothers Non-U.S. World Government
Bond Index (in U.S. dollars) 5.72%
Salomon Brothers Non-U.S. World Government
Bond Index (in local currencies) 10.70%
4 Period Overview American Century Investments
<TABLE>
<CAPTION>
CAPITAL MANAGER
6 MONTHS(2) 1 YEAR LIFE OF FUND(3)
AVERAGE ANNUAL RETURNS (as of November 30, 1996)(1)
<S> <C> <C> <C>
Capital Manager .................................................. 8.82% 15.58% 17.65%
S&P 500(4) ....................................................... 14.41% 27.87% 33.14%
Lehman Aggregate
Bond Index(4) .................................................... 7.31% 6.07% 11.71%
Three-Month Treasury Bill(4) ..................................... 2.55% 5.13% 5.40%
Avg. Flexible Portfolio Fund(5) .................................. 8.50% 16.33% 20.60%
Fund's Ranking Among
Flexible Portfolio Funds(6) ...................................... -- 95 out of 179 110 out of 143
(1) Returns are defined in the Glossary on page 25.
(2) Not annualized.
(3) Inception date was December 1, 1994.
(4) See page 24 for more information about these comparative indices.
(5) According to Lipper Analytical Services. See page 24 for more information about Lipper and the fund's category.
(6) Rankings determined by Lipper based on average annual total returns for the periods indicated.
</TABLE>
<TABLE>
[line graph - data below]
GROWTH OF $10,000 OVER THE LIFE OF THE FUND
$10,000
investment
made 12/1/94
Capital Manager S&P 500 Lehman Aggregate 3-Month T-Bill
<S> <C> <C> <C> <C>
12/1/94 $10000 $10000 $10000 $10000
12/31/94 10130 10305 10069 10047
1/31/95 10230 10555 10268 10095
2/28/95 10470 10936 10512 10144
3/31/95 10710 11305 10577 10192
4/30/95 10901 11621 10725 10240
5/31/95 11244 12043 11140 10288
6/30/95 11324 12381 11221 10336
7/31/95 11507 12774 11196 10382
8/31/95 11497 12770 11331 10429
9/30/95 11700 13362 11442 10475
10/31/95 11659 13295 11590 10521
11/30/95 11966 13841 11764 10568
12/31/95 12137 14164 11929 10614
1/31/96 12399 14625 12008 10658
2/29/96 12472 14727 11800 10701
3/31/96 12498 14923 11718 10745
4/30/96 12635 15123 11652 10789
5/31/96 12710 15469 11628 10834
6/30/96 12714 15590 11784 10880
7/31/96 12565 14878 11817 10926
8/31/96 12703 15158 11797 10972
9/30/96 13005 16069 12002 11018
10/31/96 13262 16490 12268 11064
11/30/96 13830 17699 12478 11110
Value on 11/30/96
S&P 500
$17,699
Capital
Manager
$13,830
Lehman
Aggregate
$12,478
3-Month T-Bill
$11,110
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. The line representing the fund's total return includes operating
expenses (such as transaction costs and management fees) that reduce returns,
while the total return lines of the indexes do not.
</TABLE>
[pie chart]
ASSET ALLOCATION (as of November 30, 1996)
Percent of Fund Investments
o U.S. Stocks 35.3%
o Foreign Stocks 9.3%
o U.S. Bonds 36.5%
o Foreign Bonds 5.3%
o Money Market
Securities 11.1%
o Natural Resources--
Linked Investments 2.5%
See page 24 for the fund's neutral asset mix.
Annual Report Capital Manager 5
CAPITAL MANAGER
Management Q & A
An interview with Jeff Tyler, vice president and lead portfolio manager of
American Century Capital Manager.
How did the fund perform?
For the fiscal year ended November 30, 1996, the fund posted a total return
of 15.58%, compared with the 13.58% return of the fund's benchmark (defined on
page 24) and the 16.33% average return of the 179 "Flexible Funds" tracked by
Lipper Analytical Services. (See the Average Annual Returns table on the
preceding page for other fund performance comparisons.)
Why did the fund outperform its benchmark?
The fund's overweighting in foreign stocks was a benefit, as was having a
reduced cash position. Stock selection among both the fund's U.S. and foreign
stock holdings also added value to the fund's return compared to the benchmark.
Why did the fund underperform its peer group average?
I would hesitate to call this group the fund's "peers." The fund is managed
more conservatively than most of the funds in this group, and that tends to be a
handicap when the financial markets--especially stocks--are performing well. In
addition, the fund has a relatively rigid asset allocation structure, whereas
many of its "peers" have a great deal of flexibility in their asset selection.
Did the fund's asset mix change much during the fiscal year?
The adjustments we made over the past year occurred primarily among the
fund's domestic holdings. At the beginning of the period, we overweighted U.S.
stocks and underweighted U.S. bonds. After domestic stocks rose and bonds
suffered losses in the first half of 1996, we reversed our position by taking
profits from some of the fund's U.S. stocks and investing the proceeds in U.S.
bonds. By the end of the year, the fund returned to a roughly neutral asset mix,
with the only exception being our consistent overweighting in foreign stocks and
a corresponding underweighting in cash.
In the fund's semiannual report six months ago, you had a pretty negative
outlook on the domestic stock market, but now you've taken a more neutral
position with the fund's U.S. stock holdings. Why the reversal?
Six months ago, the S&P 500 had risen by more than 50% in a year and a half,
and we simply felt there were better investment values elsewhere. But conditions
remained favorable for stocks--economic growth moderated, inflation remained
low, corporate earnings growth held up and cash flows kept pouring into the
market. So, we gradually brought the fund's domestic stock holdings back up to
neutral. As it turns out, this portion of the portfolio played a key role in the
fund's return during the period--the fund's domestic stocks are primarily
concentrated in
[bar graph - data below]
CAPITAL MANAGER FISCAL YEAR-BY-YEAR RETURNS
(Years ended November 30)
Capital Manager Benchmark
1995 20.12% 21.99%
1996 15.58% 13.58%
This chart illustrates the historical year-by-year volatility of the fund's
returns since its inception. The fund's total returns include operating
expenses, while the benchmark's returns do not. See page 24 for a definition of
the fund's benchmark.
6 Capital Manager American Century Investments
CAPITAL MANAGER
larger companies, and these stocks produced tremendous gains during the last
three months of the period.
Any lingering skepticism about the outlook for U.S. stocks?
Looking back at the market's 75% gain over the past two years, it's hard not
to get a little bit of vertigo. Our two biggest concerns about the domestic
stock market going forward are slowing corporate earnings growth and rising
labor costs. A slower U.S. economy will likely lead to a slowdown in the growth
of corporate profits, and the recent record lows in unemployment suggest that we
could see increased wage pressures in 1997.
Despite these reservations, we do see some potential value in the domestic
stock market, especially among smaller companies. Small-cap stocks have lagged
their large-cap counterparts in recent months and are therefore relatively
attractive. One significant factor may be capital gains legislation--if Congress
passes a reduction in the capital gains tax rate, it could be the catalyst for a
rally among small-cap stocks.
Looking forward, how do you plan to position the fund over the next six months?
We currently see more value overseas than we do domestically. As a result,
we'll probably maintain the fund's neutral weightings in U.S. stocks and U.S.
bonds while overweighting foreign stocks and bonds.
The fund has been overweighted in foreign stocks almost since its inception two
years ago. Do you still think this is an attractive sector?
Absolutely. The incredible performance of U.S. stocks over the past couple of
years has overshadowed some solid returns from foreign equities. From a relative
value perspective, foreign stocks continue to look more attractive to us than
U.S. equities.
FUND'S U.S. STOCKS (as of November 30, 1996)
Number of Companies 141
Dividend Yield 1.96%
Price/Earnings Ratio 16.0
% of Fund's % of
U.S. Stocks Fund
Top 5 U.S. Stocks
Atlantic Richfield Co. 2.9% 1.1%
BankAmerica Corp. 2.8% 1.1%
SBC Communications Inc. 2.5% 0.9%
American International Group, Inc. 2.4% 0.9%
Travelers Group, Inc. 2.3% 0.9%
FUND'S FOREIGN STOCKS (as of November 30, 1996)
Number of Companies 55
Dividend Yield 2.08%
Price/Earnings Ratio 34.1
% of Fund's % of
Country Foreign Stocks Fund
Top 5 Foreign Stocks
Indochina Goldfields, Ltd. Canada 4.8% 0.4%
Toyota Motor Corp. Japan 3.6% 0.3%
Sanofi SA France 2.9% 0.3%
Bayer AG Germany 2.9% 0.3%
Hang Seng Bank Hong Kong 2.8% 0.3%
[pie chart]
Percent of Fund's Foreign Stocks
Asia/Pacific 48.6%
Europe 44.0%
Americas
(excluding U.S.) 7.4%
Annual Report Capital Manager 7
CAPITAL MANAGER
Foreign markets should benefit from better economic conditions--while the
U.S. economy is slowing, economies in other parts of the world are just
beginning to rebound. Europe in particular should benefit from resurgent
economic growth and government deficit-reduction efforts. The one puzzling area
is Japan, where the stock market has been as inconsistent as the country's
economic fortunes. We are keeping a close eye on the Japanese economy because
its performance has profound implications for both foreign stock markets and the
U.S. bond market.
What's the connection between the Japanese economy and the U.S. bond market?
In the U.S., economic growth and inflation have been relatively moderate and
steady over the past five years, at 2% and 3%, respectively. But the bond market
has been surprisingly volatile despite such calm economic conditions. One of the
main causes of this volatility has been the fluctuating demand for bonds from
foreign central banks, especially the Bank of Japan (BOJ).
In an effort to pull the Japanese economy out of recession, the BOJ lowered
interest rates and took steps to weaken the Japanese currency. To weaken the
yen, the BOJ purchased U.S. dollars and invested them in U.S. bonds. As a
result, the BOJ has become a major factor in the U.S. bond market over the past
five years. If the Japanese economy recovers more fully in 1997, demand from the
BOJ for U.S. bonds would likely decline, and this could have a significant
impact on the domestic bond market and U.S. interest rates.
What else do you see in store for the U.S. bond market?
The U.S. economy slowed during the last half of 1996 from the rapid pace it
established earlier in the year. If these moderate economic conditions persist,
we expect bonds to trade in a fairly narrow range over the next few months.
However, we're watching a couple of factors closely. As I mentioned before,
we're concerned about the potential impact of rising labor costs on inflation.
We're also keeping an eye on the 105th Congress, which will consider a balanced
federal budget and entitlement reform in the coming year. The outcome of these
debates could have an effect on bond prices in 1997.
Investment terms are defined in the Glossary on page 25.
FUND'S U.S. BONDS (as of November 30, 1996)
Number of Issues 34
Weighted Average Maturity 7.50 years
Average Duration 4.69 years
[pie chart]
Percent of Fund's U.S. Bonds
o U.S. Treasury Notes 35.6%
o Mortgage-Backed
Securities 28.0%
o Corporate Bonds 16.5%
o U.S. Government Agency
Securities 10.0%
o U.S. Treasury Bonds 9.9%
FUND'S FOREIGN BONDS (as of November 30, 1996)
Number of Issues 14
Weighted Average Maturity 5.35 years
Average Duration 4.54 years
[pie chart]
Percent of Fund's Foreign Bonds
o Europe 80.2%
o Asia/Pacific 15.4%
o Americas
(excluding U.S.) 4.4%
8 Capital Manager American Century Investments
SCHEDULE OF INVESTMENTS
CAPITAL MANAGER
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE -- 0.8%
1,700 Gencorp, Inc. $ 31,450
1,700 General Dynamics Corp. 125,375
6,500 Litton Industries, Inc.(1) 303,875
1,400 United Technologies Corp. 196,350
-------
657,050
-------
AIRLINES -- 0.7%
2,100 AMR Corporation(1) 191,625
4,900 Delta Airlines, Inc. 368,725
-------
560,350
-------
AUTOMOBILES & AUTO PARTS -- 1.4%
7,600 Chrysler Corp. 269,800
6,200 Ford Motor Co. 203,050
5,500 General Motors Corp. 316,938
10,000 Toyota Motor Corp. ORD 273,407
200 Volkswagen AG ORD 80,119
---------
1,143,314
---------
BANKING -- 3.1%
25,100 Australia & New Zealand Banking
Group Ltd. ORD 165,438
4,800 Banc One Corp. 228,600
2,100 Banco Bilbao Vizcaya, S.A. ORD 106,044
8,400 BankAmerica Corp. 865,200
2,000 Credit Commercial de France ORD 96,787
9,000 Development Bank of
Singapore ORD 116,150
3,300 First Union Corp. 252,038
18,000 Hang Seng Bank ORD 217,085
3,600 NationsBank Corp. 373,050
9,000 Sanwa Bank ORD 148,747
---------
2,569,139
---------
BROADCASTING & MEDIA -- 0.1%
8,000 Carlton Communications Plc ORD 67,664
------
BUSINESS SERVICES & SUPPLIES -- 0.3%
2,200 America Online, Inc.(1) 77,825
2,000 Jacobs Engineering Group, Inc.(1) 48,250
4,000 Manpower, Inc. 130,500
-------
256,575
-------
Shares Value
- --------------------------------------------------------------------------------
CHEMICALS & RESINS -- 2.9%
2,200 Advanced Technology Labs, Inc.(1)$62,700
19,000 Asahi Chemical Industries ORD 124,941
5,500 Bayer AG ORD 221,187
3,500 Bio-Rad Laboratories, Inc. CI A 104,562
5,200 Dow Chemical Co. 435,500
7,200 du Pont (E.I.) de Nemours & Co. 678,600
8,300 Morton International, Inc. 335,112
4,500 PPG Industries, Inc. 275,625
5,000 Sculman A, Inc. 118,750
---------
2,356,977
---------
COMMUNICATIONS SERVICES -- 3.2%
11,100 AT&T Corp. 435,675
5,300 Ameritech Corp. 312,037
5,000 Bell Atlantic Corp. 314,375
4,900 BellSouth Corp. 197,837
4,893 Lucent Technologies, Inc. 250,766
14,500 SBC Communications Inc. 763,063
2,000 Sprint Corp. 83,750
20,000 Telecom Corporation of
New Zealand Ltd. ORD 105,437
37,000 Telecom Italia Mobile SpA ORD 87,009
6,000 Telefonica de Espana ORD 131,370
---------
2,681,319
---------
COMPUTER SOFTWARE & SERVICES -- 0.3%
2,250 Computer Associates
International, Inc. 147,937
500 SAP AG ORD 68,391
-------
216,328
-------
COMPUTER SYSTEMS -- 2.1%
6,000 Chips & Technologies, Inc.(1) 126,375
6,600 Compaq Computer Corp.(1) 523,050
1,500 Gateway 2000, Inc.(1) 80,438
2,500 Intel Corp. 317,188
3,300 International Business Machines
Corp. 525,938
3,500 Medic Computer Systems, Inc.(1) 118,125
1,500 Tektronix, Inc. 73,125
---------
1,764,239
---------
See Notes to Financial Statements
Annual Report Capital Manager 9
SCHEDULE OF INVESTMENTS
CAPITAL MANAGER
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
CONSTRUCTION &
PROPERTY DEVELOPMENT -- 1.2%
5,000 Centex Corp. $ 180,000
1,500 Harsco Corp. 104,625
20,000 Henderson Land Development ORD 201,112
18,000 Hutchison Whampoa Ltd. ORD 139,097
3,000 Kaufman & Broad Home Corp. 38,625
5,000 Schuller Corp. 48,125
20,000 Standard Pacific Corp. 117,500
2,200 Vulcan Materials Co. 136,950
1,000 Webb (Del) Corp. 16,875
-------
982,909
-------
CONSUMER PRODUCTS -- 1.4%
6,000 Canon, Inc. ORD 126,593
2,200 Eastman Kodak Co. 178,200
10,800 Hillenbrand Industries, Inc. 398,250
1,000 Miller (Herman), Inc. 47,000
5,000 Sankyo Co. Ltd. ORD 134,066
25,000 Sanyo Electric Company ORD 117,143
350 Snap-On, Inc. 12,688
2,000 Sony Corp. ORD 128,176
---------
1,142,116
---------
ELECTRICAL & ELECTRONIC
COMPONENTS -- 2.1%
6,600 Coherent, Inc.(1) 286,275
2,500 Fluke Corp. 107,813
5,900 General Electric Co. (U.S.) 613,600
6,400 Johnson Controls, Inc. 496,000
2,500 Park Electrochemical Corp. 56,875
1,500 Raychem Corp. 127,875
4,000 Rexel, Inc.(1) 55,500
---------
1,743,938
---------
ENERGY (PRODUCTION & MARKETING) -- 3.9%
6,400 Atlantic Richfield Co. 890,400
2,500 Chevron Corp. 167,500
1,700 Dresser Industries, Inc. 55,675
20,000 Enterprise Oil Plc ORD 200,098
1,800 Exxon Corp. 170,325
1,500 Occidental Petroleum Corporation 36,000
4,100 Pan Energy Corp. 180,400
Shares Value
- --------------------------------------------------------------------------------
2,500 Petroleum Geo Services ORD(1) $ 93,830
4,100 Phillips Petroleum Co. 185,012
1,000 Royal Dutch Petroleum
Company ADR 169,875
2,000 Royal Dutch Petroleum
Company ORD 336,906
4,600 Texaco Inc. 455,975
1,329 Total SA ORD 106,183
2,800 USX Marathon Group 64,050
3,000 Union Tex Petroleum Holdings 66,750
---------
3,178,979
---------
FINANCIAL SERVICES -- 5.7%
1,500 ABN AMRO Holdings NV ORD 97,057
4,200 American Express Credit Corp. 219,450
2,000 AmSouth Bancorporation 99,750
6,950 Bear Stearns Companies, Inc. 191,125
1,000 CS Holding AG ORD(1) 106,240
5,512 Chase Manhattan Corp. 520,884
1,000 Edwards (A.G.), Inc. 31,250
10,500 Federal National
Mortgage Association 433,125
2,900 Lehman Brothers Holdings, Inc. 84,462
29,000 Marubeni Corporation ORD 131,297
2,200 Merrill Lynch & Co., Inc. 176,550
7,100 Morgan (J.P.) & Co. Inc. 670,062
5,600 Morgan Stanley Group, Inc. 336,700
7,000 Nomura Securities Co, Ltd. ORD 118,154
3,800 Paine Webber Group, Inc. 103,075
1,800 ReliaStar Financial Corp. 100,350
6,100 Salomon, Inc. 278,313
2,500 Student Loan Marketing
Association 240,313
15,600 Travelers Group, Inc. 702,000
2,000 Washington Federal, Inc. 53,250
---------
4,693,407
---------
FOOD & BEVERAGE -- 0.7%
250 Nestle SA ORD 270,865
5,800 Sara Lee Corp. 227,650
5,000 Whitbread Plc ORD 64,443
-------
562,958
-------
See Notes to Financial Statements
10 Capital Manager American Century Investments
SCHEDULE OF INVESTMENTS
CAPITAL MANAGER
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
GOLD & NATURAL RESOURCE
LINKED INVESTMENTS -- 2.5%
4,000 Ashanti Goldfields GDR (Acquired
4-17-95, Cost $101,500)(2) $ 57,500
10,000 Barrick Gold Corporation 300,000
12,000 Cambior, Inc. 180,000
20,000 Dayton Mining Corp. ORD(1) 108,869
8,000 Diamond Fields International
ORD(1) 1,777
8,000 Driefontein Consolidated, Ltd.
ORD 91,057
8,000 Echo Bay Mines Ltd. 49,500
5,900 Freeport McMoran Copper & Gold 176,262
37,500 Indochina Goldfields, Ltd. ORD
(Acquired 10-22-96 through
10-28-96, Cost $269,196)(1)(2)363,822
5,100 Newmont Mining Corporation 244,162
5,000 Placer Dome, Inc. 118,125
11,000 Santa Fe Pacific Gold Company 126,500
50,000 South Pacific
Resources Corp. ORD(1) 140,715
13,000 TVX Gold, Inc. ORD(1) 91,000
---------
2,049,289
---------
HEALTHCARE -- 0.1%
4,400 Rotech Medical Corp.(1) 74,800
------
INDUSTRIAL EQUIPMENT & MACHINERY -- 2.5%
2,000 Case Corp. 105,000
4,000 Caterpillar Inc. 316,500
2,200 CDI Corp.(1) 64,075
9,800 Dover Corp. 523,075
3,000 Foster Wheeler Corp. 108,375
4,900 Global Industrial Technologies,
Inc.(1) 100,450
8,100 Ingersoll Rand Co. 376,650
200 Mannesmann AG ORD 83,368
1,800 Measurex Corp. 44,325
24,000 Mitsubishi Heavy Industries
Ltd. ORD 196,220
1,000 SMC Corporation ORD 67,868
5,000 United Engineers Ltd. ORD 45,311
---------
2,031,217
---------
Shares Value
- --------------------------------------------------------------------------------
INSURANCE -- 2.7%
1,200 American Bankers
Insurance Group, Inc. $ 58,463
6,500 American International
Group, Inc. 747,500
1,000 Axa SA ORD 60,042
500 CNA Financial Corp.(1) 53,750
1,400 CIGNA Corp. 197,925
2,000 Equitable of Iowa Companies 49,500
1,000 Fremont General Corp. 31,125
3,400 General Re Corp. 573,750
600 Loews Corp. 55,650
9,000 Old Rep International Corp. 244,125
10,000 Prudential Corp. Plc ORD 81,973
300 Zeurich Versicherun ORD(1) 84,992
---------
2,238,795
---------
LEISURE -- 0.4%
8,000 King World Productions, Inc. 305,000
-------
MEDICAL EQUIPMENT & SUPPLIES -- 0.4%
6,000 Becton Dickinson & Company 252,000
3,100 Nellcor Puritan Bennett, Inc.(1) 64,325
1,000 United States Surgical Corp. 40,125
-------
356,450
-------
METALS & MINING -- 0.1%
1,000 Texas Industries, Inc. 56,875
------
PHARMACEUTICALS -- 3.7%
4,900 Amgen Inc.(1) 298,287
4,000 Astra AB ORD 191,514
5,900 Bristol Myers Squibb 671,125
1,600 Genetics Institute, Inc.(1) 108,800
10,000 Genzyme Corp.(1) 227,500
10,000 Glaxo Wellcome Plc ORD 164,493
6,200 Johnson & Johnson 329,375
5,900 Merck & Co., Inc. 489,700
2,100 OrNda HealthCorp(1) 61,163
1,000 Pfizer, Inc. 89,625
150 Sandoz AG ORD 174,349
2,500 Sanofi SA ORD 223,795
---------
3,029,726
---------
See Notes to Financial Statements
Annual Report Capital Manager 11
SCHEDULE OF INVESTMENTS
CAPITAL MANAGER
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
PUBLISHING -- 0.4%
2,500 Gibson Greetings, Inc.(1) $ 47,187
6,500 Media General, Inc. 206,375
11,400 News Corporation Ltd. ORD 60,894
-------
314,456
-------
RETAIL -- 2.1%
15,000 Boots Company Plc ORD 159,911
2,800 CompUSA, Inc.(1) 126,000
2,400 Dayton Hudson Corp. 93,300
4,400 Gap, Inc. 141,350
3,000 Ito-Yokado Co., Ltd. ORD 151,648
6,100 Longs Drug Stores, Inc. 305,762
5,000 Marui Company ORD 94,945
1,000 Mercantile Stores Company, Inc. 50,250
3,700 Ross Stores, Inc. 188,238
5,100 Ruddick Corp. 67,575
7,300 Sears, Roebuck & Co. 363,175
---------
1,742,154
---------
TOBACCO -- 0.5%
4,300 Philip Morris Companies Inc. 443,438
-------
TRANSPORTATION -- 0.4%
5,700 CSX Corp. 266,475
3,000 Kysor Industrial Corp. 91,500
-------
357,975
-------
UTILITIES (ELECTRIC) -- 0.8%
5,500 NIPSCO Industries, Inc. 213,125
9,000 Tokyo Electric Power ORD 203,340
1,000 United Illuminating Co. 33,375
3,000 VEBA AG ORD 175,347
-------
625,187
-------
UTILITIES (NATURAL GAS) -- 0.6%
2,700 Columbia Gas System, Inc. 174,487
1,000 Eastern Enterprises 37,500
1,600 Indiana Energy, Inc. 38,600
6,400 Pacific Enterprises 196,000
1,000 People's Energy Corp. 36,250
-------
482,837
-------
TOTAL COMMON STOCKS-- 47.1% 38,685,461
(Cost $32,447,666) ----------
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES
$2,000,000 U.S. Treasury Notes, 5.50%,
11-15-98 $ 1,996,240
5,000,000 U.S. Treasury Notes, 7.75%,
11-30-99 5,276,550
2,000,000 U.S. Treasury Notes, 5.50%,
12-31-00 1,979,060
1,400,000 U.S. Treasury Notes, 6.50%,
5-15-05 1,442,434
1,125,000 U.S. Treasury Bonds, 12.00%,
8-15-13 1,651,635
1,050,000 U.S. Treasury Bonds, 8.75%,
5-15-17 1,320,701
----------
TOTAL U.S. TREASURY SECURITIES -- 16.7% 13,666,620
(Cost $13,269,040) ----------
U.S. GOVERNMENT AGENCY SECURITIES
1,350,000 FHLMC, 7.93%, 1-20-05 1,488,375
500,000 FNMA, 6.45%, 6-10-03 494,060
1,000,000 FNMA, 8.20%, 12-23-96 1,001,857
---------
TOTAL U.S. GOVERNMENT AGENCIES -- 3.6% 2,984,292
(Cost $2,899,306) ---------
MORTGAGE-BACKED SECURITIES(3)
53,150 FNMA Pool #343829, 6.50%,
4-1-11 52,701
952,726 FNMA Pool #341477, 6.50%,
5-1-11 944,685
296,495 FNMA Pool #346400, 6.50%,
5-1-11 293,992
619,136 FNMA Pool #346779, 6.50%,
5-1-11 613,911
432,278 GNMA Pool #351417, 7.00%,
1-15-24 431,600
256,498 GNMA Pool #361446, 8.00%,
7-15-24 264,832
409,852 GNMA Pool #377238, 8.50%,
7-20-24 426,762
336,141 GNMA Pool #355903, 8.00%,
9-15-24 347,062
See Notes to Financial Statements
12 Capital Manager American Century Investments
SCHEDULE OF INVESTMENTS
CAPITAL MANAGER
NOVEMBER 30, 1996
Principal Amount Value
- --------------------------------------------------------------------------------
$1,242,593 GNMA Pool #404303, 8.25%,
10-15-24 $ 1,290,731
277,085 GNMA Pool #001991, 9.00%,
4-20-25 291,631
862,328 GNMA Pool #9297, 8.25%,
7-20-25 885,906
493,688 GNMA Pool #412177, 7.00%,
9-15-25 491,066
304,204 GNMA Pool #425081, 7.50%,
2-15-26 308,576
500,348 GNMA Pool #402680, 8.00%,
5-15-26 515,669
502,890 GNMA Pool #417068, 8.00%,
5-15-26 518,288
692,306 GNMA Pool #002273, 9.00%,
8-20-26 729,950
---------
TOTAL MORTGAGE-BACKED
SECURITIES-- 10.2% 8,407,362
(Cost $8,213,085) ---------
CORPORATE BONDS
300,000 Citizens Utilities Company, 7.60%,
6-1-06 322,671
600,000 Ford Motor Credit Co., 6.25%,
11-8-00 600,588
400,000 Hanson Overseas BV, 6.75%,
9-15-05 402,944
500,000 Japanese Financial Corp. for
Municipal Enterprises, 7.375%,
4-27-05 530,578
500,000 Korea Development Bank, 6.25%,
5-1-00 501,208
500,000 Lockheed Martin Corp., 7.25%,
5-15-06 521,816
500,000 Merrill Lynch & Co., Inc., 8.00%,
2-1-02 536,510
1,000,000 Midland Bank Plc, 6.95%, 3-15-11 997,530
500,000 News America Holdings, 9.125%,
10-15-99 538,420
---------
TOTAL CORPORATE BONDS-- 6.0% 4,952,265
(Cost $4,881,337 ) ---------
Principal Amount Value
- --------------------------------------------------------------------------------
FOREIGN CORPORATE BONDS -- 0.9%
DEM 1,100,000 Rheinische Hypobank, 5.625%,
7-3-01 $ 740,675
(Cost $ 1,225,039) -------
SOVEREIGN GOVERNMENTS & AGENCIES
DEM 600,000 Federal Republic of Germany,
6.00%, 9-15-03 406,484
CAD 250,000 Government of Canada, 6.50%,
6-1-04 193,564
FRF 700,000 Government of France, 7.00%,
11-12-99 144,914
NLG 200,000 Government of Netherlands,
8.25%, 2-15-02 133,754
ESP 25,000,000 Government of Spain, 10.50%,
10-30-03 231,960
JPY 50,000,000 Inter American Development
Bank, 4.50%, 3-20-03 505,411
BEF 4,000,000 Kingdom of Belgium, 9.00%,
6-27-01 148,202
DKK 1,000,000 Kingdom of Denmark, 8.00%,
5-15-03 187,172
SEK 1,000,000 Kingdom of Sweden, 13.00%,
6-15-01 189,004
AUD 200,000 Queensland Treasury Corporation
Global Note, 8.00%,
7-14-99 168,692
ITL200,000,000 Republic of Italy, 9.50%,
12-1-97 134,749
JPY 70,000,000 Republic of Italy, 3.50%,
6-20-01 664,902
GBP 300,000 United Kingdom Treasury,
8.00%, 6-10-03 526,835
-------
TOTAL SOVEREIGN GOVERNMENTS
& AGENCIES-- 4.4% 3,635,643
(Cost $2,958,174) ---------
See Notes to Financial Statements
Annual Report Capital Manager 13
SCHEDULE OF INVESTMENTS
CAPITAL MANAGER
NOVEMBER 30, 1996
Principal Amount Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER & OTHER SHORT-TERM INVESTMENTS(4)
$ 300,000 American Family Financial Services,
5.24%, 2-13-97 $ 296,656
463,000 Banque Nationale de Paris, 5.17%,
12-31-96 460,798
550,000 Emerson Electric, 5.17%, 12-2-96 549,911
800,000 Ford Motor Credit Corp., 5.17%,
12-3-96 799,531
500,000 General Re Corp., 5.17%,
12-16-96 498,751
540,000 Hitachi Credit America Corp., 5.17%,
12-23-96 538,099
541,000 Hitachi Credit America Corp., 5.22%,
4-30-97 528,860
165,000 IMI Funding Corp. (USA), 5.24%,
2-18-97 163,002
800,000 Kingdom of Sweden, 5.25%, 2-3-97 792,316
570,000 Merrill Lynch & Co., Inc., 5.25%,
1-30-97 564,784
1,000,000 Mitsubishi International, 5.25%,
1-10-97 993,668
1,500,000 Morgan Guaranty Euro Certificate
of Deposit, 5.45%, 2-7-97 1,484,705
500,000 Morgan Stanley Group, Inc., 5.25%,
1-27-97 495,650
289,000 Paccar Financial Corp., 5.25%,
1-17-97 286,830
--------
TOTAL COMMERCIAL PAPER &
OTHER SHORT-TERM INVESTMENTS -- 10.3% 8,453,561
(Cost $8,470,794) ---------
TEMPORARY CASH INVESTMENTS -- 0.8%
Repurchase Agreement (Sanwa Bank), 5.70%,
due 12-2-96, collateralized by $632,000 par value
U.S. Treasury Notes, 7.50%, due 11-15-01
(Delivery value $664,315)(5) 664,000
(Cost $664,000) -------
TOTAL INVESTMENT SECURITIES -- 100.0% $82,189,879
(Cost $75,028,441) ===========
FUTURES CONTRACTS
Underlying
Expiration Face Amount Unrealized
Purchased Date at Value Gain
- --------------------------------------------------------
2 S&P500 December
Futures 1996 $758,250 $97,250
======== =======
Notes to Schedule of Investments
ADR = American Depositary Receipt
AUD = Australian Dollar
BEF = Belgian Franc
CAD = Canadian Dollar
DKK = Danish Krone
DEM = German Mark
ESP = Spanish Peseta
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
FRF = French Franc
GBP = British Pound
GDR = Global Depositary Receipt
GNMA = Government National Mortgage Association
ITL = Italian Lira
JPY = Japanese Yen
NLG = Netherlands Guilder
ORD = Foreign Ordinary Share
SEK = Swedish Krona
(1) Non-income producing
(2)Security was purchased under Rule 144A 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 November 30, 1996, was $421,322, which represented 0.5% of the
net assets of the Capital Manager Fund.
(3)Final maturity indicated. Expected remaining average life used for purposes
of calculating the weighted average portfolio maturity.
(4)Rates disclosed represent effective yield to maturity as of November 30,
1996.
(5) Security has been segregated at the custodian bank for futures contracts.
14 Capital Manager American Century Investments
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<S> <C>
ASSETS
Investment securities, at value (identified cost of $75,028,441) (Note 3) ..... $82,189,879
Foreign currency holdings, at value (identified cost of $1,014) ............... 1,005
Receivable for investments sold ............................................... 436
Receivable for variation on futures contracts (Note 1) ........................ 122,510
Receivables for capital shares sold ........................................... 56,174
Dividends and interest receivable ............................................. 735,928
Prepaid expenses and other assets ............................................. 58,537
------
83,164,469
----------
LIABILITIES
Disbursements in excess of demand deposit cash ................................ 28,846
Payable for capital shares redeemed ........................................... 83,313
Payable to affiliates (Note 2) ................................................ 60,305
Accrued expenses and other liabilities ........................................ 2,153
-----
174,617
-------
Net Assets Applicable to Outstanding Shares ................................... $82,989,852
===========
CAPITAL SHARES, $10.00 PAR VALUE
Outstanding (unlimited number of shares authorized) ........................... 6,435,426
=========
Net Asset Value Per Share ..................................................... $ 12.90
==========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) ....................................... $71,103,547
Undistributed net investment income ........................................ 706,324
Accumulated undistributed net realized gain from
investment and foreign currency transactions .............................. 3,921,444
Net unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies (Note 3) ....................... 7,258,537
---------
$82,989,852
===========
</TABLE>
See Notes to Financial Statements
Annual Report Statement of Assets and Liabilities 15
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
INVESTMENT INCOME
Income:
Interest ........................................................ $2,526,987
Dividends (net of foreign taxes withheld of $19,782) ............ 651,277
---------
3,178,264
---------
Expenses (Note 2):
Investment advisory fees ........................................ 473,371
Administrative fees ............................................. 78,439
Transfer agency fees ............................................ 87,034
Custodian fees .................................................. 58,481
Printing and postage ............................................ 49,967
Auditing and legal fees ......................................... 41,229
Registration and filing fees .................................... 27,132
Directors' fees and expenses .................................... 21,720
Organizational expenses ......................................... 16,598
Telephone expenses .............................................. 8,049
Other operating expenses ........................................ 1,030
-----
Total expenses ................................................ 863,050
Custodial earnings credits (Note 4) ............................. (619)
Amount waived (Note 2) .......................................... (140,418)
--------
Net expenses .................................................. 722,013
-------
Net investment income ........................................... 2,456,251
---------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)
Net realized gain on:
Investments ..................................................... 3,662,937
Foreign currency transactions ................................... 139,841
-------
3,802,778
---------
Change in net unrealized appreciation (depreciation) on:
Investments ..................................................... 4,192,704
Translation of assets and liabilities in foreign currencies ..... (84,595)
-------
4,108,109
---------
Net realized and unrealized gain on
investments and foreign currency ................................ 7,910,887
---------
Net Increase in Net Assets
Resulting from Operations .......................................$10,367,138
===========
See Notes to Financial Statements
16 Statement of Operations American Century Investments
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1996 AND NOVEMBER 30, 1995
Increase in Net Assets 1996 1995
OPERATIONS
<S> <C> <C>
Net investment income .............................................. $ 2,456,251 $ 1,172,478
Net realized gain on investments and foreign currency transactions . 3,802,778 1,002,805
Change in net unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies .................. 4,108,109 3,150,428
--------- ---------
Net increase in net assets resulting from operations ............... 10,367,138 5,325,711
---------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ......................................... (2,084,783) (846,212)
From net realized gains on investment transactions ................. (817,408) --
-------- --------
Decrease in net assets from distributions to shareholders .......... (2,902,191) (846,212)
---------- --------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .......................................... 50,647,741 62,385,736
Proceeds from reinvestment of distributions ........................ 2,787,490 801,795
Payments for shares redeemed ....................................... (29,066,856) (16,610,500)
----------- -----------
Net increase in net assets from capital shares transactions ........ 24,368,375 46,577,031
---------- ----------
Net increase in net assets ......................................... 31,833,322 51,056,530
NET ASSETS
Beginning of year .................................................. 51,156,530 100,000
---------- -------
End of year ........................................................ $ 82,989,852 $ 51,156,530
============ ============
Undistributed net investment income ................................ $ 706,324 $ 326,266
============ ============
TRANSACTIONS IN SHARES OF THE FUND:
Sold ............................................................... 4,251,362 5,827,372
Issued in reinvestment of distributions ............................ 238,336 71,953
Redeemed ........................................................... (2,428,334) (1,535,263)
---------- ----------
Net increase ....................................................... 2,061,364 4,364,062
========= =========
</TABLE>
See Notes to Financial Statements
Annual Report Statements of Changes in Net Assets 17
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
1. Organization and Summary of Significant Accounting Policies
Organization--American Century Manager Funds (the Trust) is registered under
the Investment Company Act of 1940 as an open-end diversified management
investment company. Capital Manager (the Fund) is the sole fund issued by the
Trust. The Fund's investment objective is to seek to maximize total return
(capital appreciation plus dividend income) consistent with prudent investment
risk. The Fund seeks to achieve this objective by allocating its assets among
U.S. equity securities, U.S. fixed-income securities, money market instruments,
foreign equity and fixed-income securities, and securities of companies with
substantial gold-related assets and natural resources linked investments. The
following significant accounting policies, related to the Fund, are in
accordance with accounting policies generally accepted in the investment company
industry.
Security Valuations--Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. Debt securities not
traded on a principal securities exchange are valued through valuations obtained
from a commercial pricing service or at the mean of the most recent bid and
asked prices. When valuations are not readily available, securities are valued
at fair value as determined in accordance with procedures adopted by the Board
of Trustees.
Security Transactions--Security transactions are accounted for on the date
purchased or sold. Net realized gains and losses are determined on the
identified cost basis, which is also used for federal income tax purposes.
Investment Income--Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of discounts and premiums.
Foreign Currency Transactions--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.
Net realized foreign currency exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability amounts
initially stated in foreign currencies and the U.S. dollar value of the amounts
actually received or paid. Net unrealized foreign currency exchange gains or
losses arise from changes in the value of assets and liabilities, other than
portfolio securities, resulting from changes in the exchange rates.
Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of portfolio securities are a component of
realized gain (loss) on investments and unrealized appreciation (depreciation)
on investments, respectively.
Forward Foreign Currency Exchange Contracts--The Fund may enter into forward
foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Fund's exposure to foreign currency exchange rate fluctuations. When
required, the Fund will segregate assets in an amount sufficient to cover its
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of market risk in
excess of the amount reflected in the Statements of Assets and Liabilities. The
Fund bears the risk of an unfavorable change in the foreign currency exchange
rate underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms.
Futures Contracts--The Fund may enter into stock index futures contracts in
order to manage the Fund's exposure to changes in market conditions. One of the
risks of entering into futures contracts may include the possibility that the
change in value of the contract may not correlate with the changes in value of
the underlying securities. Upon entering into a futures contract, the Fund is
required to deposit either cash or securities in an amount equal to a certain
percentage of the contract value (initial margin). Subsequent payments
(variation margin) are made or received daily, in cash, by the Fund. The
variation margin is equal to the daily change in the contract value and is
recorded as unrealized gains and losses. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Net realized and unrealized gains
or losses occurring during the holding period of futures contracts are a
component of realized gain (loss) on investments and unrealized appreciation
(depreciation) on investments, respectively.
18 Notes to Financial Statements American Century Investments
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
Repurchase Agreements--The Fund may enter into repurchase agreements with
institutions that the Fund's investment advisor, Benham Management Corporation
(BMC), has determined are creditworthy pursuant to criteria adopted by the Board
of Trustees. Each repurchase agreement is recorded at cost. The Fund requires
that the securities purchased in a repurchase transaction be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those securities
in the event of a default under the repurchase agreement. BMC monitors, on a
daily basis, the value of the securities transferred to ensure that the value,
including accrued interest, of the securities under each repurchase agreement is
greater than amounts owed to the Fund under each repurchase agreement.
Income Tax Status--It is the policy of the Fund to distribute all taxable
income and capital gains to shareholders and to otherwise qualify as a regulated
investment company under provisions of the Internal Revenue Code. Accordingly,
no provision has been made for federal income taxes.
Distributions to Shareholders--Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income are declared and
paid quarterly. Distributions from net realized gains are declared and paid
annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differing
treatments for foreign currency transactions and wash sales.
Supplementary Information--Certain officers and directors of the Trust are
also officers and/or directors, and, as a group, controlling stockholders of
American Century Companies, Inc. (ACC), the parent of the Trust's investment
advisor, BMC, the Trust's distributor, American Century Investment Services,
Inc. (ACIS), and the Trust's transfer agent, American Century Services
Corporation (ACSC).
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
Organization Costs--Costs incurred by the Fund in connection with the
organization, initial registration, and public offering of shares are being
amortized on a straight-line basis over a five-year period ending November 1999.
- --------------------------------------------------------------------------------
2. Transactions with Related Parties
The Trust has entered into an investment advisory agreement with BMC that
provides the Fund with investment advisory services in exchange for an
investment advisory fee. ACSC pays all compensation of Trust officers and
trustees who are officers or directors of ACC or any of its subsidiaries. In
addition, promotion and distribution expenses are paid by BMC. The investment
advisory fee is paid monthly based on the Fund's average daily closing net
assets during the previous month. The annual investment advisory fee is as
follows:
0.65% of the first $100 million
0.60% of the next $100 million
0.55% of the next $100 million
0.50% of the next $100 million
0.45% of the next $100 million
0.37% of the next $1 billion
0.34% of the next $1 billion
0.31% of the next $1 billion
0.30% of the next $1 billion
0.29% of the next $1 billion
0.28% of the next $1 billion
0.27% of the net assets over $6.5 billion
The Trust has entered into an administrative services and transfer agency
agreement with ACSC. The agreement was formerly with Benham Financial Services,
Inc. Under the agreement, ACSC provides administrative service and transfer
agency functions necessary to operate the Fund. Fees for these services are
based on transaction volume, number of accounts, and average daily closing net
assets of all funds advised by BMC.
The Trust has an additional agreement with BMC pursuant to which BMC
established a contractual expense guarantee that limits Fund expenses (excluding
expenses such as brokerage commissions, taxes, interest, custodian earnings
credits and extraordinary expenses) to 1.00% of the Fund's average daily closing
net assets. The agreement provides further that BMC may recover amounts
(representing expenses in excess of the Fund's expense guarantee rate) absorbed
during the preceding 11 months, if, and to the extent that, for any given month,
the Fund's expenses are less than the expense guarantee rate in effect at that
time. The expense guarantee rate is renewed annually in June.
Annual Report Notes to Financial Statements 19
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
The payable to affiliates as of November 30, 1996, based on the above
agreements was as follows:
Investment Advisor ........................ $33,775
Administrative Services ................... 6,350
Transfer Agent ............................ 20,180
--------
$60,305
========
The Trust has a distribution agreement with ACIS, which is responsible for
promoting sales of and distributing the Fund's shares. This agreement was
formerly with Benham Distributors, Inc.
- --------------------------------------------------------------------------------
3. Investment Transactions
The aggregate cost of investment securities purchased (excluding short-term
investments) for the year ended November 30, 1996, totaled $38,998,289 for
common stocks, $27,194,504 for U.S. Treasury and Agency obligations and
$10,485,786 for other debt obligations. Proceeds from investment securities sold
(excluding short-term investments) totaled $32,227,022 for common stocks,
$16,797,924 for U.S. Treasury and Agency obligations and $6,937,258 for other
debt obligations. On November 30, 1996, accumulated net unrealized appreciation
on investments, based on the aggregate cost of investments of $75,092,587 for
federal income tax purposes, was $7,097,292, consisting of unrealized
appreciation of $7,726,354 and unrealized depreciation of $629,062.
- --------------------------------------------------------------------------------
4. Expense Offset Arrangements
The Fund's Statement of Operations reflects custodial earnings credits. This
amount is used to offset the custody fees payable by the Fund to the custodian
bank. The credits are earned when the Fund maintains a balance of uninvested
cash at the custodian bank. The ratios of expenses to average net assets shown
in the Financial Highlights are calculated as if these credits had not been
earned.
- --------------------------------------------------------------------------------
5. Subsequent Events
<TABLE>
The following name changes became effective January 1, 1997:
NEW NAMES FORMER NAMES
<S> <C> <C>
Fund's Issuer: American Century Manager Funds Benham Manager Funds
Fund: American Century Capital Manager Fund Benham Capital Manager Fund
Parent Company: American Century Companies, Inc. Twentieth Century Companies, Inc.
Distributor: American Century Investment Services, Inc. Twentieth Century Securities, Inc.
Transfer Agent: American Century Services Corporation Twentieth Century Services, Inc.
</TABLE>
20 Notes to Financial Statements American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Years Ended November 30,
1996 1995
PER-SHARE DATA
Net Asset Value,
<S> <C> <C>
Beginning of Year .............................................. $11.70 $10.00
------ ------
Income from Investment Operations
Net Investment Income ........................................ .41 .36
Net Realized and Unrealized Gain
on Investment Transactions ................................... 1.34 1.62
---- ----
Total from
Investment Operations ........................................ 1.75 1.98
---- ----
Distributions
From Net Investment Income ................................... (.37) (.28)
From Net Realized Gains
on Investment Transactions ................................... (.18) --
---- ----
Total Distributions .......................................... (.55) (.28)
---- ----
Net Asset Value, End of Year ................................... $12.90 $11.70
====== ======
Total Return (1) ............................................. 15.58% 20.12%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets (2) .................................... 1.00% 1.01%
Ratio of Net Investment Income
to Average Net Assets (2) .................................... 3.41% 3.70%
Portfolio Turnover Rate ...................................... 79% 100%
Average Commission Paid per Investment Security Traded ....... $ .0208 --(3)
Net Assets, End
of Period (in thousands) ..................................... $82,990 $51,157
(1)Total return assumes reinvestment of dividends and capital gains
distributions, if any.
(2) The ratios include expenses paid through expense offset arrangements.
(3) Not computed for period indicated.
</TABLE>
See Notes to Financial Statements
Annual Report Financial Highlights 21
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
American Century Manager Funds
We have audited the accompanying statement of assets and liabilities,
including the schedule of investment securities, of American Century Capital
Manager Fund constituting American Century Manager Funds as of November 30,
1996, and the related statement of operations for the year then ended and the
statements of changes in net assets, and financial highlights for each of the
years in the two year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of American Century Capital Manager Fund as of November 30, 1996, the
results of its operations for the year then ended and the statements of changes
in its net assets and financial highlights for each of the years in the two year
period then ended, in conformity with generally accepted accounting principles.
/s/KPMG Peat Marwick LLP
Kansas City, Missouri
January 3, 1997
22 Independent Auditors' Report American Century Investments
IMPORTANT NOTICE FOR
ALL IRA AND 403(b) SHAREHOLDERS
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at American Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount, unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Conversions/ Redemptions 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.
Annual Report Important Notice 23
BACKGROUND INFORMATION
Investment Philosophy & Policies
American Century offers four asset allocation funds, including Capital
Manager. Each fund invests in a diversified portfolio of stocks, bonds and money
market securities, with the objective of achieving as high a level of total
return as is consistent with the fund's risk profile, given its asset mix. The
funds rely on a team management approach--although one lead manager coordinates
the funds' investments, groups of managers are responsible for the active
management of the individual fund components.
Capital Manager seeks to maximize total return consistent with prudent
investment risk. The fund emphasizes a balance between stocks and bonds, along
with a lesser allocation of money market securities and natural resources-linked
investments.
Comparative Indices
The following comparative indices are not investment products available for
purchase.
The S&P 500 was created by Standard & Poor's Corporation and consists of the
500 largest companies traded on the New York Stock Exchange. Although the S&P
500 represents less than 10% of all U.S. stocks, these 500 companies make up
approximately 70% of the total market capitalization of the U.S. stock market.
As a result, the S&P 500 is considered a broad measure of the U.S. stock market.
The Lehman Aggregate Bond Index is composed of the Lehman
Government/Corporate Index and the Lehman Mortgage-Backed Securities Index. It
reflects the price fluctuations of Treasury securities, U.S. government agency
securities, corporate bond issues and mortgage-backed securities.
The Morgan Stanley Europe, Australia, Far East (EAFE(R)) Index is a widely
followed group of stocks from 20 different countries.
The Salomon Brothers Non-U.S. World Government Bond Index consists of
fixed-income government bonds from 13 countries (excluding the United States).
The Three-Month Treasury Bill Index is derived from secondary market interest
rates as published by the Federal Reserve Bank.
The fund's benchmark consists of a combination of the above indices, weighted
to match the fund's neutral asset mix. The natural resources-linked investments
are represented by the Philadelphia Gold & Stock Index.
Lipper Rankings
Lipper Analytical Services, Inc. is an independent mutual fund ranking
service. Rankings are based on average annual total returns for each fund in the
"Flexible Portfolio Funds" category for the periods indicated. Rankings are not
included for periods less than one year. The "Flexible Portfolio Funds" category
includes funds that allocate their investments across various asset classes,
with a focus on total return.
THE FUND'S NEUTRAL ASSET MIX
U.S. Stocks 35%
Foreign Stocks 6%
U.S. Bonds 35%
Foreign Bonds 6%
Cash (money market securities) 15%
Natural Resources-Linked Investments 3%
PORTFOLIO MANAGEMENT TEAM
Lead Manager Jeff Tyler
U.S. Stocks Phil Davidson, Glenn Fogle,
Dong Zhang, Peter Zuger
Foreign Stocks Henrik Strabo, Ted Tyson
U.S. Bonds Casey Colton, Bud Hoops,
Jeff Houston, Dave Schroeder
Foreign Bonds Bill Martin, Jeff Tyler
Money Market Securities Bob Gahagan, Amy O'Donnell
Natural Resources Bill Martin
24 Background Information American Century Investments
GLOSSARY
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 Total 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 total
returns smooth out variations in a fund's return; they are not the same as
fiscal year-by-year results.
Stock Portfolio Statistics
Dividend Yield--a percentage return calculated by dividing a company's annual
cash dividend by the current market value of the company's stock.
Price/Earnings (P/E) Ratio--a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)
Bond Portfolio Statistics
Weighted Average Maturity--measures the average amount of time until the
securities in a bond portfolio mature, weighted by dollar amount.
Average Duration--measures the interest rate sensitivity of a bond portfolio.
Average duration, measured in years, represents the approximate percentage
change in the value of a bond portfolio if interest rates move up or down by one
percentage point (i.e., 1%). Therefore, longer portfolio durations typically
mean greater sensitivity to changes in interest rates.
Fixed-Income Security Types
Corporate Bonds--debt securities or instruments issued by companies and
corporations. Short-term corporate securities are typically issued to raise cash
and cover current expenses in anticipation of future revenues; long-term
corporate securities are issued to finance capital expenditures, such as new
plant construction or equipment purchases.
Foreign Government Securities--debt securities issued or guaranteed by
foreign governments or their political subdivisions. Some of these securities
are direct obligations of the issuing government; others are backed by some form
of government sponsorship.
Mortgage-Backed Securities--debt securities that represent ownership in pools
of mortgage loans. Most mortgage-backed securities are structured as
"pass-throughs"--the monthly payments of principal and interest on the mortgages
in the pool are collected by the bank that securitized the mortgages and are
"passed through" to investors. While the payments of principal and interest are
considered secure (many are backed by government agency guarantees), the cash
flow is less certain than in other fixed-income investments. Mortgages that are
paid off early reduce future interest payments from the pool.
U.S. Government Agency Securities--debt securities issued by U.S. government
agencies (such as the Federal Home Loan Bank and the Federal Farm Credit Bank).
Some agency securities are backed by the full faith and credit of the U.S.
government, while others are guaranteed only by the issuing agency. Government
agency securities include discount notes (maturing in one year or less) and
medium-term notes, debentures and bonds (maturing in three months to 50 years).
U.S. Treasury Securities--debt securities issued by the U.S. Treasury and
backed by the direct "full faith and credit" pledge of the U.S. government.
Treasury securities include bills (maturing in one year or less), notes
(maturing in two to ten years) and bonds (maturing in more than ten years).
Annual Report Glossary 25
[american century logo]
American
Century(sm)
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-Person Assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
American Century Manager Funds
Investment Manager
Benham Management Corporation
Mountain View, California
This report and the financial statements contained herein are submitted for the
general information of our shareholders. The report is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
American Century Investment Services, Inc.
9701 [recycled logo]
SH-BKT-6148 Recycled
