American Century Investment Trust NCSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-7822
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AMERICAN CENTURY INVESTMENT TRUST
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(Exact name of registrant as specified in charter)

4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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(Address of principal executive offices) (Zip code)

CHARLES A. ETHERINGTON, 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
- --------------------------------------------------------------------------------
(Name and address of agent for service)

Registrant's telephone number, including area code: 816-531-5575
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Date of fiscal year end: 03-31
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Date of reporting period: 09-30-2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
[front cover]

AMERICAN CENTURY INVESTMENTS
Semiannual Report September 30, 2007

[photo of fall]

Prime Money Market Fund

[american century investments logo and text logo]

OUR MESSAGE TO YOU

To help you monitor your investment, my colleagues and I take pride in
providing you with the semiannual report for the American Century® Prime Money
Market Fund for the six months ended September 30, 2007. This has been an
eventful and exciting period for us. We've been working diligently to secure a
smooth executive leadership transition.

I'm honored to be addressing you in the "Our Message" space long devoted to
company founder Jim Stowers, Jr. and his son Jim Stowers III. The Stowers
family remains an integral part of our heritage, leadership, and financial
structure. Jim Jr. continues as co-chair of the American Century Companies,
Inc. (ACC) board of directors with Richard Brown, who has been on the board
since 1998 and co-chairs the Stowers Institute for Medical Research board.

But times and opportunities change. As the latest step in a career transition
that began when he relinquished his executive leadership and investment
management responsibilities in early 2005, Jim III stepped down from the ACC
board in July 2007 to focus on new business ventures. Jim III's move reflects
his family's comfort with our direction and leadership, and gives the Stowers
more leeway to devote time and energy to other important priorities, such as
the Stowers Institute for Medical Research.

Meanwhile, American Century Investments, our clients, and our employees have
been my top priority since I became company president and CEO in March. We've
also added the executive talents of overall chief investment officer Enrique
Chang, international equity CIO Mark On, U.S. growth equity CIO Steve Lurito,
and chief operating officer Barry Fink.

This skilled group, combined with our existing senior management team, has
already had a positive impact on the development and management of the
products and services we take pride in delivering to you.

/s/Jonathan Thomas
Jonathan Thomas

[photo of Jonathan Thomas]

Jonathan Thomas
PRESIDENT
AMERICAN CENTURY COMPANIES, INC.

[photo of James E. Stowers, Jr.]

James E. Stowers, Jr.
FOUNDER AND CO-CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.

[photo of Richard Brown]

Richard Brown
CO-CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.

TABLE OF CONTENTS

Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2
U.S. Fixed-Income Total Returns. . . . . . . . . . . . . . . . . . 2

PRIME MONEY MARKET FUND

Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 4
Portfolio Composition by Credit Rating . . . . . . . . . . . . . . 4
Yields and Weighted Average Maturity . . . . . . . . . . . . . . . 4
Portfolio Composition by Maturity. . . . . . . . . . . . . . . . . 5
Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . 6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 8

FINANCIAL STATEMENTS

Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 14
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 15
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 16
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 17
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 21

OTHER INFORMATION

Proxy Voting Results. . . . . . . . . . . . . . . . . . . . . . . . . 25
Approval of Management Agreement for Prime Money Market . . . . . . . 27
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . 32
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 33
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 34

The opinions expressed in the Market Perspective and the Portfolio Commentary
reflect those of the portfolio management team as of the date of the report,
and do not necessarily represent the opinions of American Century or any other
person in the American Century organization. Any such opinions are subject to
change at any time based upon market or other conditions and American Century
disclaims any responsibility to update such opinions. These opinions may not
be relied upon as investment advice and, because investment decisions made by
American Century funds are based on numerous factors, may not be relied upon
as an indication of trading intent on behalf of any American Century fund.
Security examples are used for representational purposes only and are not
intended as recommendations to purchase or sell securities. Performance
information for comparative indices and securities is provided to American
Century by third party vendors. To the best of American Century's knowledge,
such information is accurate at the time of printing.

MARKET PERSPECTIVE

[photo of Chief Investment Officer]

By David MacEwen, Chief Investment Officer, Fixed-Income

MODEST GROWTH, INFLATION, BOND RETURNS

U.S. bonds managed positive returns during the six months ended September 30,
2007. But the ride was bumpy -- bond market volatility surged to the highest
level in years as waves from the bursting housing and subprime mortgage
bubbles spread to the broader economy and financial markets.

U.S. economic growth was moderate over the last four complete calendar
quarters, running at an approximately 2 - 3% average annual rate. Many
economists are calling for sub-2% growth going forward. Inflation slowed, as
the trailing 12-month percentage change in core consumer prices (without
volatile food and energy prices) finished September at 2.1%. That's down from
2.9% as recently as September 2006.

To help alleviate some of the market and economic concerns, the Federal
Reserve (the Fed) lowered its benchmark federal funds rate target in
September. This came on top of cuts to its discount rate in both August and
September -- the Fed's first rate cuts since June 2003.

RATES FELL, CURVE STEEPENED

Against that backdrop, Treasury yields generally declined. The yield on the
two-year Treasury note fell from 4.58% to 3.99%; however, yields on
longer-term notes and bonds fell less. That's because investors worried about
the potential long-term inflation effects of Fed rate cuts, high energy and
commodity prices, and a weaker dollar. As a result, the yield curve (a graphic
representation of bond yields at different maturities) fell and steepened --
the difference in yield between two- and 10-year Treasury securities increased
sharply from seven to 60 basis points (a basis point equals 0.01%).

HIGH-QUALITY BONDS DID BEST

The volatility, credit, and liquidity concerns in the market all favored
Treasury securities over higher-yielding, lower-quality alternatives (see the
returns table above). So, for example, while the Treasury market enjoyed its
best quarter in five years from July to September, July was one of the worst
months on record for high-yield bonds. Treasury inflation-indexed securities
performed best because of their combination of high credit quality and
inflation protection.

U.S. Fixed-Income Total Returns
For the six months ended September 30, 2007*

TREASURY SECURITIES
3-Month Bill 2.69%
2-Year Note 3.25%
5-Year Note 3.60%
10-Year Note 2.72%
30-Year Bond 2.57%

CITIGROUP US BOND MARKET INDICES
High-Yield (corporate) 0.65%
Credit (investment-grade corporate) 1.50%
Mortgage 2.16%
Broad Investment-Grade (multi-sector) 2.42%
Agency 3.04%
Treasury 3.38%
Inflation-Linked Securities 3.76%

*Total returns for periods less than one year are not annualized.

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2

PERFORMANCE
Prime Money Market

Total Returns as of September 30, 2007
Average Annual Returns
6 10 Since Inception
months(1) 1 year 5 years years Inception Date
INVESTOR CLASS 2.46%(2) 4.95%(2) 2.55% 3.49% 3.93% 11/17/93

90-DAY U.S.
TREASURY BILL
INDEX 2.24% 4.73% 2.79% 3.55% 3.95%(3) --

LIPPER MONEY
MARKET
INSTRUMENT
FUNDS AVERAGE
RETURN(4) 2.26% 4.56% 2.24% 3.19% 3.69%(3) --

Fund's Lipper
Ranking among
Money Market
Instrument 41 of 25 of
Funds(4) 62 of 348 58 of 334 61 of 294 188 122(3) --

A Class(5)
No sales
charge* 2.33%(2) 4.69%(2) 2.30% -- 3.06%

With sales
charge* 1.33%(2) 4.69%(2) 2.30% -- 3.06% 8/28/98

B Class
No sales
charge* 1.95%(2) 3.91%(2) -- -- 1.85%(2)

With sales
charge* -3.05%(2) -0.09%(2) -- -- 1.45%(2) 1/31/03

C Class
No sales
charge* 2.07%(2) 4.17%(2) 1.88%(2) -- 1.79%(2)

With sales
charge* 1.32%(2) 4.17%(2) 1.88%(2) -- 1.79%(2) 5/7/02

* Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. (Please see the Share Class Information page
for more about the applicable sales charges for each share class.) The SEC
requires that mutual funds provide performance information net of maximum
sales charges in all cases where charges could be applied.

(1) Total returns for periods less than one year are not annualized.

(2) Class returns would have been lower if American Century had not
voluntarily waived a portion of its management fees or its distribution and
service fees, as applicable.

(3) Since 11/30/93, the date nearest the Investor Class's inception for which
data are available.

(4) Data provided by Lipper Inc. - A Reuters Company. © 2007 Reuters. All
rights reserved. Any copying, republication or redistribution of Lipper
content, including by caching, framing or similar means, is expressly
prohibited without the prior written consent of Lipper. Lipper shall not be
liable for any errors or delays in the content, or for any actions taken in
reliance thereon.

Lipper Fund Performance -- Performance data is total return, and is
preliminary and subject to revision.

Lipper Rankings -- Rankings are based only on the universe shown and are
based on average annual total returns. This listing might not represent the
complete universe of funds tracked by Lipper.

The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by Lipper
and may be incomplete. No offer or solicitations to buy or sell any of the
securities herein is being made by Lipper.

(5) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class. Performance, with sales charge, prior to that date has been adjusted to
reflect the A Class's current sales charge.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the
performance shown. To obtain performance data current to the most recent month
end, please call 1-800-345-2021 or visit americancentury.com.

An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the fund.

The 7-day current yield more closely reflects the current earnings of the fund
than the total return.

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3

PORTFOLIO COMMENTARY
Prime Money Market

Lead Portfolio Manager: Denise Latchford
Macro Strategy Team Representative: Steven Permut

PERFORMANCE SUMMARY

Prime Money Market returned 2.46%* for the six months ended September 30,
2007, outperforming the 2.26% average return of the 348 funds in Lipper Inc.'s
Money Market Funds category. The portfolio's six-month return ranked in the
top 18% of the Lipper category, and its five- and 10-year returns ranked in
the top 21% and 22%, respectively, of the Lipper group (see the previous page).

CREDIT CRUNCH PROMPTED FED RATE CUTS

For much of the reporting period, a lingering threat of inflation kept the
Federal Reserve (Fed) on hold, and the federal (fed) funds rate target at
5.25%. Despite increasing burdens on economic growth from the housing market
slump and high energy prices, the Fed continued to view inflation as a bigger
concern than recession. Money market rates declined slightly during this
period of Fed inactivity. This was due to reduced Treasury bill issuance
stemming from surprisingly strong federal tax receipts in April.

In late July, credit and liquidity concerns took hold of the financial
markets. The bulk of the problems were confined to the bond market, but the
panic eventually filtered through to the asset-backed segment of the money
market. Many organizations regularly use asset-backed commercial paper. They
issue this short-term debt to purchase higher-yielding, longer-term
securities, such as those backed by credit card debt, student loans and
mortgage loans. But what was unclear and worrisome to many investors was the
extent of subprime mortgage exposure within these asset-backed and structured
finance securities.

The mounting credit crisis sent investors fleeing to the safety of U.S.
Treasury securities. It also sent U.S. economic growth prospects tumbling.

* All fund returns, rankings and yields referenced in this commentary are for
Investor Class shares. Class returns would have been lower had management fees
not been waived. Total returns for periods less than one year are not
annualized.

Portfolio Composition by Credit Rating
% of fund % of fund
investments investments
as of as of
9/30/07 3/31/07
A-1+ 74% 72%
A-1 26% 28%

Ratings provided by independent research companies. These ratings are listed
in Standard & Poor's format even if they were provided by other sources.

Yields and Weighted Average Maturity

7-DAY CURRENT YIELD* AS OF SEPTEMBER 30, 2007
Investor Class 4.87%
A Class 4.62%
B Class 3.87%
C Class 4.12%

7-DAY EFFECTIVE YIELD* AS OF SEPTEMBER 30, 2007
Investor Class 4.99%
A Class 4.73%
B Class 3.94%
C Class 4.20%

9/30/07 3/31/07
Weighted Average
Maturity 45 days 43 days

* The yields presented reflect the waiver of a portion of the fund's
management fees. Without such waiver, the 7-day yields would have been lower.

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4

Prime Money Market

The Fed took action, first cutting the discount rate in August and later, on
September 18, reducing the fed funds rate target to 4.75% as it cut the
discount rate again. These represented the Fed's first rate cuts since June
25, 2003.

The yield on the benchmark three-month Treasury bill fell 123 basis points
during the reporting period from 5.04% to 3.81% (a basis point equals 0.01%).
The bulk of the decline occurred during the third quarter of 2007, when the
yield dropped 100 basis points.

PORTFOLIO STRATEGY

Prime Money Market's 7-day current yield ended the reporting period at 4.87%,
only one basis point higher than it was on March 31, 2007.

Early in the reporting period we extended the portfolio's average maturity to
approximately 50 days, which helped lock in higher yields in a declining-yield
environment. Then, with credit concerns mounting and the demand for Treasury
bills skyrocketing, the portfolio's average maturity began drifting downward.
The heightened demand meant there were fewer bills available and,
consequently, little opportunity to maintain a longer average maturity.

At the height of the credit meltdown, we reaffirmed our commitment to
liquidity, focusing on the shortest-term, most-liquid securities. The
portfolio held no securities exposed to the subprime market and no
mortgage-related asset-backed commercial paper. Such securities do not meet
the portfolio's stringent selection criteria. At the same time, the portfolio
avoided any securities the team felt were at risk of losing liquidity due to
the "contagion effect."

With a Fed rate cut imminent, we attempted to extend the portfolio's average
maturity by purchasing longer-term CDs and commercial paper. Extending was not
easy, though, as longer-term paper remained in limited supply. The portfolio's
average maturity ended the reporting period at 45 days.

OUTLOOK

Based on futures prices at the end of the reporting period, the bond market
expected the Fed to cut the fed funds rate target at least one more time by
the end of 2007. We agree with that market assessment. We also believe the Fed
still faces a major challenge in shoring up confidence in the financial
markets without igniting inflation or re-inflating the speculative bubbles
that developed in the credit, real estate and leveraged-buyout markets. Going
forward we think the Fed will proceed cautiously in cutting rates, to further
assess economic conditions and the impact of September's unexpectedly large
rate cut.

Portfolio Composition by Maturity
% of fund % of fund
investments investments
as of as of
9/30/07 3/31/07
1-30 days 47% 56%
31-90 days 42% 32%
91-180 days 10% 9%
More than 180 days 1% 3%

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5

SHAREHOLDER FEE EXAMPLE (UNAUDITED)

Fund shareholders may incur two types of costs: (1) transaction costs,
including sales charges (loads) on purchase payments and redemption/exchange
fees; and (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other fund expenses. This example is intended to
help you understand your ongoing costs (in dollars) of investing in your fund
and to compare these costs with the ongoing cost of investing in other mutual
funds.

The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from April 1, 2007 to September 30, 2007.

ACTUAL EXPENSES

The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.

If you hold Investor Class shares of any American Century fund, or
Institutional Class shares of the American Century Diversified Bond Fund, in
an American Century account (i.e., not a financial intermediary or retirement
plan account), American Century may charge you a $12.50 semiannual account
maintenance fee if the value of those shares is less than $10,000. We will
redeem shares automatically in one of your accounts to pay the $12.50 fee. In
determining your total eligible investment amount, we will include your
investments in all PERSONAL ACCOUNTS (including American Century Brokerage
accounts) registered under your Social Security number. PERSONAL ACCOUNTS
include individual accounts, joint accounts, UGMA/UTMA accounts, personal
trusts, Coverdell Education Savings Accounts and IRAs (including traditional,
Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement
accounts. If you have only business, business retirement, employer-sponsored
or American Century Brokerage accounts, you are currently not subject to this
fee. We will not charge the fee as long as you choose to manage your accounts
exclusively online. If you are subject to the Account Maintenance Fee, your
account value could be reduced by the fee amount.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is
not the actual return of a fund's share class. The hypothetical account values
and expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare
this 5% hypothetical example with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transactional
costs were included, your costs would have been higher.

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6

Expenses Paid
Beginning During
Account Ending Period(1) Annualized
Value Account Value 4/1/07 - Expense
4/1/07 9/30/07 9/30/07 Ratio(1)
ACTUAL

Investor Class (after
waiver)(2) $1,000 $1,024.60 $2.78 0.55%

Investor Class (before
waiver) $1,000 $1,024.60(3) $2.99 0.59%

A Class (after
waiver)(2) $1,000 $1,023.30 $4.05 0.80%

A Class (before waiver) $1,000 $1,023.30(3) $4.25 0.84%

B Class (after
waiver)(2) $1,000 $1,019.50 $7.83 1.55%

B Class (before waiver) $1,000 $1,019.50(3) $8.03 1.59%

C Class (after
waiver)(2) $1,000 $1,020.70 $6.57 1.30%

C Class (before waiver) $1,000 $1,020.70(3) $6.77 1.34%

HYPOTHETICAL

Investor Class (after
waiver)(2) $1,000 $1,022.25 $2.78 0.55%

Investor Class (before
waiver) $1,000 $1,022.05 $2.98 0.59%

A Class (after
waiver)(2) $1,000 $1,021.00 $4.04 0.80%

A Class (before waiver) $1,000 $1,020.80 $4.24 0.84%

B Class (after
waiver)(2) $1,000 $1,017.25 $7.82 1.55%

B Class (before waiver) $1,000 $1,017.05 $8.02 1.59%

C Class (after
waiver)(2) $1,000 $1,018.50 $6.56 1.30%

C Class (before waiver) $1,000 $1,018.30 $6.76 1.34%

(1) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 183, the number of days in the most recent fiscal half-year,
divided by 366, to reflect the one-half year period.

(2) During the six months ended September 30, 2007, the class received a
partial waiver of its management fees.

(3) Ending account value assumes the return earned after waiver. The return
would have been lower had fees not been waived and would have resulted in a
lower ending account value.

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7

SCHEDULE OF INVESTMENTS
PRIME MONEY MARKET

SEPTEMBER 30, 2007 (UNAUDITED)

Principal Amount Value

Commercial Paper(1) -- 50.9%

$28,000,000 Allied Irish Banks N.A., 5.20%, 10/29/07
(Acquired 5/29/07, Cost $27,381,200)(2) $ 27,886,755
9,000,000 Amstel Funding Corp., 5.20%, 11/21/07 (Acquired
6/4/07, Cost $8,779,000)(2) 8,933,700
25,000,000 Bank of America Corp., 5.19%, 11/30/07 24,783,958
15,000,000 BASF AG, 5.25%, 10/2/07 (Acquired 7/2/07,
Cost $14,798,750)(2) 14,997,813
8,000,000 Cedar Springs Capital Co., 5.75%, 10/1/07
(Acquired 9/28/07, Cost $7,996,167)(2) 8,000,000
12,600,000 Cedar Springs Capital Co., 6.30%, 10/19/07
(Acquired 9/5/07, Cost $12,502,980)(2) 12,560,310
13,000,000 Cedar Springs Capital Co., 6.28%, 11/16/07
(Acquired 9/5/07, Cost $12,836,720)(2) 12,895,682
50,000,000 Chariot Funding LLC, 6.10%, 11/13/07 (Acquired
8/31/07, Cost $49,373,056)(2) 49,635,694
15,000,000 Chariot Funding LLC, 5.15%, 11/27/07 (Acquired
9/25/07, Cost $14,864,813)(2) 14,877,687
13,000,000 Chariot Funding LLC, 5.50%, 12/14/07 (Acquired
9/17/07, Cost $12,825,222)(2) 12,853,028
40,000,000 Charta LLC, 5.26%, 11/6/07 (Acquired 8/1/07,
Cost $39,433,089)(2) 39,789,600
30,000,000 Charta LLC, 5.80%, 1/28/08 (Acquired 8/31/07,
Cost $29,294,333)(2) 29,424,833
19,000,000 Citibank Credit Card Issuance Trust, Series 2007
A3, 6.05%, 10/31/07 (Acquired 8/17/07, Cost
$18,760,521)(2) 18,904,209
50,000,000 Cobbler Funding Ltd./Cobbler Funding LLC, 5.28%,
10/25/07 (Acquired 7/25/07, Cost $49,325,333)(2) 49,824,000
7,000,000 Cobbler Funding Ltd./Cobbler Funding LLC, 5.21%,
1/23/08 (Acquired 6/12/07, Cost $6,774,089)(2) 6,884,512
18,000,000 CRC Funding LLC, 5.27%, 11/5/07 (Acquired
8/3/07, Cost $17,752,310)(2) 17,907,775
19,400,000 CRC Funding LLC, 5.95%, 11/13/07 (Acquired
9/13/07, Cost $19,204,410)(2) 19,262,125

Principal Amount Value

$40,000,000 CRC Funding LLC, 5.05%, 1/29/08 (Acquired
9/21/07, Cost $39,270,556)(2) $ 39,326,667
31,349,000 Crown Point Capital Co., 5.24%, 10/18/07
(Acquired 7/17/07-7/30/07, Cost $30,927,012)(2) 31,271,390
1,013,000 Crown Point Capital Co., 5.30%, 10/22/07
(Acquired 7/30/07, Cost $1,000,473)(2) 1,009,868
33,000,000 Crown Point Capital Co., 5.27%, 11/9/07
(Acquired 8/3/07-9/28/07, Cost $32,618,283)(2) 32,811,565
10,000,000 Crown Point Capital Co., 5.85%, 2/25/08
(Acquired 9/17/07, Cost $9,738,375)(2) 9,761,125
2,200,000 Danske Corp., 5.23%, 11/19/07 (Acquired 6/22/07,
Cost $2,152,104)(2) 2,184,354
50,000,000 Danske Corp., 5.36%, 3/4/08 (Acquired 8/31/07,
Cost $48,645,111)(2) 48,846,111
2,575,000 Depfa Bank plc, 5.55%, 10/22/07 (Acquired
8/13/07, Cost $2,547,211)(2) 2,566,663
28,000,000 Depfa Bank plc, 5.45%, 11/13/07 (Acquired
8/13/07, Cost $27,610,022)(2) 27,817,728
30,000,000 Emerald Notes of the BA Credit Card Trust,
5.26%, 10/29/07 (Acquired 7/23/07, Cost
$29,570,842)(2) 29,877,384
8,000,000 Emerald Notes of the BA Credit Card Trust,
5.28%, 11/1/07 (Acquired 8/1/07, Cost
$7,892,053)(2) 7,963,626
10,000,000 Govco Incorporated, 5.25%, 10/2/07 (Acquired
7/2/07, Cost $9,865,833)(2) 9,998,541
46,000,000 Govco Incorporated, 5.24%, 10/23/07 (Acquired
7/23/07, Cost $45,384,009)(2) 45,852,698
10,000,000 Govco Incorporated, 5.21%, 12/31/07 (Acquired
7/2/07, Cost $9,736,606)(2) 9,868,303
5,000,000 HBOS Treasury Services plc, 5.17%, 11/13/07 4,969,153
20,000,000 HBOS Treasury Services plc, 5.67%, 12/10/07 19,779,500
15,000,000 ING (U.S.) Funding LLC, 5.25%, 11/5/07 14,923,511
15,000,000 ING (U.S.) Funding LLC, 5.01%, 12/3/07 14,868,488
50,000,000 ING (U.S.) Funding LLC, 5.19%, 12/4/07 49,538,666

- ------
8

Prime Money Market

Principal Amount Value

$36,000,000 Legacy Capital LLC, 6.30%, 10/19/07 (Acquired
9/5/07, Cost $35,779,500)(2) $ 35,943,300
629,000 Legacy Capital LLC, 5.34%, 10/24/07 (Acquired
8/6/07, Cost $621,629)(2) 626,854
6,000,000 Legacy Capital LLC, 5.30%, 11/7/07 (Acquired
8/6/07, Cost $5,917,850)(2) 5,967,316
30,000,000 Legacy Capital LLC, 6.28%, 11/16/07 (Acquired
9/5/07, Cost $29,623,200)(2) 29,759,267
15,000,000 Lexington Parker Capital, 5.26%, 10/5/07
(Acquired 6/26/07, Cost $14,780,833)(2) 14,991,234
10,000,000 Lexington Parker Capital, 5.25%, 10/31/07
(Acquired 9/25/07, Cost $9,947,500)(2) 9,956,250
14,000,000 Lexington Parker Capital, 5.30%, 11/6/07
(Acquired 8/6/07, Cost $13,810,378)(2) 13,925,800
4,000,000 Lexington Parker Capital, 5.25%, 11/14/07
(Acquired 9/28/07, Cost $3,972,583)(2) 3,974,333
24,000,000 Lexington Parker Capital, 5.90%, 2/5/08
(Acquired 9/14/07, Cost $23,433,600)(2) 23,500,467
13,000,000 Lexington Parker Capital, 5.85%, 2/25/08
(Acquired 9/17/07, Cost $12,659,888)(2) 12,689,463
50,000,000 Morgan Stanley, 5.65%, 12/6/07 49,482,084
35,000,000 Ranger Funding Co. LLC, 5.15%, 12/14/07
(Acquired 9/24/07, Cost $34,594,438)(2) 34,629,486
10,000,000 Societe Generale, 5.25%, 10/17/07 9,976,689
1,287,000 Societe Generale, 5.25%, 10/22/07 1,283,059
30,000,000 Societe Generale, 5.21%, 11/2/07 29,861,200
20,000,000 Societe Generale, 5.65%, 12/5/07 19,795,972
10,600,000 Societe Generale, 5.35%, 12/21/07 10,472,403
15,000,000 Toronto Dominion Holdings, 5.70%, 11/8/07
(Acquired 9/4/07, Cost $14,845,760)(2) 14,909,829
35,000,000 Triple A One Funding Corp., 6.41%, 10/16/07
(Acquired 9/7/07, Cost $34,756,954)(2) 34,906,521
8,000,000 Triple A One Funding Corp., 5.33%, 10/30/07
(Acquired 9/26/07, Cost $7,959,729)(2) 7,965,651
36,480,000 Triple A One Funding Corp., 6.30%, 11/13/07
(Acquired 9/4/07, Cost $36,033,120)(2) 36,205,488

Principal Amount Value

$14,500,000 Tulip Funding Corp., 5.25%, 10/25/07 (Acquired
9/25/07, Cost $14,436,563)(2) $ 14,449,250
40,000,000 UBS Finance LLC, 5.27%, 10/3/07 39,988,289
6,000,000 UBS Finance LLC, 5.25%, 10/22/07 5,981,625
10,000,000 UBS Finance LLC, 5.39%, 1/18/08 9,836,803
7,500,000 UBS Finance LLC, 5.40%, 2/11/08 7,350,375
6,000,000 Variable Funding Capital Corp. LLC, 5.90%,
11/21/07 (Acquired 8/23/07, Cost $5,911,500)(2) 5,949,850
1,700,000 Westpac Securities NZ Ltd., 5.70%, 10/23/07
(Acquired 8/16/07, Cost $1,681,697)(2) 1,694,078
2,934,000 Westpac Securities NZ Ltd., 5.65%, 11/8/07
(Acquired 8/16/07, Cost $2,895,320)(2) 2,916,502
8,500,000 Westpac Securities NZ Ltd., 5.45%, 11/30/07
(Acquired 8/21/07, Cost $8,370,033)(2) 8,422,792
30,000,000 Westpac Securities NZ Ltd., 5.41%, 12/19/07
(Acquired 9/18/07, Cost $29,589,742)(2) 29,643,842
40,000,000 Windmill Funding Corp., 5.24%, 10/9/07 (Acquired
7/10/07, Cost $39,470,178)(2) 39,953,422
19,000,000 Windmill Funding Corp., 6.20%, 10/19/07
(Acquired 9/12/07, Cost $18,878,928)(2) 18,941,100
7,000,000 Windmill Funding Corp., 5.15%, 11/2/07 (Acquired
9/19/07, Cost $6,955,939)(2) 6,967,956
40,000,000 Yorktown Capital LLC, 5.10%, 12/20/07 (Acquired
9/21/07, Cost $39,490,000)(2) 39,546,667
--------------
TOTAL COMMERCIAL PAPER 1,405,122,239
--------------

Corporate Bonds -- 20.0%
3,135,000 A&M Hospital Convention Center, VRN, 5.18%,
10/4/07 (LOC: Columbus Bank & Trust) 3,135,000
1,250,000 A&M Hospitalities LLC, VRN, 5.18%, 10/4/07 (LOC:
Columbus Bank & Trust) 1,250,000
5,500,000 AIK Partners LLC, VRN, 5.15%, 10/4/07 (LOC:
Wachovia Bank N.A.) 5,500,000
15,500,000 American Honda Finance Corp., VRN, 5.20%,
12/21/07, resets quarterly off the 3-month
T-Bill minus 0.04% with no caps (Acquired
9/5/07, Cost $15,490,158)(2) 15,491,234

- ------
9

Prime Money Market

Principal Amount Value

$46,000,000 Berkshire Hathaway Finance Corp., VRN, 5.41%,
10/11/07, resets quarterly off the 3-month LIBOR
plus 0.05% with no caps $ 46,012,502
25,000,000 Berkshire Hathaway Finance Corp., VRN, 5.59%,
11/16/07, resets quarterly off the 3-month
T-Bill plus 0.06% with no caps 25,002,162
1,910,000 Capital Markets Access Co. LLC, VRN, 5.20%,
10/4/07 1,910,000
5,685,000 Capital Markets Access Co. LLC, VRN, 5.20%,
10/4/07 5,685,000
890,000 Capital Markets Access Co. LLC, VRN, 5.20%,
10/4/07 890,000
4,295,000 Chaffee Point Hospitalities LLC, VRN, 5.18%,
10/4/07 (LOC: Columbus Bank & Trust) 4,295,000
13,170,000 Cityscape SCP, LLC/Cityscape Turnberry,
LLC/Cityscape Lakeside, LLC/et al, VRN, 5.16%,
10/4/07 (LOC: Columbus Bank & Trust) 13,170,000
2,295,000 Coastal Area Stores Inc./Tattnall Foods Inc.,
VRN, 5.18%, 10/4/07 (LOC: Columbus Bank & Trust) 2,295,000
3,550,000 Colorado Natural Gas Inc., VRN, 5.16%, 10/4/07
(LOC: Harris Trust & Savings Bank) 3,550,000
3,275,000 Delos LLC, VRN, 5.18%, 10/4/07 (LOC: Fifth Third
Bank) 3,275,000
4,658,000 FIA Credit Services, N.A., 5.375%, 1/15/08 4,656,354
8,105,000 Fiore Capital LLC, VRN, 5.13%, 10/4/07 8,105,000
2,000,000 Freehold Young Men's Christian Association
(The), VRN, 5.13%, 10/4/07 (LOC: Wachovia Bank
N.A.) 2,000,000
25,000,000 General Electric Capital Corp., VRN, 5.42%,
10/3/07, resets quarterly off the 3-month T-Bill
plus 0.06% with no caps 25,006,352
10,100,000 General Electric Capital Corp., VRN, 5.66%,
12/3/07, resets quarterly off the 3-month LIBOR
plus 0.04% with no caps 10,103,504
23,000,000 Great Falls Clinic, LLP, VRN, 5.30%, 10/3/07
(LOC: Bank of America N.A.) 23,000,000
21,000,000 Gwinnett Instructional LLC, VRN, 5.13%, 10/4/07
(LOC: Allied Irish Bank plc) 21,000,000

Principal Amount Value

$ 1,490,000 Herman & Kittle Capital LLC, VRN, 5.15%, 10/4/07
(LOC: FHLB) $ 1,490,000
23,655,000 KMS Fed Ex L.P., VRN, 5.40%, 10/1/07 (LOC: Union
Bank of California) 23,655,000
40,000,000 MBIA Global Funding LLC, VRN, 4.25%, 10/2/07,
resets weekly off the 3-month T-Bill plus 0.33%
with no caps (Acquired 4/11/07, Cost
$40,000,000)(2) 40,000,000
15,000,000 MBIA Global Funding LLC, VRN, 4.63%, 1/22/08,
resets quarterly off the 3-month T-Bill plus
0.33% with no caps (Acquired 8/30/07, Cost
$15,000,000)(2) 15,000,000
7,100,000 Mullenix-St Charles Properties LP, VRN, 5.12%,
10/4/07 (LOC: Wachovia Bank N.A.) 7,100,000
20,000,000 Natixis, VRN, 4.91%, 10/1/07, resets daily off
the Federal Funds Target Rate plus 0.16% with no
caps 20,000,000
33,000,000 Natixis, VRN, 4.91%, 10/1/07, resets daily off
the Federal Funds Target Rate plus 0.16% with no
caps 33,000,000
5,300,000 Oklahoma Christian University Inc., VRN, 5.17%,
10/4/07 (LOC: FHLB) 5,300,000
5,350,000 Roman Catholic Bishop of San Jose, VRN, 5.13%,
10/4/07 (LOC: Allied Irish Bank plc) 5,350,000
25,000,000 Royal Bank of Scotland Group plc, VRN, 5.24%,
12/21/07, resets quarterly off the 3-month LIBOR
with no caps (Acquired 1/8/07, Cost
$25,012,625)(2) 25,002,973
7,500,000 Salvation Army, Series 2003 A, VRN, 5.13%,
10/4/07 (LOC: Bank of New York) 7,500,000
8,000,000 Salvation Army, Series 2004 A, VRN, 5.13%,
10/4/07 (LOC: Bank of New York) 8,000,000
15,100,000 Signal International LLC/Signal International
L.P., VRN, 5.13%, 10/4/07 (LOC: General Electric
Capital Corp.) (Acquired 12/29/05, Cost
$15,100,000)(2) 15,100,000
7,000,000 Southwest Georgia Oil Co. Inc., VRN, 5.18%,
10/4/07 7,000,000
21,000,000 Toyota Motor Credit Corp., 5.32%, 6/2/08 21,000,000

- ------
10

Prime Money Market

Principal Amount Value

$10,000,000 Toyota Motor Credit Corp., VRN, 4.24%, 10/2/07,
resets weekly off the 3-month T-Bill plus 0.32%
with no caps $ 10,000,000
10,000,000 Toyota Motor Credit Corp., VRN, 4.24%, 10/2/07,
resets weekly off the 3-month T-Bill plus 0.32%
with no caps 10,000,000
41,000,000 Travelers Insurance Co. Group, VRN, 5.41%,
11/2/07, resets quarterly off the 3-month LIBOR
plus 0.06% with no caps (Acquired 8/7/03, Cost
$41,000,000)(2) 41,000,000
20,000,000 UBS AG, 5.40%, 11/28/07 20,000,000
10,490,000 Woodgrain Millwork, VRN, 5.16%, 10/4/07 (LOC:
General Electric Capital Corp.) 10,490,000
--------------
TOTAL CORPORATE BONDS 551,320,081
--------------
Municipal Securities -- 16.2%

12,000,000 Association of Bay Area Governments Finance
Auth. for Nonprofit Corps. Rev., Series 2007 B,
(Casa De Las Campanas, Inc.), VRDN, 6.50%,
10/4/07 (RADIAN) (SBBPA: KBC Bank N.V.) 12,000,000
4,380,000 Babylon Industrial Development Agency Rev.,
Series 2004 A, (Topiderm Inc.), VRDN, 5.16%,
10/4/07 (LOC: Citibank N.A.) 4,380,000
4,850,000 Calexico Unified School District COP,
(Refinancing Project), VRDN, 5.16%, 10/4/07
(XLCA) (SBBPA: Wachovia Bank N.A.) 4,850,000
8,160,000 California Educational Facilities Auth. Rev.,
Series 2005 B, (University La Verne), VRDN,
5.19%, 10/4/07 (LOC: Allied Irish Bank plc) 8,160,000
24,270,000 California Statewide Communities Development
Auth. Rev., Series 2002 B, (Biola University),
VRDN, 5.30%, 10/4/07 (LOC: BNP Paribas) 24,270,000
34,000,000 Catholic Health Initiatives Rev., Series 2007 B,
5.38%, 11/6/07 34,000,000
5,420,000 City of Fairfield Rev., Series 2005 A, VRDN,
5.13%, 10/4/07 (LOC: Landesbank Hessen-Thuringen
Girozentrale) 5,420,000

Principal Amount Value

$38,000,000 City of Portland GO, (Taxable Pension), VRDN,
5.13%, 10/3/07 (SBBPA: Landesbank
Hessen-Thuringen Girozentrale) $ 37,999,636
3,265,000 Columbus Development Auth. Rev., (Woodmont
Properties LLC), VRDN, 5.21%, 10/4/07 (LOC:
Columbus Bank & Trust) 3,265,000
19,665,000 Concordia College Rev., VRDN, 5.13%, 10/1/07
(LOC: Bank of America N.A.) 19,665,000
20,000,000 Cook County GO, Series 2005 D, (Public
Improvements), VRDN, 5.17%, 10/3/07 (SBBPA:
Depfa Bank plc) 20,000,000
2,715,000 El Monte COP, Series 2003 B, (Community
Improvement), VRDN, 5.17%, 10/4/07 (LOC:
California State Teacher's Retirement System) 2,715,000
22,000,000 Florida Hurricane Catastrophe Fund Financing
Corp. Rev., Series 2006 B, VRDN, 5.96%,
10/15/07, resets monthly off the 1-month LIBOR
plus 0.02% with no caps 22,000,000
6,720,000 Gadsden Airport Auth. Rev., VRDN, 5.15%, 10/4/07
(LOC: Southtrust Bank N.A.) 6,720,000
7,670,000 Georgia Municipal Gas Auth. Rev., (National Gas
Utility Improvements), VRDN, 5.16%, 10/4/07
(LOC: Wachovia Bank N.A. and JPMorgan Chase Bank) 7,670,000
15,000,000 Groton City GO, Series 2007 B, 6.00%, 10/10/07 15,002,149
5,750,000 JJB Properties LLC Rev., (Rental Property),
VRDN, 5.12%, 10/4/07 (LOC: Arvest Bank and FHLB) 5,750,000
10,690,000 Kansas City Financing Commission Tax Increment
Rev., Series 2006 B, (Briarcliff West), VRDN,
5.14%, 10/4/07 (LOC: Marshall & Isley Bank) 10,690,000
1,400,000 Las Cruces Industrial Rev., (F&A Dairy
Products), VRDN, 5.63%, 12/1/07 (LOC: Wells
Fargo Bank N.A.) 1,400,000
2,880,000 Long Beach Rev., Series 2004 A, (Towne Center
Site), VRDN, 5.12%, 10/4/07 (LOC: Allied Irish
Bank plc) 2,880,000

- ------
11

Prime Money Market

Principal Amount Value

$21,250,000 Louisiana Agriculture Finance Auth. Rev.,
(Lacassine Syrup Mill), VRDN, 5.17%, 10/4/07
(LOC: AmSouth Bank) $ 21,250,000
8,200,000 Lower Colorado River Auth. Rev., 5.37%, 11/1/07 8,200,000
6,070,000 Minnesota Higher Education Facilities Auth.
Rev., Series 2003 5-P2, (Concordia University,
St. Paul), VRDN, 5.17%, 10/1/07 (LOC: U.S. Bank
N.A.) 6,070,000
6,400,000 Mississippi Business Finance Corp. Rev.,
(Medical Development Properties), VRDN, 5.13%,
10/4/07 (LOC: BancorpSouth Bank and FHLB) 6,400,000
3,525,000 Mississippi Business Finance Corp. Rev.,
(Millsaps Chevrolet-Pontiac-Buick-GMC Truck,
Inc.), VRDN, 5.13%, 10/4/07 (LOC: National Bank
of Commerce and FHLB) 3,525,000
11,000,000 Mississippi Business Finance Corp. Rev.,
(Skyline Steel Pipe), VRDN, 5.13%, 10/4/07 (LOC:
Fortis Bank SA N.V.) 11,000,000
7,500,000 Mississippi Business Finance Corp. Rev., Series
2005, (Future Pipe Industries, Inc.), VRDN,
5.13%, 10/4/07 (LOC: Mashreqbank and Bank of New
York) 7,500,000
5,000,000 Mississippi Business Finance Corp. Rev., Series
2006 R-1, (Brown Bottling Group, Inc.), VRDN,
5.13%, 10/4/07 (LOC: FHLB) 5,000,000
10,000,000 Mississippi Business Finance Corp. Industrial
Development Rev., (VC Regional Assembly), VRDN,
5.21%, 10/3/07 (LOC: JPMorgan Chase Bank) 10,000,000
18,640,000 New Orleans Rev., VRDN, 5.38%, 10/4/07 (Ambac)
(SBBPA: JPMorgan Chase Bank) 18,640,000
24,000,000 North Texas Higher Education Auth., Inc. Student
Loan Rev., Series 2006 D, VRDN, 5.13%, 10/3/07
(Ambac/Guaranteed Student Loans) (SBBPA: Lloyds
TSB Bank plc) 24,000,000
5,000,000 Omaha Special Obligation Rev., (Riverfront
Redevelopment), VRDN, 5.18%, 10/3/07 (Ambac)
(SBBPA: Dexia Credit Local) 5,000,000

Principal Amount Value

$10,300,000 Pasadena COP, (Los Robles Avenue Parking
Facilities), VRDN, 5.13%, 10/2/07 (LOC: Bank of
New York and California State Teacher's
Retirement System) $ 10,300,000
20,000,000 Pennsylvania Housing Finance Agency Single
Family Mortgage Rev., Series 2007-97D, VRDN,
5.13%, 10/3/07 (SBBPA: Dexia Credit Local) 20,000,000
945,000 Plymouth Rev., (Carlson Center), VRDN, 5.15%,
10/4/07 (LOC: U.S. Bank N.A.) 945,000
9,990,000 Putnam County Industrial Development Agency
Rev., (Sincerity Facility LLC), VRDN, 5.13%,
10/4/07 (LOC: Bank of New York) 9,990,000
5,000,000 Roman Catholic Diocese of Raleigh Rev., Series
2002 A, VRDN, 5.18%, 10/4/07 (LOC: Bank of
America N.A.) 5,000,000
4,755,000 Santa Rosa Pension Obligation Rev., Series 2003
A, VRDN, 5.13%, 10/4/07 (LOC: Landesbank
Hessen-Thuringen Girozentrale) 4,755,000
6,761,331 Savannah College of Art & Design Inc. Rev.,
Series 2004 BD, VRDN, 5.30%, 10/4/07 (LOC: Bank
of America N.A.) 6,761,331
10,845,000 Southeast Alabama Gas District Rev., VRDN,
5.15%, 10/4/07 (XLCA) (SBBPA: Southtrust Bank
N.A.) 10,845,000
4,145,000 Sterling Tax Allocation Rev., (Rock River
Redevelopment), VRDN, 5.20%, 10/3/07 (LOC:
Wachovia Bank N.A.) 4,145,000
--------------
TOTAL MUNICIPAL SECURITIES 448,163,116
--------------

Certificates Of Deposit -- 10.2%

65,000,000 Barclays Bank plc, 5.32%, 12/4/07 65,000,000
30,000,000 Calyon New York, 5.04%, 12/19/07 30,000,000
10,000,000 Canadian Imperial Bank of Commerce (New York),
5.28%, 10/12/07 9,999,275
5,000,000 Canadian Imperial Bank of Commerce (New York),
5.375%, 10/26/07 4,999,550
20,000,000 Comerica Bank, 5.41%, 11/26/07 20,000,721
7,930,000 HBOS Treasury Services plc (New York), 5.31%,
10/16/07 7,929,800

- ------
12

Prime Money Market

Principal Amount Value

$25,000,000 HBOS Treasury Services plc (New York), 5.26%,
1/8/08 $ 25,000,000
15,000,000 HBOS Treasury Services plc (New York), 5.33%,
5/30/08 14,990,940
12,600,000 Natixis (New York), 5.26%, 1/9/08 12,591,835
25,000,000 Royal Bank of Scotland (New York), 5.45%, 3/14/08 25,002,265
65,000,000 Toronto Dominion Bank (New York), VRN, 4.75%,
10/1/07, resets daily off the Federal Funds
Target Rate plus 0.07% with no caps 65,000,000
--------------
TOTAL CERTIFICATES OF DEPOSIT 280,514,386
--------------
TOTAL INVESTMENT SECURITIES -- 97.3% 2,685,119,822
--------------
OTHER ASSETS AND LIABILITIES -- 2.7% 74,765,406
--------------
TOTAL NET ASSETS -- 100.0% $2,759,885,228
==============

Notes to Schedule of Investments

Ambac = Ambac Assurance Corporation

COP = Certificates of Participation

FHLB = Federal Home Loan Bank

GO = General Obligation

LIBOR = London Interbank Offered Rate

LOC = Letter of Credit

MBIA = MBIA Insurance Corporation

RADIAN = Radian Asset Assurance, Inc.

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.

SBBPA = Standby Bond Purchase Agreement

VRDN = Variable Rate Demand Note. Interest reset date is indicated. Rate shown
is effective September 30, 2007.

VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is
effective September 30, 2007.

XLCA = XL Capital Ltd.

(1) The rate indicated is 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 September 30, 2007,
was $1,243,824,671, which represented 45.1% of total net assets. Restricted
securities considered illiquid represent 1.5% of total net assets.

See Notes to Financial Statements.

- ------
13

STATEMENT OF ASSETS AND LIABILITIES

SEPTEMBER 30, 2007 (UNAUDITED)

ASSETS

Investment securities, at value (amortized cost and cost for
federal income tax purposes) $2,685,119,822

Cash 74,107,644

Interest receivable 14,128,544

Prepaid portfolio insurance 135,619
--------------
2,773,491,629
--------------

LIABILITIES

Payable for investments purchased 11,969,346

Payable for capital shares redeemed 33,377

Accrued management fees 1,161,633

Distribution fees payable 1,304

Service fees (and distribution fees - A Class) payable 24,815

Dividends payable 415,926
--------------
13,606,401
--------------

NET ASSETS $2,759,885,228
==============

NET ASSETS CONSIST OF:

Capital paid in $2,759,951,840

Accumulated net realized loss on investment transactions (66,612)
--------------
$2,759,885,228
==============

INVESTOR CLASS

Net assets $2,636,105,848

Shares outstanding 2,636,169,741

Net asset value per share $1.00

A CLASS

Net assets $121,628,789

Shares outstanding 121,631,551

Net asset value per share $1.00

B CLASS

Net assets $1,131,000

Shares outstanding 1,131,074

Net asset value per share $1.00

C CLASS

Net assets $1,019,591

Shares outstanding 1,019,596

Net asset value per share $1.00

See Notes to Financial Statements.

- ------
14

STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED)

INVESTMENT INCOME (LOSS)

INCOME:

Interest $65,347,215
-----------

EXPENSES:

Management fees 6,874,105

Distribution fees:

A Class 5,569

B Class 3,367

C Class 1,907

Service fees:

A Class 5,569

B Class 1,122

C Class 954

Distribution and service fees - A Class 24,520

Distribution and service fees - A Class (old) (Note 5) 121,458

Trustees' fees and expenses 56,324

Portfolio insurance and other expenses 218,541
-----------
7,313,436

Amount waived (482,538)
-----------
6,830,898
-----------

NET INVESTMENT INCOME (LOSS) 58,516,317
-----------

NET REALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS (24,092)
-----------

NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $58,492,225
===========

See Notes to Financial Statements.

- ------
15

STATEMENT OF CHANGES IN NET ASSETS

SIX MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED) AND YEAR ENDED MARCH 31, 2007

Increase (Decrease) in Net Assets Sept. 30, 2007 March 31, 2007

OPERATIONS

Net investment income (loss) $58,516,317 $105,957,150

Net realized gain (loss) (24,092) (3,528)
-------------- --------------
Net increase (decrease)
in net assets resulting
from operations 58,492,225 105,953,622
-------------- --------------

DISTRIBUTIONS TO SHAREHOLDERS

From net investment income:

Investor Class (55,702,276) (101,854,192)

A Class (559,725) (153,038)

A Class (old) (Note 5) (2,221,170) (3,877,527)

B Class (17,406) (45,130)

C Class (15,740) (27,263)
-------------- --------------
Decrease in net assets
from distributions (58,516,317) (105,957,150)
-------------- --------------

CAPITAL SHARE TRANSACTIONS

Net increase (decrease)
in net assets from
capital share transactions 484,561,153 244,090,701
-------------- --------------

NET INCREASE (DECREASE) IN NET ASSETS 484,537,061 244,087,173

NET ASSETS

Beginning of period 2,275,348,167 2,031,260,994
-------------- --------------
End of period $2,759,885,228 $2,275,348,167
============== ==============

See Notes to Financial Statements.

- ------
16

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Investment Trust (the trust) is registered
under the Investment Company Act of 1940 (the 1940 Act) as an open-end
management investment company. Prime Money Market Fund (the fund) is one fund
in a series issued by the trust. The fund is diversified under Rule 2a-7 of
the 1940 Act. The fund's investment objective is to earn the highest level of
current income while preserving the value of your investment. The fund invests
most of its assets in high-quality, very short-term debt securities issued by
corporations, banks and governments. The following is a summary of the fund's
significant accounting policies.

MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the A
Class (formerly Advisor Class), the B Class and the C Class. The A Class, B
Class and C Class may be subject to a contingent deferred sales charge. The
share classes differ principally in their respective sales charges and
distribution and shareholder servicing 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. Income, non-class specific expenses, and realized and unrealized
capital gains and losses of the fund are allocated to each class of shares
based on their relative net assets.

SECURITY VALUATIONS -- Securities are generally valued at amortized cost,
which approximates current market value. When such valuations do not reflect
market value, securities may be valued as determined in accordance with
procedures adopted by the Board of Trustees.

SECURITY TRANSACTIONS -- For financial reporting, 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.

REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) 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 collateral, represented by securities,
received 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. ACIM monitors, on a daily basis,
the securities transferred to ensure the value, including accrued interest, of
the securities under each repurchase agreement is equal to or greater than
amounts owed to the fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management agreements with ACIM or American
Century Global Investment Management, Inc. (ACGIM), may transfer uninvested
cash balances into a joint trading account. These balances are invested in one
or more repurchase agreements that are collateralized by U.S. Treasury or
Agency obligations.

WHEN-ISSUED AND FORWARD COMMITMENTS -- The fund may engage in securities
transactions on a when-issued or forward commitment basis. Under these
arrangements, the securities' prices and yields are fixed on the date of the
commitment, but payment and delivery are scheduled for a future date. During
this period, securities are subject to market fluctuations. The fund will
segregate cash, cash equivalents or other appropriate liquid securities on its
records in amounts sufficient to meet the purchase price.

INCOME TAX STATUS -- It is the fund's policy to distribute substantially all
net investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. The fund is no longer subject to examination by tax authorities
for years prior to 2004. At this time, management has not identified any
uncertain tax positions that would materially impact the financial statements.
Accordingly, no provision has been made for federal or state income taxes.
Interest and penalties associated with any federal or state income tax
obligations, if any, are recorded as interest expense.

- ------
17

SEPTEMBER 30, 2007 (UNAUDITED)

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income and
short-term capital gains, if any, are declared daily and paid monthly. The
fund does not expect to realize any long-term capital gains, and accordingly,
does not expect to pay any capital gains distributions.

INDEMNIFICATIONS -- Under the trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the fund. In addition, in the normal course of
business, the fund enters into contracts that provide general
indemnifications. The fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the fund.
The risk of material loss from such claims is considered by management to be
remote.

USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America,
which may require management to make certain estimates and assumptions at the
date of the financial statements. Actual results could differ from these
estimates.

2. FEES AND TRANSACTIONS WITH RELATED PARTIES

On July 27, 2007, the A Class (formerly Advisor Class, also referred to as "A
Class (new)") shareholders of the fund approved a change in the class's fee
structure. The change was approved by the Board of Trustees on December 8,
2006. Effective September 4, 2007, the fee structure change resulted in an
increase of 0.25% in the unified management fee and a simultaneous decrease of
0.25% in total distribution and service fee, resulting in no change to the
total operating expense ratio of the class.

MANAGEMENT FEES -- The trust has entered into a Management Agreement with
ACIM, under which ACIM provides the fund with investment advisory and
management services in exchange for a single, unified management fee (the fee)
per class. The Agreement provides that all expenses of the fund, except
brokerage commissions, taxes, portfolio insurance, interest, fees and expenses
of those trustees who are not considered "interested persons" as defined in
the 1940 Act (including counsel fees) and extraordinary expenses, will be paid
by ACIM. The fee is computed and accrued daily based on the daily net assets
of the specific class of shares of the fund and paid monthly in arrears. The
fee consists of (1) an Investment Category Fee based on the daily net assets
of the fund and certain other accounts managed by the investment advisor that
are in the same broad investment category as the fund and (2) a Complex Fee
based on the assets of all the funds in the American Century family of funds.
The rates for the Investment Category Fee range from 0.2370% to 0.3500% and
the rates for the Complex Fee (Investor Class, A Class, B Class and C Class)
range from 0.2500% to 0.3100%. Prior to September 4, 2007, the A Class (new)
was 0.2500% less at each point within the Complex Fee range. From August 1,
2006 to July 31, 2007, the investment advisor voluntarily agreed to waive
0.050% of its management fee. Effective August 1, 2007, the investment advisor
voluntarily agreed to waive 0.021% of its management fee. The total amount of
the waiver for each class of the fund for the six months ended September 30,
2007, was $457,716, $2,988, $21,518, $173, and $143 for the Investor Class, A
Class (new), A Class (old), B Class and C Class, respectively. This fee waiver
may be revised or terminated at any time without notice. The effective annual
management fee before waiver for each class of the fund for the six months
ended September 30, 2007 was 0.57% for the Investor Class, B Class and C
Class, and 0.36% for the A Class (new). The effective annual management fee
after waiver for each class of the fund for the six months ended September 30,
2007 was 0.53% for the Investor Class, B Class and C Class, and 0.32% for the
A Class (new).

DISTRIBUTION AND SERVICE FEES -- The Board of Trustees has adopted a separate
Master Distribution and Individual Shareholder Services Plan for each of the A
Class, B Class and C Class (collectively the plans), pursuant to Rule 12b-1 of
the 1940 Act. The plans provide that the A Class will pay American Century
Investment Services, Inc. (ACIS) an annual distribution and service fee of
0.25%. The plans provide that the B Class and the C Class will each pay ACIS
an annual distribution fee of 0.75% and service fee of 0.25%. Prior to
September 4, 2007, the Board of Trustees had adopted a Master Distribution and
Shareholder Services plan for the A Class (new), pursuant to Rule 12b-1 of the
1940 Act, in which the A Class (new) paid ACIS an annual distribution fee of
0.25% and service fee of 0.25%. The fees are computed and accrued daily based
on each class's daily net assets and paid monthly in arrears. The distribution
fee provides compensation for expenses incurred in connection with
distributing shares of the classes including, but not limited to, payments to
brokers, dealers, and financial institutions that have entered into sales
agreements with respect to shares of the fund. The service fee provides
compensation for individual shareholder services rendered by broker/dealers or
other independent financial intermediaries for A Class (new), A Class (old), B
Class and C Class shares. Prior to September 4, 2007, the service fee provided
compensation for shareholder and administrative

- ------
18

SEPTEMBER 30, 2007 (UNAUDITED)

services rendered by ACIS, its affiliates or independent third party providers
for A Class (new) shares. Fees incurred under the plans during the six months
ended September 30, 2007, are detailed in the Statement of Operations.

MONEY MARKET INSURANCE -- The fund, along with other money market funds
managed by ACIM, has entered into an insurance agreement with Ambac Assurance
Corporation (Ambac). Ambac provides limited coverage for certain loss events
including issuer defaults as to payment of principal or interest and
insolvency of a credit enhancement provider. The fund pays annual premiums to
Ambac, which are amortized daily over one year. For the six months ended
September 30, 2007, the annualized ratio of money market insurance expense to
average net assets was 0.02%.

JPMorgan Chase Bank is a custodian of the fund and a wholly owned subsidiary
of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.

3. CAPITAL SHARE TRANSACTIONS

Transactions in shares of the fund were as follows (unlimited number of shares
authorized):

Six months ended Year ended
September 30, 2007 March 31, 2007
Shares Amount Shares Amount

INVESTOR CLASS

Sold 1,477,313,978 $1,477,313,978 2,293,636,505 $2,293,636,505

Issued in
reinvestment of
distributions 52,526,281 52,526,281 97,522,574 97,522,574

Redeemed (1,049,510,214) (1,049,510,214) (2,217,321,520) (2,217,321,520)
--------------- --------------- --------------- ---------------
480,330,045 480,330,045 173,837,559 173,837,559
--------------- --------------- --------------- ---------------
A CLASS

Sold 24,831,684 24,831,684 3,411,695 3,411,695

Issued in
connection with
reclassification
(Note 5) 109,222,892 109,218,798 -- --

Issued in
reinvestment of
distributions 474,910 474,910 149,117 149,117

Redeemed (17,082,694) (17,082,694) (2,520,839) (2,520,839)
--------------- --------------- --------------- ---------------
117,446,792 117,442,698 1,039,973 1,039,973
--------------- --------------- --------------- ---------------
A CLASS (OLD)

Sold 64,249,272 64,249,272 198,542,700 198,542,700

Issued in
reinvestment of
distributions 1,551,046 1,551,046 3,203,673 3,203,673

Redeemed in
connection with
reclassification
(Note 5) (109,222,892) (109,218,798) -- --

Redeemed (70,578,778) (70,578,778) (132,900,813) (132,900,813)
--------------- --------------- --------------- ---------------
(114,001,352) (113,997,258) 68,845,560 68,845,560
--------------- --------------- --------------- ---------------
B CLASS

Sold 394,263 394,263 2,159,121 2,159,121

Issued in
reinvestment of
distributions 15,709 15,709 42,105 42,105

Redeemed (117,368) (117,368) (1,497,102) (1,497,102)
--------------- --------------- --------------- ---------------
292,604 292,604 704,124 704,124
--------------- --------------- --------------- ---------------
C CLASS

Sold 712,712 712,712 821,690 821,690

Issued in
reinvestment of
distributions 14,685 14,685 26,399 26,399

Redeemed (234,333) (234,333) (1,184,604) (1,184,604)
--------------- --------------- --------------- ---------------
493,064 493,064 (336,515) (336,515)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 484,561,153 $ 484,561,153 244,090,701 $244,090,701
=============== =============== =============== ===============

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19

SEPTEMBER 30, 2007 (UNAUDITED)

4. FEDERAL TAX INFORMATION

The book-basis 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 reflect
the differing character of certain income items and net realized gains and
losses for financial statement and tax purposes, and may result in
reclassification among certain capital accounts on the financial statements.

As of March 31, 2007, the fund had accumulated net realized capital loss
carryovers for federal income tax purposes of $(41,623), which may be used to
offset future taxable gains. The capital loss carryovers expire as follows:

2010 2011 2012 2013 2014 2015

$(13,456) $(36) -- $(11,584) $(2,029) $(14,518)

Capital loss deferrals of $(897) represent net capital losses incurred in the
five-month period ended March 31, 2007. The fund has elected to treat such
losses as having been incurred in the following fiscal year for federal income
tax purposes.

5. CORPORATE EVENT

Effective September 4, 2007, the A Class (old) shares of the fund were
reclassified as Advisor Class shares. Subsequent to the reclassification, the
Advisor Class was renamed A Class. The change was approved by the Board of
Trustees on December 8, 2006.

6. RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
Interpretation of FASB Statement No. 109" (FIN 48). FIN 48 establishes a
minimum threshold for financial statement recognition of the benefit of
positions taken in filing tax returns (including whether an entity is taxable
in a particular jurisdiction), and requires certain expanded tax disclosures.
FIN 48 is effective for fiscal years beginning after December 15, 2006, and is
to be applied to all open tax years as of the date of effectiveness.
Management has concluded that the adoption of FIN 48 will not materially
impact the financial statements.

The FASB issued Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" (FAS 157), in September 2006, which is effective for
fiscal years beginning after November 15, 2007. FAS 157 defines fair value,
establishes a framework for measuring fair value and expands the required
financial statement disclosures about fair value measurements. Management is
currently evaluating the impact that adopting FAS 157 will have on the
financial statement disclosures.

- ------
20

FINANCIAL HIGHLIGHTS
Prime Money Market

Investor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003

PER-SHARE DATA

Net Asset
Value,
Beginning of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------- -------- -------- -------- -------- --------
Income From
Investment
Operations

Net
Investment
Income
(Loss) 0.02 0.05 0.03 0.01 0.01 0.01
--------- -------- -------- -------- -------- --------
Distributions

From Net
Investment
Income (0.02) (0.05) (0.03) (0.01) (0.01) (0.01)
--------- -------- -------- -------- -------- --------
Net Asset
Value, End of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
========= ======== ======== ======== ======== ========

TOTAL RETURN(2) 2.46% 4.83% 3.28% 1.19% 0.58% 1.19%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net
Assets 0.55%(3)(4) 0.55%(3) 0.57%(3) 0.60% 0.61% 0.61%

Ratio of
Operating
Expenses to
Average Net
Assets (Before
Expense Waiver) 0.59%(4) 0.59% 0.60% 0.61%
0.59% 0.61%

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 4.87%(3)(4) 4.73%(3) 3.24%(3) 1.17% 0.58% 1.19%

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (Before
Expense Waiver) 4.83%(4) 4.69% 3.22% 1.17% 0.58% 1.19%

Net Assets, End
of Period (in
thousands) $2,636,106 $2,155,800 $1,981,964 $1,964,135 $2,126,433 $2,574,694

(1) Six months ended September 30, 2007 (unaudited).

(2) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized.

(3) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(4) Annualized.

See Notes to Financial Statements.

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21

Prime Money Market

A Class(1)
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(2) 2007 2006 2005 2004 2003
PER-SHARE DATA

Net Asset Value,
Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----------- -------- -------- ------ ------ ------
Income From
Investment
Operations

Net Investment
Income (Loss) 0.02 0.04 0.03 0.01 --(3) 0.01
----------- -------- -------- ------ ------ ------
Distributions

From Net
Investment
Income (0.02) (0.04) (0.03) (0.01) --(3) (0.01)
----------- -------- -------- ------ ------ ------
Net Asset Value,
End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=========== ======== ======== ====== ====== ======

TOTAL RETURN(4) 2.33% 4.58% 3.02% 0.94% 0.33% 0.93%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating
Expenses to Average
Net Assets 0.80%(5)(6) 0.80%(5) 0.82%(5) 0.85% 0.86% 0.86%

Ratio of Operating
Expenses to Average
Net Assets (Before
Expense Waiver) 0.84%(6) 0.84% 0.84% 0.85% 0.86% 0.86%

Ratio of Net
Investment Income
(Loss) to Average
Net Assets 4.62%(5)(6) 4.48%(5) 2.99%(5) 0.92% 0.33% 0.94%

Ratio of Net
Investment Income
(Loss) to Average
Net Assets (Before
Expense Waiver) 4.58%(6) 4.44% 2.97% 0.92% 0.33% 0.94%

Net Assets, End of
Period (in
thousands) $121,629 $4,185 $3,145 $2,560 $3,055 $5,431

(1) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class.

(2) Six months ended September 30, 2007 (unaudited).

(3) Per-share amount was less than $0.005.

(5) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(6) Annualized.

See Notes to Financial Statements.

- ------
22

Prime Money Market

B Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA

Net Asset
Value,
Beginning of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----------- -------- -------- -------- -------- ----------
Income From
Investment
Operations

Net
Investment
Income
(Loss) 0.02 0.04 0.02 --(3) --(3) --(3)
----------- -------- -------- -------- -------- ----------
Distributions

From Net
Investment
Income (0.02) (0.04) (0.02) --(3) --(3) --(3)
----------- -------- -------- -------- -------- ----------
Net Asset
Value, End of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=========== ======== ======== ======== ======== ==========

TOTAL RETURN(4) 1.95% 3.80% 2.26% 0.34% 0.22% 0.12%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net
Assets 1.55%(5)(6) 1.55%(5) 1.57%(5) 1.48%(7) 0.99%(7) 0.61%(6)(7)

Ratio of
Operating
Expenses to
Average Net
Assets (Before
Expense Waiver) 1.59%(6) 1.59% 1.59% 1.60% 1.61% 1.61%(6)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 3.87%(5)(6) 3.73%(5) 2.24%(5) 0.29%(7) 0.20%(7) 0.76%(6)(7)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (Before
Expense Waiver) 3.83%(6) 3.69% 2.22% 0.17% (0.42)% (0.24)%(6)

Net Assets, End
of Period (in
thousands) $1,131 $838 $134 $97 $74 $25

(1) Six months ended September 30, 2007 (unaudited).

(2) January 31, 2003 (commencement of sale) through March 31, 2003.

(3) Per-share amount was less than $0.005.

(5) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(6) Annualized.

(7) The distributor voluntarily waived a portion of its distribution and
service fees.

See Notes to Financial Statements.

- ------
23

Prime Money Market

C Class
For a Share Outstanding Throughout the Years Ended March 31 (except as
noted)
2007(1) 2007 2006 2005 2004 2003(2)

PER-SHARE DATA

Net Asset
Value,
Beginning of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----------- -------- -------- -------- -------- -----------
Income From
Investment
Operations

Net
Investment
Income
(Loss) 0.02 0.04 0.02 0.01 --(3) --(3)
----------- -------- -------- -------- -------- -----------
Distributions

From Net
Investment
Income (0.02) (0.04) (0.02) (0.01) --(3) --(3)
----------- -------- -------- -------- -------- -----------
Net Asset
Value, End of
Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=========== ======== ======== ======== ======== ===========

TOTAL RETURN(4) 2.07% 4.06% 2.51% 0.57% 0.09% 0.40%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net
Assets 1.30%(5)(6) 1.30%(5) 1.32%(5) 1.28%(7) 1.10%(7) 1.34%(6)(7)

Ratio of
Operating
Expenses to
Average Net
Assets (Before
Expense Waiver) 1.34%(6) 1.34% 1.34% 1.35% 1.36% 1.36%(6)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 4.12%(5)(6) 3.98%(5) 2.49%(5) 0.49%(7) 0.09%(7) 0.47%(6)(7)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (Before
Expense Waiver) 4.08%(6) 3.94% 2.47% 0.42% (0.17)% 0.45%(6)

Net Assets, End
of Period (in
thousands) $1,020 $527 $863 $604 $96 $40

(1) Six months ended September 30, 2007 (unaudited).

(2) May 7, 2002 (commencement of sale) through March 31, 2003.

(3) Per-share amount was less than $0.005.

(5) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(6) Annualized.

(7) The distributor voluntarily waived a portion of its distribution and
service fees.

See Notes to Financial Statements.

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24

PROXY VOTING RESULTS

A special meeting of shareholders was held on July 27, 2007, to vote on the
following proposals. The proposals received the required number of votes of
the American Century Investment Trust or the applicable fund, depending on the
proposal, and were adopted. A summary of voting results is listed below each
proposal.

PROPOSAL 1:

To elect eight Trustees to the Board of Trustees of American Century
Investment Trust (the proposal was voted on by all shareholders of funds
issued by American Century Investment Trust).

Jonathan S. Thomas For: 3,336,300,729
Withhold: 35,929,005
Abstain: 0
Broker Non-Vote: 0

John Freidenrich For: 3,337,319,127
Withhold: 34,910,607
Abstain: 0
Broker Non-Vote: 0

Ronald J. Gilson For: 3,337,806,752
Withhold: 34,422,982
Abstain: 0
Broker Non-Vote: 0

Kathryn A. Hall For: 3,337,653,997
Withhold: 34,575,737
Abstain: 0
Broker Non-Vote: 0

Peter F. Pervere For: 3,336,793,063
Withhold: 35,436,671
Abstain: 0
Broker Non-Vote: 0

Myron S. Scholes For: 3,335,709,158
Withhold: 36,520,576
Abstain: 0
Broker Non-Vote: 0

John B. Shoven For: 3,337,333,277
Withhold: 34,896,457
Abstain: 0
Broker Non-Vote: 0

Jeanne D. Wohlers For: 3,336,368,531
Withhold: 35,861,203
Abstain: 0
Broker Non-Vote: 0

- ------
25

PROPOSAL 2:

To approve a change in the fee structure of the Advisor Class. This proposal
was voted on by the Advisor Class shareholders of the fund.

For: 1,955,971
Against: 144,822
Abstain: 13,584
Broker Non-Vote: 500,497

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26

APPROVAL OF MANAGEMENT AGREEMENT
Prime Money Market

Under Section 15(c) of the Investment Company Act, contracts for investment
advisory services are required to be reviewed, evaluated and approved by a
majority of a fund's independent directors or trustees (the "Directors") each
year. At American Century, this process is referred to as the "15(c) Process."
As a part of this process, the board reviews fund performance, shareholder
services, audit and compliance information, and a variety of other reports
from the advisor concerning fund operations. In addition to this annual
review, the board of directors oversees and evaluates on a continuous basis at
its quarterly meetings the nature and quality of significant services
performed by the advisor, fund performance, audit and compliance information,
and a variety of other reports relating to fund operations. The board, or
committees of the board, also holds special meetings as needed.

Under a Securities and Exchange Commission rule, each fund is required to
disclose in its annual or semiannual report, as appropriate, the material
factors and conclusions that formed the basis for the board's approval or
renewal of any advisory agreements within the fund's most recently completed
fiscal half-year period.

ANNUAL CONTRACT REVIEW PROCESS

As part of the annual 15(c) Process undertaken during the most recent fiscal
half-year period, the Directors reviewed extensive data and information
compiled by the advisor and certain independent providers of evaluative data
(the "15(c) Providers") concerning Prime Money Market (the "fund") and the
services provided to the fund under the management agreement. The information
considered and the discussions held at the meetings included, but were not
limited to:

* the nature, extent and quality of investment management, shareholder
services and other services provided to the fund under the management
agreement;

* reports on the advisor's activities relating to the wide range of programs
and services the advisor provides to the fund and its shareholders on a
routine and non-routine basis;

* data comparing the cost of owning the fund to the cost of owning a similar
fund;

* data comparing the fund's performance to appropriate benchmarks and/or a
peer group of other mutual funds with similar investment objectives and
strategies;

* financial data showing the profitability of the fund to the advisor and the
overall profitability of the advisor; and

* data comparing services provided and charges to other investment management
clients of the advisor.

In keeping with its practice, the fund's board of directors held two regularly
scheduled meetings to review and discuss the information provided by the
advisor and to complete its negotiations with the advisor regarding the
renewal of the management agreement, including the setting of the applicable
advisory fee. The board also had the benefit of the advice of its independent
counsel throughout the period.

- ------
27

FACTORS CONSIDERED

The Directors considered all of the information provided by the advisor, the
15(c) Providers, and the board's independent counsel, and evaluated such
information for each fund for which the board has responsibility. The
Directors did not identify any single factor as being all-important or
controlling, and each Director may have attributed different levels of
importance to different factors. In deciding to renew the agreement under the
terms ultimately determined by the board to be appropriate, the Directors'
decision was based on the following factors.

NATURE, EXTENT AND QUALITY OF SERVICES - GENERALLY. Under the management
agreement, the advisor is responsible for providing or arranging for all
services necessary for the operation of the fund. The board noted that under
the management agreement, the advisor provides or arranges at its own expense
a wide variety of services including:

* fund construction and design

* portfolio security selection

* initial capitalization/funding

* securities trading

* custody of fund assets

* daily valuation of the fund's portfolio

* shareholder servicing and transfer agency, including shareholder
confirmations, recordkeeping and communications

* legal services

* regulatory and portfolio compliance

* financial reporting

* marketing and distribution

The Directors noted that many of these services have expanded over time both
in terms of quantity and complexity in response to shareholder demands,
competition in the industry and the changing regulatory environment. In
performing their evaluation, the Directors considered information received in
connection with the annual review, as well as information provided on an
ongoing basis at their regularly scheduled board and committee meetings.

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28

services, the advisor utilizes teams of investment professionals (portfolio
managers, analysts, research assistants, and securities traders) who require
extensive information technology, research, training, compliance and other
systems to conduct their business. At each quarterly meeting the Directors
review investment performance information for the fund, together with
comparative information for appropriate benchmarks and peer groups of funds
managed similarly to the fund. The Directors also review detailed performance
information during the 15(c) Process. If performance concerns are identified,
the Directors discuss with the advisor the reasons for such results (e.g.,
market conditions, security selection) and any efforts being undertaken to
improve performance. The fund's performance for both the one- and three-year
periods was above the median for its peer group.

SHAREHOLDER AND OTHER SERVICES. The advisor provides the fund with a
comprehensive package of transfer agency, shareholder, and other services. The
Directors review reports and evaluations of such services at their regular
quarterly meetings, including the annual meeting concerning contract review,
and reports to the board. These reports include, but are not limited to,
information regarding the operational efficiency and accuracy of the
shareholder and transfer agency services provided, staffing levels,
shareholder satisfaction (as measured by external as well as internal
sources), technology support, new products and services offered to fund
shareholders, securities trading activities, portfolio valuation services,
auditing services, and legal and operational compliance activities. Certain
aspects of shareholder and transfer agency service level efficiency and the
quality of securities trading activities are measured by independent third
party providers and are presented in comparison to other fund groups not
managed by the advisor.

COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor
provides detailed information concerning its cost of providing various
services to the fund, its profitability in managing the fund, its overall
profitability, and its financial condition. The Directors have reviewed with
the advisor the methodology used to prepare this financial information. This
financial information regarding the advisor is considered in order to evaluate
the advisor's financial condition, its ability to continue to provide services
under the management agreement, and the reasonableness of the current
management fee.

ETHICS OF THE ADVISOR. The Directors generally consider the advisor's
commitment to providing quality services to shareholders and to conducting its
business ethically. They noted that the advisor's practices generally meet or
exceed industry best practices.

ECONOMIES OF SCALE. The Directors review reports provided by the advisor on
economies of scale for the complex as a whole and the year-over-year changes
in revenue, costs, and profitability. The Directors concluded that economies
of scale are difficult to measure and predict with precision, especially on a
fund-by-fund basis. This analysis is also complicated by the additional
services and content provided by the advisor and its reinvestment in its
ability to provide and expand those services. Accordingly, the Directors also
seek to evaluate economies of scale by reviewing other information, such as
year-over-year profitability of the advisor generally, the profitability of
its management of the fund specifically, the expenses incurred by the advisor
in providing various functions to the fund, and the breakpoint fees of
competitive funds not managed by the advisor. The Directors believe the
advisor is appropriately sharing

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29

economies of scale through its competitive fee structure, fee breakpoints as
the fund complex and the fund increases in size, and through reinvestment in
its business to provide shareholders additional content and services. In
particular, separate breakpoint schedules based on the size of the entire fund
complex and on the size of the fund reflect the complexity of assessing
economies of scale.

COMPARISON TO OTHER FUNDS' FEES. The fund pays the advisor a single,
all-inclusive (or unified) management fee for providing all services necessary
for the management and operation of the fund, other than brokerage expenses,
taxes, interest, extraordinary expenses, and the fees and expenses of the
fund's independent directors (including their independent legal counsel).
Under the unified fee structure, the advisor is responsible for providing all
investment advisory, custody, audit, administrative, compliance,
recordkeeping, marketing and shareholder services, or arranging and
supervising third parties to provide such services. By contrast, most other
funds are charged a variety of fees, including an investment advisory fee, a
transfer agency fee, an administrative fee, distribution charges and other
expenses. Other than their investment advisory fees and Rule 12b-1
distribution fees, all other components of the total fees charged by these
other funds may be increased without shareholder approval. The board believes
the unified fee structure is a benefit to fund shareholders because it clearly
discloses to shareholders the cost of owning fund shares, and, since the
unified fee cannot be increased without a vote of fund shareholders, it shifts
to the advisor the risk of increased costs of operating the fund and provides
a direct incentive to minimize administrative inefficiencies. Part of the
Directors' analysis of fee levels involves reviewing certain evaluative data
compiled by an independent provider and comparing the fund's unified fee to
the total expense ratio of other funds in the fund's peer group. The unified
fee charged to shareholders of the fund was slightly above the median of the
total expense ratios of its peer group.

COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The
Directors also requested and received information from the advisor concerning
the nature of the services, fees, and profitability of its advisory services
to advisory clients other than the fund. They observed that these varying
types of client accounts require different services and involve different
regulatory and entrepreneurial risks than the management of the fund. The
Directors analyzed this information and concluded that the fees charged and
services provided to the fund were reasonable by comparison.

COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information
from the advisor concerning collateral benefits it receives as a result of its
relationship with the fund. They concluded that the advisor's primary business
is managing mutual funds and it generally does not use fund or shareholder
information to generate profits in other lines of business, and therefore does
not derive any significant collateral benefits from them. The Directors noted
that the advisor receives proprietary research from broker-dealers that
execute fund portfolio transactions and concluded that this research is likely
to benefit fund shareholders. The Directors also determined that the advisor
is able to provide investment management services to certain clients other
than the fund, at least in part, due to its existing infrastructure built to
serve the fund complex. The Directors concluded, however, that the assets of
those other clients are not material to the analysis and, in any event, are
included with the assets of the fund to determine breakpoints in the fund's
fee schedule, provided they are managed using the same investment team and
strategy.

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30

CONCLUSIONS OF THE DIRECTORS

As a result of this process, the Directors negotiated a one-year waiver by the
advisor of a portion of the management fee. These changes were proposed by the
Directors based on their review of the fund's percentile rank in its peer
group universe and the fact that the Directors seek as a general rule to have
total expense ratios of fixed income and money market funds in the lowest 25th
percentile of the fees of comparable funds. The advisor accepted the principle
of the fee waiver based on the fact that the lower fee will result in
increased competitiveness of the fund within its peer group universe. The fee
waiver, effective August 1, 2007, will result in a lowering of the management
fee of the fund by 0.021 percentage points below the current management fee.
Following these negotiations with the advisor, the Directors concluded that
the investment management agreement between the fund and the advisor is fair
and reasonable in light of the services provided and should be renewed.

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31

SHARE CLASS INFORMATION

Four classes of shares are authorized for sale by the fund: Investor Class, A
Class, B Class, and C Class. The total expense ratios of A Class, B Class, and
C Class shares are higher than that of Investor Class shares.

INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; and/or 2) through
certain financial intermediaries (such as banks, broker-dealers, insurance
companies and investment advisors), which may require payment of a transaction
fee to the financial intermediary. The fund's prospectus contains additional
information regarding eligibility for Investor Class shares.

A CLASS shares are sold primarily through employer-sponsored retirement plans
and through institutions such as investment advisors, banks, broker-dealers,
and insurance companies. A Class shares are sold at their net asset value. If
you purchase A Class shares of the fund directly, a sales charge will apply
when you exchange into the A Class shares of another American Century Advisor
Fund, in accordance with the schedule set forth in that fund's prospectus. A
Class shares may be subject to a contingent deferred sales charge (CDSC).
There is no CDSC on shares acquired through reinvestment of dividends or
capital gains. The prospectus contains information regarding reductions and
waivers of sales charges for A Class shares. The unified management fee for A
Class shares is the same as for Investor Class shares. A Class shares also are
subject to a 0.25% annual Rule 12b-1 distribution and service fee.

B CLASS shares are sold primarily through employer-sponsored retirement plans
and through institutions such as investment advisors, banks, broker-dealers,
and insurance companies. B Class shares redeemed within six years of purchase
are subject to a CDSC that declines from 5.00% during the first year after
purchase to 0.00% after the sixth year. There is no CDSC on shares acquired
through reinvestment of dividends or capital gains. The unified management fee
for B Class shares is the same as for Investor Class shares. B Class shares
also are subject to a 1.00% annual Rule 12b-1 distribution and service fee. B
Class shares automatically convert to A Class shares (with lower expenses)
eight years after their purchase date.

C CLASS shares are sold primarily through employer-sponsored retirement plans
and through institutions such as investment advisors, banks, broker-dealers,
and insurance companies. C Class shares redeemed within 12 months of purchase
are subject to a CDSC of 0.75%. There is no CDSC on shares acquired through
reinvestment of dividends or capital gains. The unified management fee for C
Class shares is the same as for Investor Class shares. C Class shares also are
subject to a Rule 12b-1 distribution and service fee of 0.75%.

All classes of shares represent a pro rata interest in the fund and generally
have the same rights and preferences.

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32

ADDITIONAL INFORMATION

RETIREMENT ACCOUNT INFORMATION

As required by law, any distributions you receive from an IRA or certain
403(b), 457 and qualified plans [those not eligible for rollover to an IRA or
to another qualified plan] are subject to federal income tax withholding,
unless you elect not to have withholding apply. Tax will be withheld on the
total amount withdrawn even though you may be receiving amounts that are not
subject to withholding, such as nondeductible contributions. In such case,
excess amounts of withholding could occur. You may adjust your withholding
election so that a greater or lesser amount will be withheld.

If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. 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 notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right
to revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.

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.

State tax will be withheld if, at the time of your distribution, your address
is within one of the mandatory withholding states and you have federal income
tax withheld. State taxes will be withheld from your distribution in
accordance with the respective state rules.

PROXY VOTING GUIDELINES

American Century Investment Management, Inc., the fund's investment advisor,
is responsible for exercising the voting rights associated with the securities
purchased and/or held by the fund. A description of the policies and
procedures the advisor uses in fulfilling this responsibility is available
without charge, upon request, by calling 1-800-345-2021. It is also available
on American Century's website at americancentury.com and on the Securities and
Exchange Commission's website at sec.gov. Information regarding how the
investment advisor voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 is available on the "About Us" page
at americancentury.com. It is also available at sec.gov.

QUARTERLY PORTFOLIO DISCLOSURE

The fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission (SEC) for the first and third quarters of each fiscal
year on Form N-Q. The fund's Form N-Q is available on the SEC's website at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may
be obtained by calling 1-800-SEC-0330. The fund also makes its complete
schedule of portfolio holdings for the most recent quarter of its fiscal year
available on its website at americancentury.com and, upon request, by calling
1-800-345-2021.

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33

INDEX DEFINITIONS

The following indices are used to illustrate investment market, sector, or
style performance or to serve as fund performance comparisons. They are not
investment products available for purchase.

The 90-DAY U.S. TREASURY BILL INDEX is derived from secondary market interest
rates as published by the Federal Reserve Bank and includes three-month,
six-month, and one-year instruments.

The CITIGROUP AGENCY INDEX is a market-capitalization-weighted index that
includes U.S. government sponsored agencies with a remaining maturity of at
least one year.

The CITIGROUP CREDIT INDEX includes US and non-US corporate securities and
non-US sovereign and provincial securities.

The CITIGROUP MORTGAGE INDEX measures the mortgage component of the US BIG
Index, comprising 30-and 15-year GNMA, FNMA, and FHLMC pass-throughs and FNMA
and FHLMC balloon mortgages.

The CITIGROUP TREASURY INDEX is comprised of U.S. Treasury securities with an
amount outstanding of at least $5 billion and a remaining maturity of at least
one year.

The CITIGROUP US BROAD INVESTMENT-GRADE (BIG) BOND INDEX is a market-
capitalization-weighted index that includes fixed-rate Treasury,
government-sponsored, mortgage, asset-backed, and investment-grade issues with
a maturity of one year or longer.

The CITIGROUP US HIGH-YIELD MARKET INDEX captures the performance of
below-investment-grade debt issued by corporations domiciled in the United
States or Canada. This index includes cash-pay and deferred-interest
securities that are publicly placed, have a fixed coupon, and are
nonconvertible.

The CITIGROUP US INFLATION-LINKED SECURITIES INDEX (ILSI) measures the return
of bonds with fixed-rate coupon payments that adjust for inflation as measured
by the Consumer Price Index (CPI).

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34

NOTES

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35

NOTES

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36

[back cover]

AMERICANCENTURY.COM

AUTOMATED INFORMATION LINE:
1-800-345-8765

INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575

INVESTORS USING ADVISORS:
1-800-378-9878

BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533

BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL PROFESSIONALS, INSURANCE COMPANIES:
1-800-345-6488

TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485

AMERICAN CENTURY INVESTMENT TRUST

INVESTMENT ADVISOR:
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.

American Century Investments
P.O. Box 419200
Kansas City, MO 64141-6200

PRSRT STD
U.S. POSTAGE PAID
AMERICAN CENTURY
COMPANIES

American Century Investment Services, Inc., Distributor

The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.

0711
SH-SAN-56804S

[front cover]

AMERICAN CENTURY INVESTMENTS
Semiannual Report September 30, 2007

[photo of fall]

Diversified Bond Fund
High-Yield Fund

[american century investments logo and text logo]

OUR MESSAGE TO YOU

To help you monitor your investment, my colleagues and I take pride in
providing you with the semiannual report for the American Century® Diversified
Bond and High-Yield funds for the six months ended September 30, 2007. This
has been an eventful and exciting period for us. We've been working diligently
to secure a smooth executive leadership transition.

/s/Jonathan Thomas
Jonathan Thomas

[photo of Jonathan Thomas]

Jonathan Thomas
PRESIDENT
AMERICAN CENTURY COMPANIES, INC.

[photo of James E. Stowers, Jr.]

James E. Stowers, Jr.
FOUNDER AND CO-CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.

[photo of Richard Brown]

Richard Brown
CO-CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.

TABLE OF CONTENTS

Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2
U.S. Fixed-Income Total Returns. . . . . . . . . . . . . . . . . . . 2

DIVERSIFIED BOND

Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 5
Portfolio at a Glance. . . . . . . . . . . . . . . . . . . . . . . . 5
Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 6
Portfolio Composition by Credit Rating . . . . . . . . . . . . . . . 6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 7

HIGH-YIELD

Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 19
Portfolio at a Glance. . . . . . . . . . . . . . . . . . . . . . . . 19
Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Top Five Industries. . . . . . . . . . . . . . . . . . . . . . . . . 20
Portfolio Composition by Credit Rating . . . . . . . . . . . . . . . 20
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 21

Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . 27

FINANCIAL STATEMENTS

Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 30
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 32
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 33
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 34
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 42

OTHER INFORMATION

Proxy Voting Results. . . . . . . . . . . . . . . . . . . . . . . . . 54
Approval of Management Agreements for Diversified Bond
and High-Yield. . . . . . 56
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . 61
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 63
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 64

The opinions expressed in the Market Perspective and each of the Portfolio
Commentaries reflect those of the portfolio management team as of the date of
the report, and do not necessarily represent the opinions of American Century
or any other person in the American Century organization. Any such opinions
are subject to change at any time based upon market or other conditions and
American Century disclaims any responsibility to update such opinions. These
opinions may not be relied upon as investment advice and, because investment
decisions made by American Century funds are based on numerous factors, may
not be relied upon as an indication of trading intent on behalf of any
American Century fund. Security examples are used for representational
purposes only and are not intended as recommendations to purchase or sell
securities. Performance information for comparative indices and securities is
provided to American Century by third party vendors. To the best of American
Century's knowledge, such information is accurate at the time of printing.

MARKET PERSPECTIVE

[photo of chief investment officer]

By David MacEwen, Chief Investment Officer, Fixed Income

MODEST GROWTH, INFLATION, BOND RETURNS

U.S. economic growth was moderate over the last four complete calendar
quarters, running at an approximately 2-3% average annual rate. Many
economists are calling for sub-2% growth going forward. Inflation slowed, as
the trailing 12-month percentage change in core consumer prices (without
volatile food and energy prices) finished September at 2.1%. That's down from
2.9% as recently as September 2006.

RATES FELL, CURVE STEEPENED

HIGH-QUALITY BONDS DID BEST

The volatility, credit, and liquidity concerns in the market all favored
Treasury securities over higher-yielding, lower-quality alternatives (see the
accompanying returns table above). So, for example, while the Treasury market
enjoyed its best quarter in five years from July to September, July was one of
the worst months on record for high-yield bonds. Treasury inflation-indexed
securities performed best because of their combination of high credit quality
and inflation protection.

U.S. Fixed-Income Total Returns
For the six months ended September 30, 2007*

TREASURY SECURITIES
3-Month Bill 2.69%
2-Year Note 3.25%
5-Year Note 3.60%
10-Year Note 2.72%
30-Year Bond 2.57%

*Total returns for periods less than one year are not annualized.

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2

PERFORMANCE
Diversified Bond

Total Returns as of September 30, 2007
Average Annual Returns
6 5 10 Since Inception
months(1) 1 year years years Inception Date

INVESTOR CLASS 2.41% 5.05% 3.78% -- 4.22% 12/3/01

CITIGROUP US BROAD
INVESTMENT-GRADE BOND
INDEX 2.42% 5.25% 4.23% 6.01% 4.95%(2) --

Institutional Class 2.51% 5.26% 3.99% 5.47% 5.70% 4/1/93

A Class(3)
No sales charge* 2.28% 4.78% 3.52% -- 3.96%
With sales charge* -2.30% 0.07% 2.57% -- 3.15% 12/3/01

B Class
No sales charge* 1.90% 4.01% -- -- 2.68%
With sales charge* -3.10% 0.01% -- -- 2.29% 1/31/03

C Class
No sales charge* 1.90% 4.01% -- -- 2.72%
With sales charge* 0.90% 4.01% -- -- 2.72% 1/31/03

R Class 2.16% 4.53% -- -- 3.36% 7/29/05

* Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
sales charge for fixed income funds and may be subject to a maximum CDSC of
1.00%. B Class shares redeemed within six years of purchase are subject to a
CDSC that declines from 5.00% during the first year after purchase to 0.00%
the sixth year after purchase. C Class shares redeemed within 12 months of
purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class
Information pages for more about the applicable sales charges for each share
class. The SEC requires that mutual funds provide performance information net
of maximum sales charges in all cases where charges could be applied.

Diversified Bond acquired all of the net assets of the American Century
Intermediate-Term Bond Fund, the American Century Bond Fund, and the American
Century Premium Bond Fund on December 3, 2001, pursuant to a plan of
reorganization approved by the acquired funds' shareholders on November 16,
2001. Financial information prior to December 3, 2001 is that of American
Century Premium Bond Fund and is used in calculating the performance of
Diversified Bond.

(1) Total returns for periods less than one year are not annualized.

(2) Since 11/30/01, the date nearest the Investor Class's inception for which
data are available.

(3) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class. Performance, with sales charge, prior to that date has been adjusted to
reflect the A Class's current sales charge.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the
performance shown. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. To obtain performance
data current to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating
expenses (such as transaction costs and management fees) that reduce returns,
while the total returns of the index do not.

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3

Diversified Bond

Growth of $10,000 Over Life of Class
$10,000 investment made December 3, 2001

One-Year Returns Over Life of Class
Periods ended September 30
                                  2002*   2003    2004    2005    2006   2007

Investor Class                    5.72%   5.19%  2.66%   2.82%   3.22%   5.05%

Citigroup US Broad
Investment-Grade Bond Index       7.72%   5.49%  3.82%   2.92%   3.71%   5.25%

* From 12/3/01, the Investor Class's inception date. Index data from 11/30/01,
the date nearest the Investor Class's inception for which data are available.
Not annualized.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the
performance shown. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. To obtain performance
data current to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating
expenses (such as transaction costs and management fees) that reduce returns,
while the total returns of the index do not.


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4


PORTFOLIO COMMENTARY
Diversified Bond

Lead Portfolio Managers: Jeff Houston, Hando Aguilar, Brian Howell, John
Walsh, Dan Shiffman, Jim Platz and Seth Plunkett

Macro Strategy Team Representatives: Dave MacEwen, Bob Gahagan and Jim Keegan

PERFORMANCE SUMMARY

Diversified Bond returned 2.41%* for the six months ended September 30, 2007,
in line with the 2.42% return of its benchmark, the Citigroup US Broad
Investment-Grade (BIG) Bond Index. Portfolio returns reflect operating
expenses, while index returns do not.

The portfolio's absolute return reflected the challenging climate for bonds
prevailing in recent months (see the Market Perspective on page 2). Relative
to the benchmark, Diversified Bond's performance benefited from some of our
credit, yield curve, sector, and currency allocation decisions.

CURVE POSITIONING WAS KEY

Our yield-curve positioning was the key factor explaining the portfolio's
solid performance relative to the benchmark, as we maintained a yield
curve-steepening bias during the period using two- and 10-year Treasury
futures. This trade helped relative results as the yield curve steepened
overall, particularly in August. For the six months, the yield difference
between two- and 10-year Treasurys went from seven to 60 basis points (a basis
point equals 0.01%). This curve-steepening bias is a strategy we expect to
carry forward, given our view of the economy, interest rates, and shape of the
curve.

SECTOR AND SECURITY SELECTION CONTRIBUTED

For some time now we've believed that investors have not been adequately
compensated for credit or volatility risks -- risk premiums, expressed in
terms of yield, seemed too low. As a result, we maintained an overweight
position in the securitized sector and an underweight position in the
corporate sector relative to the Citigroup US BIG Index. These trades
contributed to return in the last six months as mortgages outperformed
corporates.

Our security selection also contributed to relative results. For example, we
used a small slice of the portfolio to gain Japanese yen exposure, a trade we
put on when the yen was at a 4 1/2-year low against the dollar early in 2007.
Though currency values have been volatile, the yen appreciated against the
dollar overall for the six-month period.

Portfolio at a Glance
                                    As of       As of
                                   9/30/07     3/31/07
Average Duration (effective)      4.9 years   4.6 years
Average Life                      7.9 years   6.9 years

Yields as of September 30, 2007
30-day SEC Yield
Investor Class                                  4.66%
Institutional Class                             4.87%
A Class                                         4.22%
B Class                                         3.66%
C Class                                         3.66%
R Class                                         4.16%

*All fund returns referenced in this commentary are for Investor Class shares.
Total returns for periods less than one year are not annualized.


- ------
5


Diversified Bond

In addition, we avoided the worst performers during the credit and liquidity
crunch that peaked in July and August. Among mortgage-backed securities, we
had essentially no subprime exposure. And when you look across all the
non-Treasury sectors, we tended to avoid the least-liquid off-the-run bonds,
which typically performed worse than more easily bought and sold on-the-run
securities.

RELATIVE-VALUE APPROACH

"We continued to focus on identifying the best relative values across the U.S.
taxable fixed-income securities universe," said Macro Strategy Team
representative Jim Keegan. "We think this steady, long-term approach to
investing is the best way to generate outperformance over time. Because of
this relative-value approach, we saw the sell-off during the liquidity crunch
in July and August as an opportunity to make some select trades to swap into
high-quality corporate issuers at what we believed were very attractive
prices. That said, we should point out that we remain underweight corporates
overall because we think there's potential for more underperformance as credit
spreads widen and risk assets are re-priced."

OUTLOOK

"We see a difficult path for the economy as a result of headwinds from
housing, the consumer, and higher energy prices," said Macro Strategy Team
representative Bob Gahagan. "The economic, market, and interest rate
environment also argue for the continuation of our curve-steepening trade and
yen overweight position. In terms of sector allocations, our caution about the
economy means we plan to continue to underweight credit-sensitive corporate
bonds and overweight Treasury and government agency securities. In addition,
we think the environment for inflation-indexed securities could be positive
going forward. On top of some positive fundamentals, inflation-indexed bonds
are benefiting from demand from investors who think the Federal Reserve will
err on the side of fighting recession, rather than inflation."

Types of Investments in Portfolio
                                           % of fund     % of fund
                                          investments   investments
                                             as of         as of
                                            9/30/07       3/31/07
Mortgage-Backed Securities                   24.5%         24.0%
U.S. Treasury Securities                     17.3%         16.1%
Collateralized Mortgage Obligations          13.6%         11.7%
Corporate Bonds                              12.1%         10.6%
U.S. Government Agency Securities             7.3%         10.6%
Asset-Backed Securities                       3.8%          4.7%
Sovereign Governments & Agencies              2.2%          1.6%
Municipal Securities                          0.2%          0.1%
Temporary Cash Investments                    0.3%          1.1%
Temporary Cash Investments --
Securities Lending Collateral                18.7%         19.5%

Portfolio Composition by Credit Rating
                                           % of fund     % of fund
                                          investments   investments
                                             as of         as of
                                            9/30/07       3/31/07
AAA                                           84%           85%
AA                                             4%            3%
A                                              5%            5%
BBB                                            7%            7%


- ------
6


SCHEDULE OF INVESTMENTS
Diversified Bond

SEPTEMBER 30, 2007 (UNAUDITED)

Principal Amount                                                             Value

U.S. Government Agency Mortgage-Backed Securities(1) -- 31.7%

           $9,605  FHLMC, 6.50%, 2/1/09(2)                                  $9,732
        1,601,267  FHLMC, 5.00%, 10/1/10(2)                              1,599,157
           19,473  FHLMC, 6.50%, 12/1/12(2)                                 19,996
          193,334  FHLMC, 6.00%, 1/1/13(2)                                 196,129
           28,055  FHLMC, 7.00%, 11/1/13(2)                                 29,005
           57,706  FHLMC, 7.00%, 6/1/14(2)                                  59,765
          182,342  FHLMC, 6.50%, 6/1/16(2)                                 187,089
          108,390  FHLMC, 6.50%, 6/1/16(2)                                 111,211
        2,450,201  FHLMC, 5.00%, 11/1/17(2)                              2,411,020
          242,746  FHLMC, 4.50%, 1/1/19(2)                                 234,350
       10,366,126  FHLMC, 5.00%, 1/1/21(2)                              10,165,490
        4,128,828  FHLMC, 5.00%, 4/1/21(2)                               4,048,914
           20,771  FHLMC, 7.00%, 9/1/27(2)                                  21,604
           34,011  FHLMC, 6.50%, 1/1/28(2)                                  34,990
            5,082  FHLMC, 7.00%, 2/1/28(2)                                   5,285
          197,234  FHLMC, 6.50%, 3/1/29(2)                                 202,591
          126,872  FHLMC, 6.50%, 6/1/29(2)                                 130,204
           18,655  FHLMC, 7.00%, 8/1/29(2)                                  19,408
           42,541  FHLMC, 7.50%, 8/1/29(2)                                  44,591
          119,246  FHLMC, 6.50%, 5/1/31(2)                                 122,219
            2,843  FHLMC, 6.50%, 5/1/31(2)                                   2,914
            9,086  FHLMC, 6.50%, 6/1/31(2)                                   9,313
            1,760  FHLMC, 6.50%, 6/1/31(2)                                   1,804
            9,781  FHLMC, 6.50%, 6/1/31(2)                                  10,025
           79,984  FHLMC, 6.50%, 6/1/31(2)                                  81,977
            4,055  FHLMC, 6.50%, 6/1/31(2)                                   4,156
            3,676  FHLMC, 6.50%, 6/1/31(2)                                   3,767
        2,376,539  FHLMC, 5.50%, 12/1/33(2)                              2,334,125
          653,238  FHLMC, 6.50%, 7/1/47(2)                                 659,413
       45,808,623  FNMA, 6.00%, settlement date 10/11/07(3)             45,873,031
           22,858  FNMA, 6.00%, 2/1/09(2)                                   23,068
           13,423  FNMA, 6.00%, 5/1/13(2)                                   13,669
           25,276  FNMA, 6.00%, 5/1/13(2)                                   25,656
           69,171  FNMA, 6.00%, 7/1/13(2)                                   70,212
          105,894  FNMA, 6.00%, 12/1/13(2)                                 107,488
           84,447  FNMA, 6.00%, 1/1/14(2)                                   85,719
          142,711  FNMA, 6.00%, 2/1/14(2)                                  144,860
          151,727  FNMA, 6.00%, 4/1/14(2)                                  154,012
          578,169  FNMA, 5.50%, 12/1/16(2)                                 579,219
        1,090,794  FNMA, 5.50%, 12/1/16(2)                               1,092,776
        4,131,496  FNMA, 4.50%, 5/1/19(2)                                3,983,184
          110,501  FNMA, 6.50%, 1/1/26(2)                                  113,386

Principal Amount                                                             Value

          $12,331  FNMA, 7.00%, 12/1/27(2)                                 $12,847
            6,389  FNMA, 6.50%, 1/1/28(2)                                    6,574
            6,155  FNMA, 7.00%, 1/1/28(2)                                    6,413
           33,977  FNMA, 7.50%, 4/1/28(2)                                   35,667
          103,374  FNMA, 7.00%, 5/1/28(2)                                  107,727
            6,391  FNMA, 7.00%, 6/1/28(2)                                    6,660
           26,279  FNMA, 6.50%, 1/1/29(2)                                   27,001
           74,217  FNMA, 6.50%, 4/1/29(2)                                   76,182
           34,021  FNMA, 7.00%, 7/1/29(2)                                   35,453
           39,928  FNMA, 7.00%, 7/1/29(2)                                   41,616
          106,219  FNMA, 7.50%, 7/1/29(2)                                  111,387
           10,655  FNMA, 7.00%, 5/1/30(2)                                   11,107
          144,206  FNMA, 7.50%, 8/1/30(2)                                  150,981
           52,623  FNMA, 7.50%, 9/1/30(2)                                   55,095
          275,049  FNMA, 7.00%, 9/1/31(2)                                  286,509
          155,124  FNMA, 6.50%, 1/1/32(2)                                  159,030
        1,383,379  FNMA, 7.00%, 6/1/32(2)                                1,439,826
          589,520  FNMA, 6.50%, 8/1/32(2)                                  604,366
        3,354,384  FNMA, 5.50%, 6/1/33(2)                                3,295,485
       16,409,935  FNMA, 5.50%, 7/1/33(2)                               16,121,793
        2,774,387  FNMA, 5.50%, 8/1/33(2)                                2,725,672
        3,549,559  FNMA, 5.50%, 9/1/33(2)                                3,487,233
       23,185,640  FNMA, 5.00%, 11/1/33(2)                              22,198,488
        7,412,392  FNMA, 5.50%, 1/1/34(2)                                7,282,238
        2,472,694  FNMA, 5.00%, 8/1/35(2)                                2,362,896
        8,838,311  FNMA, 4.50%, 9/1/35(2)                                8,206,734
       10,606,453  FNMA, 5.00%, 2/1/36(2)                               10,135,484
       13,881,224  FNMA, 5.50%, 4/1/36(2)                               13,615,121
        8,618,417  FNMA, 6.50%, 8/1/37(2)                                8,713,736
       12,502,500  FNMA, 6.50%, 9/1/37(2)                               12,732,596
          317,736  FNMA, 6.50%, 6/1/47(2)                                  320,740
          836,807  FNMA, 6.50%, 8/1/47(2)                                  844,718
        1,176,354  FNMA, 6.50%, 8/1/47(2)                                1,187,474
          147,881  FNMA, 6.50%, 9/1/47(2)                                  149,279
        1,317,568  FNMA, 6.50%, 9/1/47(2)                                1,330,023
        1,060,834  FNMA, 6.50%, 9/1/47(2)                                1,070,862
        1,070,853  FNMA, 6.50%, 9/1/47(2)                                1,080,976
        1,866,873  FNMA, 6.50%, 9/1/47(2)                                1,884,521
           42,799  GNMA, 7.50%, 8/20/17(2)                                  44,583
           55,737  GNMA, 7.00%, 11/15/22(2)                                 58,426
           55,866  GNMA, 8.75%, 3/15/25(2)                                  60,194
           13,771  GNMA, 7.00%, 4/20/26(2)                                  14,408
           26,747  GNMA, 7.50%, 8/15/26(2)                                  28,111
           12,482  GNMA, 8.00%, 8/15/26(2)                                  13,276
            2,367  GNMA, 7.50%, 4/15/27(2)                                   2,487


- ------
7


Diversified Bond

Principal Amount                                                             Value

          $27,444  GNMA, 7.50%, 5/15/27(2)                                 $28,838
           21,431  GNMA, 8.00%, 6/15/27(2)                                  22,788
            2,320  GNMA, 7.50%, 11/15/27(2)                                  2,438
           10,601  GNMA, 7.00%, 2/15/28(2)                                  11,115
           19,798  GNMA, 7.50%, 2/15/28(2)                                  20,796
           16,009  GNMA, 6.50%, 3/15/28(2)                                  16,430
            3,003  GNMA, 7.00%, 4/15/28(2)                                   3,148
           13,621  GNMA, 6.50%, 5/15/28(2)                                  13,980
           53,279  GNMA, 6.50%, 5/15/28(2)                                  54,681
            2,241  GNMA, 6.50%, 5/15/28(2)                                   2,300
           17,792  GNMA, 7.00%, 12/15/28(2)                                 18,654
            5,074  GNMA, 8.00%, 12/15/29(2)                                  5,397
          139,212  GNMA, 7.00%, 5/15/31(2)                                 145,787
                                                                     -------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES
(Cost $199,120,454)                                                    197,514,871
                                                                     -------------

U.S. Treasury Securities -- 22.3%

       11,000,000  U.S. Treasury Bonds, 8.125%, 8/15/19(2)(4)           14,331,801
        2,180,000  U.S. Treasury Bonds, 8.125%, 8/15/21(2)(4)            2,896,165
       11,817,000  U.S. Treasury Bonds, 7.125%, 2/15/23(2)(4)           14,669,707
       22,556,000  U.S. Treasury Bonds, 6.125%, 11/15/27(2)(4)          26,106,811
       37,882,000  U.S. Treasury Notes, 4.875%, 6/30/12(2)(4)           38,953,378
       11,500,000  U.S. Treasury Notes, 4.25%, 8/15/14(2)(4)            11,422,743
       15,427,000  U.S. Treasury Notes, 4.625%, 2/15/17(2)(4)           15,502,932
       15,410,000  U.S. Treasury Notes, 4.50%, 5/15/17(2)(4)            15,328,142
                                                                     -------------
TOTAL U.S. TREASURY SECURITIES
(Cost $135,995,002)                                                    139,211,679
                                                                     -------------

Collateralized Mortgage Obligations(1) -- 17.7%

        5,540,700  Banc of America Alternative Loan Trust, Series
                   2007-2, Class 2A4, 5.75%, 6/25/37(2)                  5,535,985
       18,291,848  Banc of America Commercial Mortgage Inc.
                   STRIPS - COUPON, Series 2004-1, Class XP, VRN,
                   0.63%, 10/1/07(2)                                       337,751
        6,766,366  Banc of America Commercial Mortgage Inc.,
                   Series 2000-2, Class B, 7.38%, 9/15/32(2)             7,163,423
        8,250,000  Banc of America Commercial Mortgage Inc.,
                   Series 2004-2, Class A3 SEQ, 4.05%, 11/10/38(2)       8,060,448

Principal Amount                                                             Value

     $ 13,300,000  Banc of America Commercial Mortgage Inc.,
                   Series 2006-6, Class A3 SEQ, 5.37%, 12/10/16(2)    $ 13,211,687
        1,042,091  Banc of America Large Loan, Series 2005 MIB1,
                   Class A1, VRN, 5.90%, 10/15/07, resets monthly
                   off the 1-month LIBOR plus 0.15% with no caps
                   (Acquired 11/18/05, Cost $1,042,090)(2)(5)            1,037,855
       27,050,806  Bear Stearns Commercial Mortgage Securities
                   Trust STRIPS - COUPON, Series 2004 T16, Class
                   X2, VRN, 0.75%, 10/1/07(2)                              763,434
        4,311,219  Bear Stearns Commercial Mortgage Securities
                   Trust, Series 2006 BBA7, Class A1, VRN, 5.86%,
                   10/15/07, resets monthly off the 1-month LIBOR
                   plus 0.11% with no caps (Acquired 6/5/06, Cost
                   $4,311,219)(2)(5)                                     4,311,133
       15,528,983  Commercial Mortgage Acceptance Corp. STRIPS -
                   COUPON, Series 1998 C2, Class X, VRN, 0.98%,
                   10/1/07(2)                                              313,275
          143,990  Commercial Mortgage Pass-Through Certificates,
                   Series 2005 F10A, Class A1, VRN, 5.85%,
                   10/15/07, resets monthly off the 1-month LIBOR
                   plus 0.10% with no caps (Acquired 3/18/05,
                   Cost $143,990)(2)(5)                                    143,993
          306,848  Commercial Mortgage Pass-Through Certificates,
                   Series 2005 FL11, Class A1, VRN, 5.90%,
                   10/15/07, resets monthly off the 1-month LIBOR
                   plus 0.15% with no caps (Acquired 11/18/05,
                   Cost $306,849)(2)(5)                                    306,680
       11,847,790  Countrywide Home Loan Mortgage Pass-Through
                   Trust, Series 2007-16, Class A1, 6.50%,
                   10/25/37(2)                                          11,959,289
        5,675,903  Credit Suisse First Boston Mortgage Securities
                   Corp., Series 2003 AR28, Class 2A1, 4.41%,
                   12/25/33(2)                                           5,713,092
        3,750,000  Credit Suisse Mortgage Capital Certificates,
                   Series 2007 TF2A, Class A1, VRN, 5.93%,
                   10/15/07, resets monthly off the 1-month LIBOR
                   plus 0.18% with no caps (Acquired 7/24/07,
                   Cost $3,750,000)(2)(5)                                3,721,875


- ------
8


Diversified Bond

Principal Amount                                                             Value

      $ 5,151,323  FHLMC, Series 2567, Class OD, 5.00%, 8/15/15(2)     $ 5,150,483
        3,831,938  FHLMC, Series 2900, Class PA, 4.50%, 3/15/14(2)       3,817,001
        2,020,727  FHLMC, Series 2937, Class KA, 4.50%,
                   12/15/14(2)                                           2,012,731
           30,557  FNMA, Series 1989-35, Class G SEQ, 9.50%,
                   7/25/19(2)                                               33,182
        1,085,000  FNMA, Series 2003-92, Class PD, 4.50%,
                   3/25/17(2)                                            1,064,411
        6,804,000  GMAC Commercial Mortgage Securities, Inc.,
                   Series 2005 C1, Class A2 SEQ, 4.47%, 5/10/43(2)       6,722,916
        1,698,012  Greenwich Capital Commercial Funding Corp.,
                   Series 2006 FL4A, Class A1, VRN, 5.86%,
                   10/5/07, resets monthly off the 1-month LIBOR
                   plus 0.09% with no caps (Acquired 12/14/06,
                   Cost $1,698,012)(2)(5)                                1,693,952
        1,213,608  GS Mortgage Securities Corp. II, Series 2007
                   EOP, Class A1 VRN, 5.89%, 10/6/07, resets
                   monthly off the 1-month LIBOR plus 0.09% with
                   no caps (Acquired 6/1/07, Cost
                   $1,213,608)(2)(5)                                     1,202,844
        5,729,000  LB-UBS Commercial Mortgage Trust, Series 2005
                   C3, Class A3 SEQ, 4.65%, 7/30/30(2)                   5,627,305
          950,000  Lehman Brothers Commercial Conduit Mortgage
                   Trust, Series 1998 C1, Class C, 6.68%,
                   2/18/30(2)                                              950,536
        1,051,512  Lehman Brothers Floating Rate Commercial
                   Mortgage Trust, Series 2006 LLFA, Class A1,
                   VRN, 5.83%, 10/15/07, resets monthly off the
                   1-month LIBOR plus 0.08% with no caps
                   (Acquired 8/7/06-9/25/06, Cost
                   $1,051,455)(2)(5)                                     1,051,061
          151,466  MASTR Alternative Loans Trust, Series 2003-8,
                   Class 4A1, 7.00%, 12/25/33(2)                           155,318
        2,593,547  Merrill Lynch Floating Trust, Series 2006-1,
                   Class A1, VRN, 5.82%, 10/15/07, resets monthly
                   off the 1-month LIBOR plus 0.07% with no caps
                   (Acquired 10/31/06, Cost $2,593,547)(2)(5)            2,578,816

Principal Amount                                                             Value

      $ 2,716,648  Thornburg Mortgage Securities Trust, Series
                   2006-5, Class A1, VRN, 5.25%, 10/25/07, resets
                   monthly off the 1-month LIBOR plus 0.12% with
                   no caps(2)                                          $ 2,677,251
        2,275,000  Washington Mutual Mortgage Pass-Through
                   Certificates, Series 2005 AR4, Class A3,
                   4.59%, 4/25/35(2)                                     2,247,830
        4,497,000  Washington Mutual Mortgage Pass-Through
                   Certificates, Series 2005 AR4, Class A4B,
                   4.68%, 4/25/35(2)                                     4,450,811
        5,893,627  Wells Fargo Mortgage Backed Securities Trust,
                   Series 2007-11, Class A19 SEQ, 6.00%,
                   8/25/37(2)                                            5,919,536
                                                                     -------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $110,028,510)                                                    109,935,904
                                                                     -------------

Corporate Bonds -- 15.7%

AEROSPACE & DEFENSE -- 0.6%
          675,000  Honeywell International Inc., 5.30%, 3/15/17(2)         659,067
          853,000  Lockheed Martin Corp., 6.15%, 9/1/36(2)                 865,111
        1,183,000  United Technologies Corp., 4.375%, 5/1/10(2)          1,171,135
        1,027,000  United Technologies Corp., 6.05%, 6/1/36(2)           1,034,589
                                                                     -------------
                                                                         3,729,902
                                                                     -------------
AUTOMOBILES -- 0.1%
          800,000  DaimlerChrysler N.A. Holding Corp., 6.50%,
                   11/15/13(2)                                             830,582
                                                                     -------------
BEVERAGES -- 0.4%
          951,000  Miller Brewing Co., 4.25%, 8/15/08 (Acquired
                   8/6/03, Cost $947,738)(2)(5)                            941,793
        1,490,000  SABMiller plc, 6.20%, 7/1/11 (Acquired
                   6/27/06, Cost $1,488,942)(2)(5)                       1,540,625
                                                                     -------------
                                                                         2,482,418
                                                                     -------------
BIOTECHNOLOGY -- 0.2%
        1,034,000  Genentech, Inc., 4.75%, 7/15/15(2)                      976,466
                                                                     -------------
CAPITAL MARKETS -- 0.3%
          747,000  Merrill Lynch & Co., Inc., 4.25%, 2/8/10(2)             734,246
        1,376,000  Merrill Lynch & Co., Inc., 4.79%, 8/4/10(2)           1,354,350
                                                                     -------------
                                                                         2,088,596
                                                                     -------------


- ------
9


Diversified Bond

Principal Amount                                                             Value

CHEMICALS -- 0.1%
        $ 550,000  Rohm and Haas Co., 5.60%, 3/15/13(2)                  $ 548,998
                                                                     -------------
COMMERCIAL BANKS -- 0.8%
        1,012,000  PNC Bank N.A., 4.875%, 9/21/17(2)                       932,867
          741,000  PNC Funding Corp., 5.125%, 12/14/10(2)                  742,207
          845,000  Wachovia Bank N.A., 4.80%, 11/1/14(2)                   805,593
        1,320,000  Wachovia Bank N.A., 4.875%, 2/1/15(2)                 1,250,521
        1,167,000  Wells Fargo & Co., 4.625%, 8/9/10(2)                  1,155,534
                                                                     -------------
                                                                         4,886,722
                                                                     -------------
COMMERCIAL SERVICES & SUPPLIES -- 0.2%
          550,000  Deluxe Corp., 7.375%, 6/1/15(2)                         545,875
          540,000  Pitney Bowes, Inc., 5.75%, 9/15/17(2)                   541,798
                                                                     -------------
                                                                         1,087,673
                                                                     -------------
CONSUMER FINANCE -- 0.1%
          571,000  American Express Centurion Bank, 4.375%,
                   7/30/09(2)                                              564,665
                                                                     -------------
DIVERSIFIED FINANCIAL SERVICES -- 1.6%
        1,861,000  Bank of America Corp., 4.375%, 12/1/10(2)             1,833,064
          949,000  Bank of America N.A., 5.30%, 3/15/17(2)                 922,223
          825,000  Bank of America N.A., 6.00%, 10/15/36(2)                812,161
        1,634,000  Citigroup Inc., 5.00%, 9/15/14(2)                     1,577,316
          631,000  Citigroup Inc., 6.125%, 8/25/36(2)                      626,723
        1,080,000  General Electric Capital Corp., 5.625%,
                   9/15/17(2)                                            1,081,742
          773,000  General Electric Capital Corp., 6.125%,
                   2/22/11(2)                                              797,223
        1,167,000  John Deere Capital Corp., 4.50%, 8/25/08(2)           1,159,214
        1,205,000  John Deere Capital Corp., 5.50%, 4/13/17(2)           1,195,918
                                                                     -------------
                                                                        10,005,584
                                                                     -------------

Principal Amount                                                             Value

DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.2%
      $ 1,167,000  AT&T Corp., 7.30%, 11/15/11(2)                      $ 1,254,803
        1,000,000  AT&T Inc., 6.80%, 5/15/36(2)                          1,073,764
          176,000  BellSouth Corp., 6.875%, 10/15/31(2)                    184,781
          494,000  Embarq Corp., 7.08%, 6/1/16(2)                          512,952
          280,000  Qwest Corp., 7.875%, 9/1/11(2)                          295,400
          280,000  Qwest Corp., 7.50%, 10/1/14(2)                          292,600
        1,263,000  Telecom Italia Capital SA, 4.00%, 1/15/10(2)          1,230,339
          540,000  Telecom Italia Capital SA, 5.25%, 10/1/15(2)            513,457
          680,000  Telefonica Emisiones SAU, 7.05%, 6/20/36(2)             726,632
          686,000  Verizon Communications Inc., 5.55%, 2/15/16(2)          680,344
          489,000  Verizon Communications Inc., 6.25%, 4/1/37(2)           493,417
                                                                     -------------
                                                                         7,258,489
                                                                     -------------
ELECTRIC UTILITIES -- 0.8%
        1,123,000  Carolina Power & Light Co., 5.15%, 4/1/15(2)          1,090,139
          545,000  Carolina Power & Light Co., 5.25%, 12/15/15(2)          530,663
          908,000  Cleveland Electric Illuminating Co. (The),
                   5.70%, 4/1/17(2)                                        885,040
          602,000  Florida Power Corp., 4.50%, 6/1/10(2)                   595,095
          540,000  Florida Power Corp., 6.35%, 9/15/37(2)                  552,207
          780,000  Southern California Edison Co., 5.625%,
                   2/1/36(2)                                               730,957
          425,000  Toledo Edison Co., 6.15%, 5/15/37(2)                    397,974
                                                                     -------------
                                                                         4,782,075
                                                                     -------------
FOOD & STAPLES RETAILING -- 0.7%
          820,000  CVS Caremark Corp., 5.75%, 6/1/17(2)                    801,823
          500,000  Kroger Co. (The), 6.40%, 8/15/17(2)                     510,766
        1,014,000  Wal-Mart Stores, Inc., 4.125%, 7/1/10(2)                994,111
        1,060,000  Wal-Mart Stores, Inc., 5.875%, 4/5/27(2)              1,025,388
          850,000  Wal-Mart Stores, Inc., 6.50%, 8/15/37(2)                885,031
                                                                     -------------
                                                                         4,217,119
                                                                     -------------


- ------
10


Diversified Bond

Principal Amount                                                             Value

FOOD PRODUCTS -- 0.6%
      $ 1,566,000  Cadbury Schweppes U.S. Finance LLC, 3.875%,
                   10/1/08 (Acquired 6/14/05-11/28/05, Cost
                   $1,528,931)(2)(5)                                   $ 1,544,418
        1,460,000  General Mills Inc., 5.65%, 9/10/12(2)                 1,474,569
          830,000  Kraft Foods Inc., 6.00%, 2/11/13(2)                     855,408
                                                                     -------------
                                                                         3,874,395
                                                                     -------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 0.4%
        1,531,000  Baxter Finco BV, 4.75%, 10/15/10(2)                   1,530,502
        1,130,000  Baxter International Inc., 5.90%, 9/1/16(2)           1,141,230
                                                                     -------------
                                                                         2,671,732
                                                                     -------------
HEALTH CARE PROVIDERS & SERVICES -- 0.3%
        1,826,000  Laboratory Corp. of America Holdings, 5.625%,
                   12/15/15(2)                                           1,769,925
                                                                     -------------
HOTELS, RESTAURANTS & LEISURE -- 0.2%
        1,390,000  Royal Caribbean Cruises Ltd., 7.00%, 6/15/13(2)       1,389,233
                                                                     -------------
HOUSEHOLD PRODUCTS -- 0.3%
          560,000  Kimberly-Clark Corp., 6.125%, 8/1/17(2)                 577,877
        1,030,000  Procter & Gamble Co. (The), 5.55%, 3/5/37(2)            987,506
                                                                     -------------
                                                                         1,565,383
                                                                     -------------
INDUSTRIAL CONGLOMERATES -- 0.4%
        2,734,000  General Electric Co., 5.00%, 2/1/13(2)                2,713,254
                                                                     -------------
INSURANCE -- 0.5%
        1,280,000  Allstate Financial Global Funding, 4.25%,
                   9/10/08 (Acquired 9/3/03, Cost
                   $1,277,491)(2)(5)                                     1,271,100
          956,000  Hartford Financial Services Group Inc. (The),
                   5.375%, 3/15/17(2)                                      925,449
          600,000  Prudential Financial, Inc., 5.40%, 6/13/35(2)           525,718
          570,000  Travelers Companies, Inc. (The), 6.25%,
                   6/15/37(2)                                              551,632
                                                                     -------------
                                                                         3,273,899
                                                                     -------------
IT SERVICES -- 0.3%
        1,940,000  International Business Machines Corp., 5.70%,
                   9/14/17(2)                                            1,953,836
                                                                     -------------

Principal Amount                                                             Value

MACHINERY -- 0.1%
        $ 550,000  Atlas Copco AB, 5.60%, 5/22/17 (Acquired
                   5/15/07, Cost $549,753)(2)(5)                         $ 543,758
                                                                     -------------
MEDIA -- 1.0%
        1,104,000  Comcast Corp., 5.90%, 3/15/16(2)                      1,100,043
          635,000  News America Holdings, 7.75%, 1/20/24(2)                697,130
        1,600,000  Rogers Cable Inc., 6.25%, 6/15/13(2)                  1,622,434
        1,650,000  Time Warner Cable Inc., 5.40%, 7/2/12
                   (Acquired 4/4/07-8/9/07, Cost $1,641,366)(2)(5)       1,631,393
          760,000  Time Warner Cable Inc., 6.55%, 5/1/37
                   (Acquired 4/4/07, Cost $755,106)(2)(5)                  747,947
          445,000  Time Warner Inc., 5.50%, 11/15/11(2)                    444,776
          176,000  Time Warner Inc., 7.625%, 4/15/31(2)                    191,977
                                                                     -------------
                                                                         6,435,700
                                                                     -------------
METALS & MINING -- 0.2%
        1,045,000  Xstrata Finance Canada Ltd., 5.50%, 11/16/11
                   (Acquired 11/8/06-11/17/06, Cost
                   $1,045,503)(2)(5)                                     1,039,545
          447,000  Xstrata Finance Canada Ltd., 5.80%, 11/15/16
                   (Acquired 11/8/06, Cost $445,896)(2)(5)                 445,280
                                                                     -------------
                                                                         1,484,825
                                                                     -------------
MULTI-UTILITIES -- 1.0%
          950,000  CenterPoint Energy Resources Corp., 6.25%,
                   2/1/37(2)                                               935,711
        1,198,000  CenterPoint Energy Resources Corp., 6.50%,
                   2/1/08(2)                                             1,198,557
        1,027,000  Consolidated Edison Co. of New York, Inc.,
                   Series 2006 C, 5.50%, 9/15/16(2)                      1,012,437
        1,459,000  Dominion Resources Inc., 4.125%, 2/15/08(2)           1,451,185
          584,000  Dominion Resources Inc., 4.75%, 12/15/10(2)             576,082
          614,000  Pacific Gas & Electric Co., 6.05%, 3/1/34(2)            604,967
          367,000  Pacific Gas & Electric Co., 5.80%, 3/1/37(2)            348,035
                                                                     -------------
                                                                         6,126,974
                                                                     -------------


- ------
11


Diversified Bond

Principal Amount                                                             Value

MULTILINE RETAIL -- 0.4%
        $ 396,000  Federated Retail Holdings, Inc., 5.35%,
                   3/15/12(2)                                             $388,705
          560,000  Kohl's Corp., 6.875%, 12/15/37(2)                       564,080
        1,390,000  Macy's Retail Holdings, Inc., 5.875%,
                   1/15/13(2)                                            1,385,974
                                                                     -------------
                                                                         2,338,759
                                                                     -------------
OIL, GAS & CONSUMABLE FUELS -- 1.4%
          560,000  Canadian Natural Resources Ltd., 5.70%,
                   5/15/17(2)                                              547,656
          585,000  Devon Financing Corp., ULC, 7.875%, 9/30/31(2)          692,911
        1,776,000  Enterprise Products Operating L.P., 4.95%,
                   6/1/10(2)                                             1,769,872
          590,000  Enterprise Products Operating L.P., 6.65%,
                   10/15/34(2)                                             588,878
          810,000  Nexen Inc., 6.40%, 5/15/37(2)                           789,685
        1,386,000  Premcor Refining Group Inc. (The), 6.125%,
                   5/1/11(2)                                             1,421,649
          780,000  Tesoro Corp., 6.25%, 11/1/12(2)                         785,850
          490,000  Tesoro Corp., 6.50%, 6/1/17 (Acquired 5/23/07,
                   Cost $490,000)(2)(5)                                    488,775
          470,000  Williams Companies, Inc. (The), 8.75%,
                   3/15/32(2)                                              543,438
          773,000  XTO Energy Inc., 5.30%, 6/30/15(2)                      744,281
          615,000  XTO Energy Inc., 6.10%, 4/1/36(2)                       596,830
                                                                     -------------
                                                                         8,969,825
                                                                     -------------
PHARMACEUTICALS -- 0.7%
        1,021,000  Abbott Laboratories, 5.875%, 5/15/16(2)               1,031,919
        1,390,000  AstraZeneca plc, 5.40%, 9/15/12(2)                    1,402,435
          830,000  AstraZeneca plc, 5.90%, 9/15/17(2)                      844,083
        1,205,000  Wyeth, 5.95%, 4/1/37(2)                               1,166,804
                                                                     -------------
                                                                         4,445,241
                                                                     -------------
REAL ESTATE INVESTMENT TRUSTS -- 0.2%
        1,080,000  ProLogis, 5.625%, 11/15/16(2)                         1,025,512
                                                                     -------------
SOFTWARE -- 0.3%
          573,000  Intuit Inc., 5.75%, 3/15/17(2)                          547,846
        1,233,000  Oracle Corp., 5.00%, 1/15/11(2)                       1,231,180
                                                                     -------------
                                                                         1,779,026
                                                                     -------------

Principal Amount                                                             Value

SPECIALTY RETAIL -- 0.1%
        $ 560,000  Lowe's Companies, Inc., 5.60%, 9/15/12(2)             $ 566,097
                                                                     -------------
WIRELESS TELECOMMUNICATION SERVICES -- 0.2%
          762,000  Nextel Communications Inc., 5.95%, 3/15/14(2)           728,443
          708,000  Vodafone Group plc, 5.625%, 2/27/17(2)                  689,385
                                                                     -------------
                                                                         1,417,828
                                                                     -------------
TOTAL CORPORATE BONDS
(Cost $98,474,721)                                                      97,804,491
                                                                     -------------

U.S. Government Agency Securities -- 9.4%

       22,075,000  FHLMC, 4.625%, 10/25/12(2)(4)                        22,074,779
        8,875,000  FHLMC, 4.75%, 1/19/16(2)(4)                           8,798,418
        5,461,000  FNMA, 4.375%, 7/17/13(2)                              5,357,126
        5,700,000  FNMA, 5.375%, 6/12/17(2)(4)                           5,872,721
       16,293,000  FNMA, 5.80%, 2/9/26(2)                               16,308,691
                                                                     -------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(Cost $57,823,542)                                                      58,411,735
                                                                     -------------

Asset-Backed Securities(1) -- 4.9%

          703,360  Accredited Mortgage Loan Trust, Series 2006-1,
                   Class A1, VRN, 5.19%, 10/25/07, resets monthly
                   off the 1-month LIBOR plus 0.06% with no
                   caps(2)                                                 702,269
        1,738,099  Accredited Mortgage Loan Trust, Series 2006-2,
                   Class A1, VRN, 5.17%, 10/25/07, resets monthly
                   off the 1-month LIBOR plus 0.04% with no
                   caps(2)                                               1,729,116
        2,109,186  Capital One Prime Auto Receivables Trust,
                   Series 2004-2, Class A4, VRN, 5.81%, 10/15/07,
                   resets monthly off the 1-month LIBOR plus
                   0.06% with no caps(2)                                 2,108,723
        7,400,000  Citibank Credit Card Issuance Trust, Series
                   2007 A2, VRN, 5.49%, 11/21/07, resets
                   quarterly off the 3-month LIBOR minus 0.01%
                   with no caps(2)                                       7,362,031
          225,585  Countrywide Asset-Backed Certificates, Series
                   2006-6, Class 2A1, VRN, 5.20%, 10/25/07,
                   resets monthly off the 1-month LIBOR plus
                   0.07% with no caps(2)                                   225,525


- ------
12


Diversified Bond

Principal Amount                                                             Value

      $ 3,675,287  Countrywide Asset-Backed Certificates, Series
                   2006-22, Class 2A1, VRN, 5.18%, 10/25/07,
                   resets monthly off the 1-month LIBOR plus
                   0.05% with no caps(2)                               $ 3,644,084
          772,209  Countrywide Asset-Backed Certificates, Series
                   2006 BC2, Class 2A1, VRN, 5.17%, 10/25/07,
                   resets monthly off the 1-month LIBOR plus
                   0.04% with no caps(2)                                   769,212
        1,164,000  Detroit Edison Securitization Funding LLC,
                   Series 2001-1, Class A4 SEQ, 6.19%, 3/1/13(2)         1,193,753
        3,179,314  First Franklin Mortgage Loan Asset Backed
                   Certificates, Series 2006 FF11, Class 2A1,
                   VRN, 5.17%, 10/25/07, resets monthly off the
                   1-month LIBOR plus 0.04% with no caps(2)              3,148,182
            9,374  IndyMac Residential Asset Backed Trust, Series
                   2006 B, Class 2A1, VRN, 5.19%, 10/25/07,
                   resets monthly off the 1-month LIBOR plus
                   0.06% with no caps(2)                                     9,372
          136,732  Long Beach Mortgage Loan Trust, Series 2006-2,
                   Class 2A1, VRN, 5.20%, 10/25/07, resets
                   monthly off the 1-month LIBOR plus 0.07% with
                   no caps(2)                                              136,657
        2,467,457  Long Beach Mortgage Loan Trust, Series 2006-6,
                   Class 2A1, VRN, 5.17%, 10/25/07, resets
                   monthly off the 1-month LIBOR plus 0.04% with
                   no caps(2)                                            2,456,499
           81,423  Nomura Home Equity Loan, Inc., Series 2006
                   HE1, Class A1, VRN, 5.21%, 10/25/07, resets
                   monthly off the 1-month LIBOR plus 0.08% with
                   no caps(2)                                               81,211
           67,796  Nomura Home Equity Loan, Inc., Series 2006
                   HE2, Class A1, VRN, 5.19%, 10/25/07, resets
                   monthly off the 1-month LIBOR plus 0.06% with
                   no caps(2)                                               67,450
        2,041,975  SLM Student Loan Trust, Series 2006-5, Class
                   A2, VRN, 5.35%, 10/25/07, resets quarterly off
                   the 3-month LIBOR minus 0.01% with no caps(2)         2,040,693

Principal Amount                                                             Value

      $ 3,000,000  SLM Student Loan Trust, Series 2006-10, Class
                   A2, VRN, 5.37%, 10/25/07, resets quarterly off
                   the 3-month LIBOR plus 0.01% with no caps(2)        $ 3,001,575
        1,800,560  Soundview Home Equity Loan Trust, 2006-3,
                   Class A1, VRN, 5.17%, 10/25/07, resets monthly
                   off the 1-month LIBOR plus 0.04% with no
                   caps(2)                                               1,794,994
                                                                     -------------
TOTAL ASSET-BACKED SECURITIES
(Cost $30,572,355)                                                      30,471,346
                                                                     -------------

Sovereign Governments & Agencies -- 2.9%

          246,000  Hydro Quebec, 8.40%, 1/15/22(2)                         318,671
              JPY  KfW, VRN, 0.60%, 11/8/07, resets quarterly off
    1,874,000,000  the 3-month JPY LIBOR minus 0.22% with no
                   caps(2)                                              16,336,551
      $ 1,305,000  Province of Quebec, 5.00%, 7/17/09(2)                 1,317,997
                                                                     -------------
TOTAL SOVEREIGN GOVERNMENTS & AGENCIES
(Cost $17,028,033)                                                      17,973,219
                                                                     -------------
Municipal Securities -- 0.2%

        1,477,000  Illinois GO, (Taxable Pension), 5.10%,
                   6/1/33(2)
(Cost $1,477,000)                                                        1,386,297
                                                                     -------------

Temporary Cash Investments -- 0.4%

Repurchase Agreement, Bank of America Securities, LLC,
(collateralized by various U.S. Treasury obligations, 0.875%,
4/15/10, valued at $2,851,047), in a joint trading account at
3.80%, dated 9/28/07, due 10/1/07 (Delivery value $2,537,803)(2)
(Cost $2,537,000)                                                        2,537,000
                                                                     -------------

Temporary Cash Investments -- Securities Lending Collateral(6) -- 24.2%

        6,000,287  Bancaja US Debt, SAu, VRN, 5.41%, 10/10/07,
                   resets quarterly off the 3-month LIBOR plus
                   0.05% with no caps                                    6,000,287
        5,000,000  Barclays Bank plc, 5.37%, 12/17/07                    5,000,000
        4,999,500  BASF AG, VRN, 5.36%, 10/22/07, resets
                   quarterly off the 3-month LIBOR minus 0.01%
                   with no caps                                          4,999,500
        3,000,000  Dexia Credit Local, VRN, 4.84%, 10/1/07               3,000,000
        4,868,524  Govco Inc., 5.37%, 12/17/07                           4,868,524


- ------
13


Diversified Bond

Principal Amount                                                             Value

      $ 5,996,863  K2 (USA) LLC, VRN, 4.87%, 10/1/07, resets
                   quarterly off the Federal Reserve Prime Loan
                   Rate minus 2.91% with no caps                       $ 5,996,863
        5,997,000  Links Finance LLC, VRN, 4.87%, 10/1/07                5,997,000
        5,000,000  Merrill Lynch & Co. Inc., VRN, 4.92%, 10/1/07,
                   resets quarterly off the Federal Reserve Prime
                   Loan Rate minus 2.83% with no caps                    5,000,000
        4,723,726  Morgan Stanley ABS Capital I, Series 2007 NC4,
                   Class A2A, VRN, 5.21%, 10/25/07, resets
                   monthly off the 1-month LIBOR plus 0.08% with
                   no caps                                               4,723,726
        3,004,946  Nationwide Building Society, VRN, 5.73%,
                   12/10/07                                              3,004,946
        6,000,000  Northern Rock plc, 5.34%, 10/18/07                    6,000,000
        6,210,953  Old Line Funding, 5.37%, 10/18/07                     6,210,953
        1,979,549  Silver Tower US Funding, LLC, 5.39%, 10/10/07         1,979,549

Principal Amount                                                             Value

      $ 4,996,826  Tango Finance Corp., VRN, 4.88%, 10/1/07,
                   resets quarterly off the Federal Reserve Prime
                   Loan Rate minus 2.91% with no caps                  $ 4,996,826
        6,000,000  Ulster Bank Ireland Ltd., VRN, 4.85%, 10/1/07         6,000,000

Repurchase Agreement, Lehman Brothers, Inc., (collateralized by
various U.S. Government Agency obligations in a pooled account at
the lending agent), 5.15%, dated 9/28/07, due 10/1/07 (Delivery
value $77,096,090)                                                      77,063,017
                                                                     -------------
TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING COLLATERAL
(Cost $150,841,191)                                                    150,841,191
                                                                     -------------
TOTAL INVESTMENT SECURITIES -- 129.4%
(Cost $803,897,808)                                                    806,087,733
                                                                     -------------
OTHER ASSETS AND LIABILITIES -- (29.4)%                              (183,333,755)
                                                                     -------------
TOTAL NET ASSETS -- 100.0%                                           $ 622,753,978
                                                                     =============

Futures Contracts
                                                  Underlying
                                                  Face Amount      Unrealized
    Contracts Purchased       Expiration Date      at Value       Gain (Loss)

    1,198  U.S. Treasury
           2-Year Notes        December 2007       $248,042,156      $1,229,711

    1,101  U.S. Treasury
           5-Year Notes        December 2007        117,841,406       1,297,179
                                                   ------------    ------------
                                                   $365,883,562      $2,526,890
                                                   ============    ============

                                                  Underlying
                                                  Face Amount      Unrealized
      Contracts Sold          Expiration Date      at Value       Gain (Loss)

      281  U.S. Long Bond      December 2007       $ 31,287,594     $ (570,604)

    1,071  U.S. Treasury
           10-Year Notes       December 2007        117,040,219     (1,787,806)
                                                   ------------    ------------
                                                   $148,327,813    $(2,358,410)
                                                   ============    ============


- ------
14


Diversified Bond

Swap Agreements

Notional                                                 Expiration    Unrealized
Amount          Description of Agreement                    Date      Gain (Loss)

CREDIT DEFAULT

$1,725,000      Pay quarterly a fixed rate equal to      March 2012      $ 172,169
                0.46% multiplied by the notional
                amount and receive from Barclays Bank
                plc upon each default event of Centex
                Corp., par value of the proportional
                notional amount.
 4,650,000      Pay quarterly a fixed rate equal to      March 2012        465,205
                0.55% multiplied by the notional
                amount and receive from Deutsche Bank
                Securities Inc. upon each default
                event of Lennar Corp., par value of
                the proportional notional amount.
27,100,000      Pay quarterly a fixed rate equal to       June 2012        296,741
                0.35% multiplied by the notional
                amount and receive from Barclays Bank
                plc upon each default event of one of
                the issues of Dow Jones CDX N.A.
                Investment Grade 8, par value of the
                proportional notional amount.
 8,500,000      Pay quarterly a fixed rate equal to       June 2012       (53,621)
                0.57% multiplied by the notional
                amount and receive from Deutsche Bank
                AG upon each default event of Darden
                Restaurants, Inc., par value of the
                proportional notional amount.
 1,450,000      Pay quarterly a fixed rate equal to       September        (1,062)
                0.35% multiplied by the notional            2012
                amount and receive from Merrill Lynch
                International upon each default event
                of Computer Sciences Corp., par value
                of the proportional notional amount.
 1,100,000      Pay quarterly a fixed rate equal to       September            219
                0.36% multiplied by the notional            2012
                amount and receive from Barclays Bank
                plc upon each default event of
                Whirlpool Corp., par value of the
                proportional notional amount.
 4,520,000      Pay quarterly a fixed rate equal to       September       (33,281)
                0.47% multiplied by the notional            2012
                amount and receive from Deutsche Bank
                AG upon each default event of JPMorgan
                Chase & Co., par value of the
                proportional notional amount.
 6,000,000      Pay quarterly a fixed rate equal to       September       (25,672)
                0.63% multiplied by the notional            2012
                amount and receive from Deutsche Bank
                AG upon each default event of Morgan
                Stanley, par value of the proportional
                notional amount.
 6,000,000      Pay quarterly a fixed rate equal to       September      (112,832)
                1.32% multiplied by the notional            2012
                amount and receive from Deutsche Bank
                AG upon each default event of Bear
                Stearns Companies Inc. (The), par
                value of the proportional notional
                amount.
 7,600,000      Pay quarterly a fixed rate equal to      March 2017         38,498
                0.12% multiplied by the notional
                amount and receive from Barclays Bank
                plc upon each default event of Pfizer
                Inc., par value of the proportional
                notional amount.
3,010,000       Pay quarterly a fixed rate equal to       September       (23,874)
                0.64% multiplied by the notional            2017
                amount and receive from Deutsche Bank
                AG upon each default event of JPMorgan
                Chase & Co., par value of the
                proportional notional amount.
                                                                        ----------
                                                                         $ 722,490
                                                                        ==========


- ------
15


Diversified Bond

Notes to Schedule of Investments

CDX = Credit Derivative Indexes

FHLMC = Federal Home Loan Mortgage Corporation

FNMA = Federal National Mortgage Association

GMAC = General Motors Acceptance Corporation

GNMA = Government National Mortgage Association

GO = General Obligation

JPY = Japanese Yen

LB-UBS = Lehman Brothers Inc. -- UBS AG

LIBOR = London Interbank Offered Rate

MASTR = Mortgage Asset Securitization Transactions, Inc.

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.

SEQ = Sequential Payer

STRIPS = Separate Trading of Registered Interest and Principal of Securities

VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is
effective September 30, 2007.

(1) Final maturity indicated, unless otherwise noted.

(2) Security, or a portion thereof, has been segregated for forward
commitments, futures contracts and/or swap agreements.

(3) Forward commitment.

(4) Security, or a portion thereof, was on loan as of September 30, 2007.

(5) Security was purchased under Rule 144A 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 September 30, 2007, was
$26,242,843, which represented 4.2% of total net assets.

(6) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions.

See Notes to Financial Statements.


- ------
16


PERFORMANCE
High-Yield

Total Returns as of September 30, 2007
                                                      Average Annual Returns
                           6                                             Since     Inception
                           months(1)    1 year     5 years   10 years  Inception      Date

INVESTOR CLASS              0.82%(2)   6.59%(2)   9.17%(2)    3.71%      3.71%      9/30/97

MERRILL LYNCH US HIGH
YIELD MASTER II
CONSTRAINED INDEX            0.65%       7.79%     12.25%     5.92%      5.92%         --

LIPPER HIGH CURRENT
YIELD FUNDS AVERAGE
RETURN(3)                    0.26%       7.03%     11.10%     4.31%      4.31%         --

Investor Class's Lipper                333 of     270 of     105 of
Ranking(3)                     --         446        320       146     105 of 146      --

Institutional Class(2)       0.92%       6.80%       --         --       6.54%       8/2/04

A Class(2)(4)
 No sales charge*            0.70%       6.33%      8.95%       --       7.45%
 With sales charge*          -3.90%      1.52%      7.96%       --       6.57%       3/8/02

B Class(2)
 No sales charge*            0.32%       5.54%       --         --       7.48%
 With sales charge*          -4.68%      1.54%       --         --       7.15%      1/31/03

C Class(2)
 No sales charge*            0.32%       5.53%      8.16%       --       6.51%
 With sales charge*          -0.66%      5.53%      8.16%       --       6.51%      12/10/01

R Class(2)                   0.57%       6.06%       --         --       4.94%      7/29/05

* Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
sales charge for fixed income funds and may be subject to a maximum CDSC of
1.00%. B Class shares redeemed within six years of purchase are subject to a
CDSC that declines from 5.00% during the first year after purchase to 0.00%
the sixth year after purchase. C Class shares redeemed within 12 months of
purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class
Information pages for more about the applicable sales charges for each share
class. The SEC requires that mutual funds provide performance information net
of maximum sales charges in all cases where charges could be applied.

(1) Total returns for periods less than one year are not annualized.

(2) Class returns would have been lower if American Century had not
voluntarily waived a portion of its management fees and reimbursed a portion
of its distribution and service fees, as applicable.

(3) Data provided by Lipper Inc. -- A Reuters Company. © 2007 Reuters. All
rights reserved. Any copying, republication or redistribution of Lipper
content, including by caching, framing or similar means, is expressly
prohibited without the prior written consent of Lipper. Lipper shall not be
liable for any errors or delays in the content, or for any actions taken in
reliance thereon.

  Lipper Fund Performance -- Performance data is total return, and is
preliminary and subject to revision.

  Lipper Rankings -- Rankings are based only on the universe shown and are
based on average annual total returns. This listing might not represent the
complete universe of funds tracked by Lipper.

  The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by Lipper
and may be incomplete. No offer or solicitations to buy or sell any of the
securities herein is being made by Lipper.

(4) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class. Performance, with sales charge, prior to that date has been adjusted to
reflect the A Class's current sales charge.

Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the
performance shown. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. To obtain performance
data current to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline. In
addition, the lower-rated securities in which the fund invests are subject to
greater credit risk, default risk and liquidity risk.

Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating
expenses (such as transaction costs and management fees) that reduce returns,
while the total returns of the index do not.


- ------
17


High-Yield


Growth of $10,000 Over 10 Years
$10,000 investment made September 30, 1997

One-Year Returns Over 10 Years
Periods ended September 30
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Investor Class -0.45% 3.37% -1.80% -11.54% 3.86% 18.81% 10.67% 4.51% 5.90%* 6.59%*

Merrill Lynch
US High Yield
Master II
Constrained
Index 2.48% 3.86% 0.89% -6.13% -1.08% 28.80% 12.33% 6.59% 7.22% 7.79%

*Returns would have been lower, along with the ending value, if a portion of
the class's management fees had not been waived during the period.

- ------
18

PORTFOLIO COMMENTARY
High-Yield

Lead Portfolio Manager: Mike Difley

Macro Strategy Team Representative: Jim Keegan

PERFORMANCE SUMMARY

High-Yield returned 0.82%* for the six months ended September 30, 2007. That
compares with the 0.65% return of its benchmark, the Merrill Lynch US High
Yield Master II Constrained Index. Portfolio returns reflect operating
expenses, while the index returns do not.

The portfolio's absolute return reflected the difficult climate for high-yield
bonds prevailing in recent months (see the Market Perspective on page 2).
Relative to the benchmark, the portfolio outperformed because of our sector
and security selection, as well as an underweight position in the lowest-rated
segment of the market.

HIGH-YIELD MARKET REVIEW

Beginning in June, a long streak of outperformance by the riskiest,
lowest-rated segment of the high-yield market came to an end, reflecting a
lack of liquidity and aversion to risk in the marketplace. At the peak of the
credit crunch in July and August, demand for highly leveraged bonds with light
covenants and low risk premiums evaporated. As a result, CCC-rated bonds had
negative returns for the six months, while the higher-quality B and BB bonds
managed positive performance. Looking at returns by sector, consumer-related
sectors performed poorly, led by housing bonds, while bonds from more
defensive sectors, such as telecommunications and utilities bonds, held up
well.

HIGHER-QUALITY PAID OFF

We have been positioning the portfolio to benefit from higher risk premiums by
holding underweight positions in CCC bonds relative to the major high-yield
benchmarks. That's because we viewed the risk/reward trade-off of CCCs as
being unattractive -- yield spreads were in the neighborhood of all-time lows
even as the credit cycle appeared to have peaked and housing had begun to drag
on the economy.

While we thought this positioning made sense over time given our view of the
economy, credit quality, and spreads, it limited portfolio performance
relative to the benchmark until June, when CCC bonds finally gave back some
ground and began underperforming higher-rated debt. The re-pricing of risk
accelerated through the summer, peaking in August. As a result, the
lowest-quality bonds underperformed for the six months, rewarding our
higher-quality, more defensive positioning.

Portfolio at a Glance
As of As of
9/30/07 3/31/07
Weighted Average Maturity 5.4 years 4.7 years
Average Duration (effective) 4.1 years 3.5 years

Yields as of September 30, 2007(1)
30-day SEC Yield
Investor Class 6.85%
Institutional Class 7.05%
A Class 6.32%
B Class 5.85%
C Class 5.85%
R Class 6.35%

(1) The yields presented reflect the waiver of a portion of the fund's
management fees. Without such waiver, the 30-day yields would have been lower.

* All fund returns referenced in this commentary are for Investor Class
shares. Class returns would have been lower had management fees not been
waived. Total returns for periods less than one year are not annualized.

- ------
19

High-Yield

SECTOR, SECURITY PICKS CONTRIBUTED

Our sector allocation and security selection also helped relative performance,
as some of our larger, defensive holdings performed well. Examples are waste
transporter and recycler Allied Waste, and health care names HCA and Community
Health. We favored these securities because they're in less economically
sensitive sectors of the economy and should hold up better given a slowdown in
growth. In addition, it helped performance to hold an underweight position in
paper & forest products names, which struggled with higher input costs at a
time of slack demand and negative currency effects. That said, our holdings in
the finance company bonds of GMAC and Ford Motor Credit underperformed as
finance-related bonds in general came under pressure following major
dislocations in the mortgage finance market.

OUTLOOK

"We use a relative value approach to investing, looking for what we believe
are good fundamental credits trading at attractive valuations," said portfolio
manager Mike Difley. "We think that style should fare better in a more
discriminating market where good credits lead, as opposed to the recent past,
when the lowest-rated bonds outperformed seemingly without regard to deal
quality or structure."

"Credit selection will become increasingly important in the coming months as
the high-yield market faces a large new issue calendar in the face of a
slowing economic environment," Difley continued. "While default rates remain
near all-time lows, they are likely to see upward pressure over the next 12
months. In that environment, we will remain vigilant in our investment process
while looking to capitalize on today's wider spread levels through fundamental
credit selection."

Top Five Industries* as of September 30, 2007
% of net % of net
assets as of assets as of
9/30/07 3/31/07
Media 10.8% 10.9%
Oil, Gas & Consumable Fuels 8.5% 7.2%
Hotels, Restaurants & Leisure 7.1% 6.2%
Diversified Financial Services 6.3% 3.9%
Health Care Providers & Services 5.5% 4.5%

* Excludes securities in the Diversified industry category. These securities
represent investments in diversified pools of underlying securities in multiple
industry categories.

Portfolio Composition by Credit Rating
% of fund % of fund
investments investments
as of as of
9/30/07 3/31/07
AAA 8% 12%
A -- 1%
BBB 1% 4%
BB 31% 24%
B 48% 50%
CCC or lower 12% 9%

- ------
20

SCHEDULE OF INVESTMENTS
High-Yield

SEPTEMBER 30, 2007 (UNAUDITED)

Principal Amount Value

Corporate Bonds -- 88.5%

AEROSPACE & DEFENSE -- 1.1%
$ 400,000 DRS Technologies, Inc., 7.625%, 2/1/18 $410,000
350,000 L-3 Communications Corp., 6.125%, 7/15/13(1) 345,625
250,000 L-3 Communications Corp., 6.375%, 10/15/15 246,875
------------
1,002,500
------------
AUTOMOBILES -- 1.7%
500,000 Ford Motor Co., 7.45%, 7/16/31(1) 395,000
1,300,000 General Motors Corp., 8.375%, 7/15/33(1)(2) 1,145,629
------------
1,540,629
------------
CHEMICALS -- 2.6%
550,000 Hexion US Finance Corp./Hexion Nova Scotia
Finance ULC, 9.75%, 11/15/14(2) 607,750
750,000 Ineos Group Holdings plc, 8.50%, 2/15/16
(Acquired 5/14/07, Cost $757,500)(1)(3) 721,875
850,000 Lyondell Chemical Co., 8.25%, 9/15/16(2) 962,625
------------
2,292,250
------------
COMMERCIAL SERVICES & SUPPLIES -- 4.7%
750,000 Allied Waste North America, Inc., 6.375%,
4/15/11(2) 755,625
750,000 Allied Waste North America, Inc., 7.875%,
4/15/13(2) 778,125
750,000 ARAMARK Corp., 8.50%, 2/1/15(1)(2) 768,750
500,000 Cenveo Corp., 7.875%, 12/1/13(1) 457,500
700,000 Corrections Corp. of America, 6.25%, 3/15/13 693,000
750,000 Deluxe Corp., 7.375%, 6/1/15(2) 744,375
------------
4,197,375
------------
COMMUNICATIONS EQUIPMENT -- 0.8%
675,000 Nordic Telephone Co. Holdings ApS, 8.875%,
5/1/16 (Acquired 4/26/06-5/5/06, Cost
$693,594)(2)(3) 715,500
------------
CONTAINERS & PACKAGING -- 2.7%
500,000 Ball Corp., 6.875%, 12/15/12 508,750
250,000 Ball Corp., 6.625%, 3/15/18 246,250
250,000 Graham Packaging Co. Inc., 8.50%, 10/15/12 249,375

Principal Amount Value

$ 1,000,000 Graham Packaging Co. Inc., 9.875%, 10/15/14(1) $995,000
400,000 Smurfit-Stone Container Enterprises, Inc.,
8.00%, 3/15/17(1) 395,000
------------
2,394,375
------------
DIVERSIFIED -- 6.5%
4,000,000 Dow Jones CDX N.A. High Yield Secured Note,
Series 8-T1, 7.625%, 6/29/12 (Acquired 4/11/07,
Cost $3,935,000)(1)(3) 3,874,999
2,000,000 Dow Jones CDX N.A. High Yield Secured Note,
Series 8-T2, 6.75%, 6/29/12 (Acquired 4/11/07,
Cost $1,980,000)(3) 1,935,000
------------
5,809,999
------------
DIVERSIFIED FINANCIAL SERVICES -- 6.3%
400,000 Ford Motor Credit Co., 6.625%, 6/16/08 397,044
1,600,000 Ford Motor Credit Co., 7.375%, 10/28/09(2) 1,569,628
1,100,000 Ford Motor Credit Co., 7.25%, 10/25/11(2) 1,031,705
1,000,000 General Motors Acceptance Corp., 6.875%,
9/15/11(2) 952,467
750,000 General Motors Acceptance Corp., 6.75%,
12/1/14(2) 680,715
1,000,000 KAR Holdings Inc., 8.75%, 5/1/14 (Acquired
4/13/07-9/25/07, Cost $977,500)(2)(3) 962,500
------------
5,594,059
------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 5.1%
325,000 Citizens Communications Co., 6.25%, 1/15/13 318,500
500,000 Embarq Corp., 7.08%, 6/1/16 519,183
200,000 Intelsat Bermuda Ltd., 9.25%, 6/15/16(1) 208,500
250,000 Intelsat Subsidiary Holding Co. Ltd., 8.25%,
1/15/13 255,000
500,000 Intelsat Subsidiary Holding Co. Ltd., 8.625%,
1/15/15 512,500
550,000 Level 3 Financing Inc., 9.25%, 11/1/14 544,500
1,000,000 MetroPCS Wireless, Inc., 9.25%, 11/1/14
(Acquired 5/31/07-6/5/07, Cost $1,060,625)(3) 1,025,000

- ------
21

High-Yield

Principal Amount Value

$ 550,000 Qwest Communications International Inc., 7.50%,
2/15/14(1) $559,625
550,000 Qwest Corp., 7.875%, 9/1/11 580,250
------------
4,523,058
------------
ELECTRIC UTILITIES -- 1.4%
500,000 Edison Mission Energy, 7.00%, 5/15/17 (Acquired
5/1/07, Cost $500,000)(3) 495,000
750,000 Reliant Energy, Inc., 7.625%, 6/15/14(2) 759,375
------------
1,254,375
------------
ELECTRICAL EQUIPMENT -- 0.3%
250,000 Baldor Electric Co., 8.625%, 2/15/17(1) 262,500
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 0.5%
500,000 Flextronics International Ltd., 6.50%, 5/15/13 480,000
------------
FOOD & STAPLES RETAILING -- 2.0%
500,000 Ingles Markets, Inc., 8.875%, 12/1/11(1) 512,500
750,000 Rite Aid Corp., 7.50%, 3/1/17(2) 709,688
550,000 SUPERVALU INC., 7.50%, 11/15/14 562,375
------------
1,784,563
------------
FOOD PRODUCTS -- 0.9%
750,000 Smithfield Foods Inc., 7.75%, 7/1/17(2) 772,500
------------
HEALTH CARE PROVIDERS & SERVICES -- 5.5%
1,400,000 Community Health Systems Inc., 8.875%, 7/15/15
(Acquired 6/27/07-7/13/07, Cost $1,396,658)(2)(3) 1,445,500
750,000 HCA Inc., 6.50%, 2/15/16(1)(2) 641,250
1,250,000 HCA Inc., 9.25%, 11/15/16 (Acquired
11/9/06-7/13/07, Cost $1,291,231)(2)(3) 1,331,250
500,000 Omnicare Inc., 6.125%, 6/1/13 460,000
250,000 Omnicare Inc., 6.875%, 12/15/15 232,500
750,000 Sun Healthcare Group, Inc., 9.125%, 4/15/15
(Acquired 3/22/07-6/1/07, Cost $780,000)(3) 768,750
------------
4,879,250
------------
HOTELS, RESTAURANTS & LEISURE -- 7.1%
600,000 Majestic Star Casino LLC/Majestic Star Casino
Capital Corp., 9.50%, 10/15/10(2) 579,000

Principal Amount Value

$ 34,000 Mandalay Resort Group, 9.375%, 2/15/10 $35,785
1,000,000 MGM Mirage, 8.50%, 9/15/10(2) 1,049,999
300,000 MGM Mirage, 6.75%, 9/1/12 296,625
400,000 Penn National Gaming, Inc., 6.875%, 12/1/11 407,000
750,000 Pinnacle Entertainment Inc., 7.50%, 6/15/15
(Acquired 6/5/07, Cost $738,938)(2)(3) 713,438
300,000 Royal Caribbean Cruises Ltd., 7.00%, 6/15/13 299,834
300,000 Royal Caribbean Cruises Ltd., 6.875%, 12/1/13 297,890
250,000 Six Flags Inc., 8.875%, 2/1/10(1) 226,875
500,000 Six Flags Inc., 9.75%, 4/15/13(1) 426,250
500,000 Station Casinos Inc., 6.875%, 3/1/16 437,500
750,000 Station Casinos Inc., 7.75%, 8/15/16(2) 746,250
400,000 Wimar OpCo LLC/Wimar OpCo Finance Corp., 9.625%,
12/15/14 (Acquired 12/14/06, Cost $400,000)(1)(3) 312,000
500,000 Wynn Las Vegas LLC, 6.625%, 12/1/14 492,500
------------
6,320,946
------------
HOUSEHOLD DURABLES -- 1.4%
500,000 KB Home, 6.375%, 8/15/11(2) 462,500
750,000 Sealy Mattress Co., 8.25%, 6/15/14(2) 759,375
------------
1,221,875
------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS -- 1.3%
500,000 AES Corp. (The), 8.75%, 5/15/13 (Acquired
5/1/03, Cost $500,000)(3) 525,625
650,000 NRG Energy Inc., 7.375%, 2/1/16(2) 653,250
------------
1,178,875
------------
INSURANCE -- 0.7%
675,000 Fairfax Financial Holdings Ltd., 7.75%,
6/15/17(1) 646,313
------------
IT SERVICES -- 0.9%
450,000 SunGard Data Systems Inc., 9.125%, 8/15/13 470,250
350,000 SunGard Data Systems Inc., 10.25%, 8/15/15(1) 367,500
------------
837,750
------------

- ------
22

High-Yield

Principal Amount Value

MACHINERY -- 1.1%
$ 950,000 Rental Service Corp., 9.50%, 12/1/14(1) $912,000
21,000 Terex Corp., 7.375%, 1/15/14 21,420
------------
933,420
------------
MEDIA -- 10.8%
200,000 Cablevision Systems Corp., 8.00%, 4/15/12 195,000
350,000 Cadmus Communications Corp., 8.375%, 6/15/14 324,188
1,798,000 CCH I, LLC/CCH I Capital Corp., 11.00%, 10/1/15 1,829,464
1,000,000 Cinemark Inc., VRN, 0.00%, 3/15/09(4) 950,000
500,000 CSC Holdings, Inc., 8.125%, 8/15/09 510,000
250,000 CSC Holdings, Inc., 6.75%, 4/15/12 241,875
500,000 Dex Media Inc., 8.00%, 11/15/13 506,250
500,000 DirecTV Holdings LLC/DirecTV Financing Co.,
Inc., 8.375%, 3/15/13 521,875
500,000 Echostar DBS Corp., 6.375%, 10/1/11 503,750
750,000 Harland Clarke Holdings Corp., 9.50%, 5/15/15(2) 673,125
250,000 Harland Clarke Holdings Corp., VRN, 10.31%,
11/15/07, resets quarterly off the 3-month LIBOR
plus 4.75% with no caps 224,375
1,200,000 Idearc Inc., 8.00%, 11/15/16(2) 1,202,999
500,000 Mediacom LLC/Mediacom Capital Corp., 9.50%,
1/15/13 508,750
800,000 MediaNews Group, Inc., 6.875%, 10/1/13(2) 612,000
850,000 R.H. Donnelley Corp., 8.875%, 1/15/16(2) 870,188
------------
9,673,839
------------
METALS & MINING -- 2.4%
300,000 Freeport-McMoRan Copper & Gold Inc., 8.25%,
4/1/15 324,750
950,000 Freeport-McMoRan Copper & Gold Inc., 8.375%,
4/1/17(2) 1,040,250
775,000 Tube City IMS Corp., 9.75%, 2/1/15(1)(2) 761,438
------------
2,126,438
------------
MULTI-UTILITIES -- 0.6%
500,000 CMS Energy Corp., 7.75%, 8/1/10 525,533
------------
MULTILINE RETAIL -- 0.5%
500,000 Bon-Ton Stores, Inc. (The), 10.25%, 3/15/14(1) 470,000
------------

Principal Amount Value

OIL, GAS & CONSUMABLE FUELS -- 8.5%
$ 500,000 Chesapeake Energy Corp., 7.625%, 7/15/13 $525,000
600,000 Chesapeake Energy Corp., 7.50%, 6/15/14(1) 618,000
750,000 Cimarex Energy Co., 7.125%, 5/1/17(2) 748,125
650,000 Forest Oil Corp., 7.75%, 5/1/14 663,000
400,000 Massey Energy Co., 6.625%, 11/15/10 393,000
750,000 Massey Energy Co., 6.875%, 12/15/13(2) 703,125
800,000 OPTI Canada Inc., 7.875%, 12/15/14 (Acquired
6/25/07-7/13/07, Cost $800,000)(2)(3) 803,999
520,000 Pacific Energy Partners L.P./Pacific Energy
Finance Corp., 7.125%, 6/15/14 533,746
500,000 Peabody Energy Corp., 7.375%, 11/1/16 530,000
500,000 Range Resources Corp., 7.375%, 7/15/13 510,000
750,000 Sabine Pass LNG, L.P., 7.50%, 11/30/16(2) 742,500
250,000 Tesoro Corp., 6.25%, 11/1/12 251,875
500,000 Williams Companies, Inc. (The), 8.125%, 3/15/12 541,250
------------
7,563,620
------------
PAPER & FOREST PRODUCTS -- 1.7%
300,000 Boise Cascade LLC, 7.125%, 10/15/14 289,500
500,000 Georgia-Pacific Corp., 7.70%, 6/15/15(1) 500,000
150,000 Georgia-Pacific Corp., 7.125%, 1/15/17 (Acquired
12/13/06, Cost $150,000)(3) 145,875
21,000 Jefferson Smurfit Corp., 8.25%, 10/1/12 21,158
500,000 Verso Paper Holdings LLC/Verso Paper Inc.,
9.125%, 8/1/14 517,500
------------
1,474,033
------------
REAL ESTATE INVESTMENT TRUSTS -- 0.7%
400,000 Host Marriott L.P., 7.00%, 8/15/12 405,000
250,000 Host Marriott L.P., 6.75%, 6/1/16 248,750
------------
653,750
------------
ROAD & RAIL -- 1.2%
550,000 Hertz Corp., 8.875%, 1/1/14 569,250
500,000 Hertz Corp., 10.50%, 1/1/16(1)(2) 542,500
------------
1,111,750
------------

- ------
23

High-Yield

Principal Amount Value

SPECIALTY RETAIL -- 3.5%

$ 250,000 Asbury Automotive Group Inc., 8.00%, 3/15/14 $242,500
650,000 Asbury Automotive Group Inc., 7.625%, 3/15/17
(Acquired 3/12/07-4/13/07, Cost $653,000)(3) 601,250
350,000 Claire's Stores Inc., 9.25%, 6/1/15 (Acquired
5/22/07, Cost $350,000)(1)(3) 304,500
600,000 Couche-Tard U.S. L.P./Couche-Tard Finance Corp.,
7.50%, 12/15/13 613,500
650,000 GSC Holdings Corp., 8.00%, 10/1/12(2) 679,250
425,000 Michaels Stores, Inc., 10.00%, 11/1/14(1) 437,750
350,000 Toys "R" Us, Inc., 7.375%, 10/15/18 282,625
------------
3,161,375
------------
TEXTILES, APPAREL & LUXURY GOODS -- 1.6%
850,000 Hanesbrands Inc., VRN, 8.78%, 12/17/07, resets
semiannually off the 6-month LIBOR plus 3.375%
with no caps(2) 850,000
625,000 Perry Ellis International, Inc., 8.875%, 9/15/13 617,188
------------
1,467,188
------------
TRADING COMPANIES & DISTRIBUTORS -- 1.5%
675,000 Ashtead Capital Inc., 9.00%, 8/15/16 (Acquired
8/1/06-10/5/06, Cost $690,500)(3) 669,094
400,000 United Rentals North America, Inc., 6.50%,
2/15/12 407,000
271,000 United Rentals North America, Inc., 7.75%,
11/15/13(1) 280,485
------------
1,356,579
------------
WIRELESS TELECOMMUNICATION SERVICES -- 0.9%
200,000 Dobson Communications Corp., 8.875%, 10/1/13 214,000
300,000 Rural Cellular Corp., 9.875%, 2/1/10 315,000
300,000 Syniverse Technologies Inc., 7.75%, 8/15/13 288,000
------------
817,000
------------
TOTAL CORPORATE BONDS
(Cost $79,687,251) 79,043,217
------------

Principal Amount Value

Sovereign Governments & Agencies -- 2.9%

JPY KfW, VRN, 0.60%, 11/8/07, resets quarterly off
302,000,000 the 3-month JPY LIBOR minus 0.22% with no caps
(Cost $2,483,751) $ 2,632,395
------------

Temporary Cash Investments -- 6.4%

Repurchase Agreement, Bank of America Securities, LLC,
(collateralized by various U.S. Treasury obligations, 0.875%,
4/15/10, valued at $4,943,538), in a joint trading account at
3.80%, dated 9/28/07, due 10/1/07 (Delivery value $4,400,393)(2) 4,399,000

Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized
by various U.S. Treasury obligations, 2.375%, 4/15/11, valued at
$1,358,277), in a joint trading account at 3.75%, dated 9/28/07,
due 10/1/07 (Delivery value $1,329,415)(2) 1,329,000
------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $5,728,000) 5,728,000
------------

Temporary Cash Investments -- Securities Lending Collateral(5) -- 15.2%

$ 1,000,048 Bancaja US Debt, SAu, VRN, 5.41%, 10/10/07,
resets quarterly off the 3-month LIBOR plus
0.05% with no caps 1,000,048
1,000,000 Barclays Bank plc, 5.37%, 12/17/07 1,000,000
999,900 BASF AG, VRN, 5.36%, 10/22/07, resets quarterly
off the 3-month LIBOR minus 0.01% with no caps 999,900
1,000,000 Dexia Credit Local, VRN, 4.84%, 10/1/07 1,000,000
973,704 Govco Incorporated, 5.37%, 12/17/07 973,705
999,477 K2 (USA) LLC, VRN, 4.87%, 10/1/07, resets
quarterly off the Federal Reserve Prime Loan
Rate minus 2.91% with no caps 999,477
999,500 Links Finance LLC, VRN, 4.87%, 10/1/07 999,500
1,000,000 Merrill Lynch & Co. Inc., VRN, 4.92%, 10/1/07,
resets quarterly off the Federal Reserve Prime
Loan Rate minus 2.83% with no caps 1,000,000

- ------
24

High-Yield

Principal Amount Value

$ 944,744 Morgan Stanley ABS Capital I, Series 2007 NC4,
Class A2A, VRN, 5.21%, 10/25/07, resets monthly
off the 1-month LIBOR plus 0.08% with no caps $944,744
1,001,648 Nationwide Building Society, VRN, 5.73%, 12/10/07 1,001,648
1,000,000 Northern Rock plc, 5.34%, 10/18/07 1,000,000
494,887 Silver Tower US Funding, LLC, 5.39%, 10/10/07 494,887
999,365 Tango Finance Corp., VRN, 4.88%, 10/1/07, resets
quarterly off the Federal Reserve Prime Loan
Rate minus 2.91% with no caps 999,365
1,000,000 Ulster Bank Ireland Ltd., VRN, 4.85%, 10/1/07 1,000,000

Principal Amount Value

Repurchase Agreement, Lehman Brothers, Inc., (collateralized by
various U.S. Government Agency obligations in a pooled account at
the lending agent), 5.15%, dated 9/28/07, due 10/1/07 (Delivery
value $140,184) $140,124
------------
TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING COLLATERAL
(Cost $13,553,398) 13,553,398
------------
TOTAL INVESTMENT SECURITIES -- 113.0%
(Cost $101,452,400) 100,957,010
------------
OTHER ASSETS AND LIABILITIES -- (13.0)% (11,604,253)
------------
TOTAL NET ASSETS -- 100.0% $ 89,352,757
============

Futures Contracts
Underlying Face Unrealized Gain
Contracts Purchased Expiration Date Amount at Value (Loss)
90 U.S. Treasury
2-Year Notes December 2007 $18,634,219 $102,454
============ =========

Underlying Face Unrealized Gain
Contracts Sold Expiration Date Amount at Value (Loss)
45 U.S. Treasury
10-Year Notes December 2007 $4,917,656 $(75,118)
============ =========

Swap Agreements

Notional Expiration Unrealized
Amount Description of Agreement Date Gain (Loss)

CREDIT DEFAULT

$1,800,000 Pay quarterly a fixed rate equal to June 2012 $ (9,819)
0.55% multiplied by the notional
amount and receive from Barclays Bank
plc upon each default event of Darden
Restaurants, Inc., par value of the
proportional notional amount.
5,100,000 Pay semiannually a fixed rate equal June 2012 12,356
to 1.25% multiplied by the notional
amount and receive from Barclays Bank
plc upon each default event of one of
the issues of Dow Jones CDX Emerging
Markets 7, par value of the
proportional notional amount.
---------
$2,537
=========

- ------
25

High-Yield

Notes to Schedule of Investments

CDX = Credit Derivative Indexes

JPY = Japanese Yen

LIBOR = London Interbank Offered Rate

VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is
effective September 30, 2007.

(1) Security, or a portion thereof, was on loan as of September 30, 2007.

(2) Security, or a portion thereof, has been segregated for futures contracts
and/or swap agreements.

(3) Security was purchased under Rule 144A 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 September 30, 2007 was
$17,351,155, which represented 19.4% of total net assets. None of the
restricted securities were considered illiquid.

(4) Step-coupon security. These securities are issued with a zero-coupon and
become interest bearing at a predetermined rate and date and are issued at a
substantial discount from their value at maturity. Rate shown is effective
September 30, 2007.

(5) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions.

See Notes to Financial Statements.

- ------
26

SHAREHOLDER FEE EXAMPLES (UNAUDITED)

The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from April 1, 2007 to September 30, 2007.

ACTUAL EXPENSES

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

- ------
27

Expenses Paid
Beginning During
Account Ending Period(1) Annualized
Value Account Value 4/1/07 - Expense
4/1/07 9/30/07 9/30/07 Ratio(1)
Diversified Bond

ACTUAL
Investor Class $1,000 $1,024.10 $3.14 0.62%
Institutional Class $1,000 $1,025.10 $2.13 0.42%
A Class $1,000 $1,022.80 $4.40 0.87%
B Class $1,000 $1,019.00 $8.18 1.62%
C Class $1,000 $1,019.00 $8.18 1.62%
R Class $1,000 $1,021.60 $5.66 1.12%

HYPOTHETICAL
Investor Class $1,000 $1,021.90 $3.13 0.62%
Institutional Class $1,000 $1,022.90 $2.12 0.42%
A Class $1,000 $1,020.65 $4.39 0.87%
B Class $1,000 $1,016.90 $8.17 1.62%
C Class $1,000 $1,016.90 $8.17 1.62%
R Class $1,000 $1,019.40 $5.65 1.12%

- ------
28

Beginning Expenses Paid
Account Ending During Annualized
Value Account Value Period(1) Expense
4/1/07 9/30/07 4/1/07 - 9/30/07 Ratio(1)
High-Yield

ACTUAL
Investor Class (after waiver)(2) $1,000 $1,008.20 $4.02 0.80%
Investor Class (before waiver) $1,000 $1,008.20(3) $4.37 0.87%
Institutional Class (after waiver)(2) $1,000 $1,009.20 $3.01 0.60%
Institutional Class (before waiver) $1,000 $1,009.20(3) $3.37 0.67%
A Class (after waiver)(2) $1,000 $1,007.00 $5.27 1.05%
A Class (before waiver) $1,000 $1,007.00(3) $5.62 1.12%
B Class (after waiver)(2) $1,000 $1,003.20 $9.01 1.80%
B Class (before waiver) $1,000 $1,003.20(3) $9.36 1.87%
C Class (after waiver)(2) $1,000 $1,003.20 $9.01 1.80%
C Class (before waiver) $1,000 $1,003.20(3) $9.36 1.87%
R Class (after waiver)(2) $1,000 $1,005.70 $6.52 1.30%
R Class (before waiver) $1,000 $1,005.70(3) $6.87 1.37%

HYPOTHETICAL
Investor Class (after waiver)(2) $1,000 $1,021.00 $4.04 0.80%
Investor Class (before waiver) $1,000 $1,020.65 $4.39 0.87%
Institutional Class (after waiver)(2) $1,000 $1,022.00 $3.03 0.60%
Institutional Class (before waiver) $1,000 $1,021.65 $3.39 0.67%
A Class (after waiver)(2) $1,000 $1,019.75 $5.30 1.05%
A Class (before waiver) $1,000 $1,019.40 $5.65 1.12%
B Class (after waiver)(2) $1,000 $1,016.00 $9.07 1.80%
B Class (before waiver) $1,000 $1,015.65 $9.42 1.87%
C Class (after waiver)(2) $1,000 $1,016.00 $9.07 1.80%
C Class (before waiver) $1,000 $1,015.65 $9.42 1.87%
R Class (after waiver)(2) $1,000 $1,018.50 $6.56 1.30%
R Class (before waiver) $1,000 $1,018.15 $6.91 1.37%

(2) During the six months ended September 30, 2007, the class received a
partial waiver of its management fee.

(3) Ending account value assumes the return earned after waiver. The return
would have been lower had fees not been waived and may have resulted in a
lower ending account value.

- ------
29

STATEMENT OF ASSETS AND LIABILITIES

SEPTEMBER 30, 2007 (UNAUDITED)
Diversified
Bond High-Yield
ASSETS

Investment securities, at value (cost of
$653,056,617 and $87,899,002, respectively) --
including $152,764,091 and $13,331,132 of
securities on loan, respectively $655,246,542 $87,403,612

Investments made with cash collateral received for
securities on loan, at value (cost of $150,841,191
and $13,553,398, respectively) 150,841,191 13,553,398
------------ -----------
Total investment securities, at value (cost of
$803,897,808 and $101,452,400, respectively) 806,087,733 100,957,010

Cash 15,475,743 1,387,242

Receivable for investments sold 218,028 --

Receivable for variation margin on futures contracts 44,248 44,797

Unrealized appreciation on swap agreements 972,832 12,356

Interest receivable 4,821,381 1,838,217
------------ -----------
827,619,965 104,239,622
------------ -----------

LIABILITIES

Payable for collateral received for securities on
loan 150,841,191 13,553,398

Payable for investments purchased 52,373,662 974,227

Payable for capital shares redeemed 218 14,359

Unrealized depreciation on swap agreements 250,342 9,819

Accrued management fees 279,420 52,778

Distribution fees payable 2,491 2,010

Service fees (and distribution fees -- A Class and
R Class) payable 3,255 2,825

Dividends payable 1,115,408 277,449
------------ -----------
204,865,987 14,886,865
------------ -----------

NET ASSETS $622,753,978 $89,352,757
============ ===========

See Notes to Financial Statements.

- ------
30

SEPTEMBER 30, 2007 (UNAUDITED)
Diversified
Bond High-Yield
NET ASSETS CONSIST OF:

Capital paid in $628,674,176 $102,507,934

Accumulated net realized loss on investment
transactions (8,945,448) (12,727,978)

Net unrealized appreciation (depreciation) on
investments 3,025,250 (427,199)
------------ ------------
$622,753,978 $ 89,352,757
============ ============

INVESTOR CLASS

Net assets $450,892,292 $53,138,804

Shares outstanding 44,932,164 8,406,612

Net asset value per share $10.03 $6.32

INSTITUTIONAL CLASS

Net assets $155,906,733 $22,097,732

Shares outstanding 15,536,373 3,495,882

Net asset value per share $10.03 $6.32

A CLASS

Net assets $12,003,489 $10,857,884

Shares outstanding 1,196,169 1,717,724

Net asset value per share $10.03 $6.32

Maximum offering price (net asset value divided
by 0.955) $10.50 $6.62

B CLASS

Net assets $802,876 $1,338,094

Shares outstanding 80,008 211,688

Net asset value per share $10.03 $6.32

C CLASS

Net assets $3,121,715 $1,892,294

Shares outstanding 311,084 299,363

Net asset value per share $10.03 $6.32

R CLASS

Net assets $26,873 $27,949

Shares outstanding 2,678 4,422

Net asset value per share $10.03 $6.32

See Notes to Financial Statements.

- ------
31

STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED)
Diversified
Bond High-Yield
INVESTMENT INCOME (LOSS)

INCOME:

Interest $ 16,326,730 $ 3,261,041

Securities lending 277,392 17,939
------------ -----------
16,604,122 3,278,980
------------ -----------
EXPENSES:

Management fees 1,756,520 356,661

Distribution fees:

A Class 3,329 957

B Class 2,977 4,871

C Class 10,592 7,319

Service fees:

A Class 3,329 957

B Class 992 1,624

C Class 3,531 2,440

Distribution and service fees:

A Class 2,497 2,169

A Class (old) (Note 9) 8,396 10,929

R Class 66 69

Trustees' fees and expenses 15,731 2,084

Other expenses 5,096 47
------------ -----------
1,813,056 390,127
Amount waived -- (30,898)
------------ -----------
1,813,056 359,229
------------ -----------

NET INVESTMENT INCOME (LOSS) 14,791,066 2,919,751
------------ -----------

REALIZED AND UNREALIZED GAIN (LOSS)

NET REALIZED GAIN (LOSS) ON:

Investment transactions (2,453,008) 56,323

Futures and swaps transactions 1,170,550 69,965
------------ -----------
(1,282,458) 126,288
------------ -----------
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION)
ON:

Investments 1,584,892 (2,408,122)

Futures and swaps (116,058) 9,175
------------ -----------
1,468,834 (2,398,947)
------------ -----------

NET REALIZED AND UNREALIZED GAIN (LOSS) 186,376 (2,272,659)
------------ -----------

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 14,977,442 $ 647,092
============ ===========

See Notes to Financial Statements.

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32

STATEMENT OF CHANGES IN NET ASSETS

SIX MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED) AND YEAR ENDED MARCH 31, 2007
Diversified Bond High-Yield
Increase
(Decrease)
in Net Assets Sept. 30, 2007 March 31, 2007 Sept. 30, 2007 March 31, 2007

OPERATIONS

Net investment
income (loss) $ 14,791,066 $ 33,433,873 $ 2,919,751 $ 4,961,267

Net realized gain
(loss) (1,282,458) (3,020,837) 126,288 17,724

Change in net
unrealized
appreciation
(depreciation) 1,468,834 12,151,171 (2,398,947) 1,154,960
------------- ------------- -------------- -------------
Net increase
(decrease) in net
assets resulting
from operations 14,977,442 42,564,207 647,092 6,133,951
------------- ------------- -------------- -------------

DISTRIBUTIONS TO
SHAREHOLDERS

From net investment
income:

Investor Class (9,649,723) (13,796,392) (1,731,513) (3,048,546)

Institutional
Class (4,764,418) (18,990,587) (703,654) (947,906)

A Class (99,917) (202,222) (79,901) (38,759)

A Class (old)
(Note 9) (144,687) (313,123) (277,389) (717,605)

B Class (14,196) (29,896) (36,495) (69,352)

C Class (50,465) (85,835) (54,832) (111,418)

R Class (536) (1,039) (848) (1,617)
------------- ------------- -------------- -------------
Decrease in net
assets from
distributions (14,723,942) (33,419,094) (2,884,632) (4,935,203)
------------- ------------- -------------- -------------

CAPITAL SHARE
TRANSACTIONS

Net increase
(decrease) in net
assets from capital
share transactions (176,238,791) 109,144,189 6,496,957 17,128,138
------------- ------------- -------------- -------------

NET INCREASE
(DECREASE) IN NET
ASSETS (175,985,291) 118,289,302 4,259,417 18,326,886

NET ASSETS

Beginning of period 798,739,269 680,449,967 85,093,340 66,766,454
------------- ------------- -------------- -------------
End of period $ 622,753,978 $798,739,269 $89,352,757 $85,093,340
============= ============= ============== =============

Accumulated net
investment loss -- $(163,172) -- $(1,359)
============= ============= ============== =============

See Notes to Financial Statements.

- ------
33

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Investment Trust (the trust) is registered
under the Investment Company Act of 1940 (the 1940 Act) as an open-end
management investment company. Diversified Bond Fund (Diversified Bond) and
High-Yield Fund (High-Yield) (the funds) are two funds in a series issued by
the trust. The funds are diversified under the 1940 Act. Diversified Bond's
investment objective is to seek a high level of income by investing in
non-money market debt securities. High-Yield's investment objective is to seek
high current income by investing in high-yield corporate bonds and other debt
securities. High-Yield invests primarily in lower-rated debt securities, which
are subject to greater credit risk and consequently offer higher yields. The
following is a summary of the funds' significant accounting policies.

MULTIPLE CLASS -- The funds are authorized to issue the Investor Class, the
Institutional Class, the A Class (formerly Advisor Class), the B Class, the C
Class and the R Class. The A Class may incur an initial sales charge. The A
Class, B Class and C Class may be subject to a contingent deferred sales
charge. The share classes differ principally in their respective sales charges
and distribution and shareholder servicing expenses and arrangements. All
shares of the funds represent an equal pro rata interest in the net 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. Income, non-class specific expenses, and realized and
unrealized capital gains and losses of the funds are allocated to each class
of shares based on their relative net assets.

SECURITY VALUATIONS -- Debt securities maturing in greater than 60 days are
valued at current market value as provided by a commercial pricing service or
at the mean of the most recent bid and asked prices. Debt securities maturing
within 60 days may be valued at cost, plus or minus any amortized discount or
premium. Discount notes may be valued through a commercial pricing service or
at amortized cost, which approximates fair value. Securities traded on foreign
securities exchanges and over-the-counter markets are normally completed
before the close of business on days that the New York Stock Exchange (the
Exchange) is open and may also take place on days when the Exchange is not
open. If an event occurs after the value of a security was established but
before the net asset value per share was determined that was likely to
materially change the net asset value, that security would be valued at fair
value as determined in accordance with procedures adopted by the Board of
Trustees. If the funds determine that the market price of a portfolio security
is not readily available, or that the valuation methods mentioned above do not
reflect the security's fair value, such security is valued as determined by,
or in accordance with procedures adopted by, the Board of Trustees or its
designee if such determination would materially impact a fund's net asset
value. Certain other circumstances may cause the funds to use alternative
procedures to value a security such as: a security has been declared in
default; trading in a security has been halted during the trading day; or
there is a foreign market holiday and no trading will commence.

INVESTMENT INCOME -- Interest income less foreign taxes withheld, if any, is
recorded on the accrual basis and includes paydown gain (loss) and accretion
of discounts and amortization of premiums.

SECURITIES ON LOAN -- The funds may lend portfolio securities through their
lending agent to certain approved borrowers in order to earn additional
income. The funds continue to recognize any gain or loss in the market price
of the securities loaned and record any interest earned or dividends declared.

FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially
expressed in foreign currencies are translated into U.S. dollars at prevailing
exchange rates at period end. 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. For
assets and liabilities, other than investments in securities, net realized and
unrealized gains and losses from foreign currency translations arise from
changes in currency exchange rates.

- ------
34

Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of investment securities are a component
of realized gain (loss) on investment transactions and unrealized appreciation
(depreciation) on investments, respectively. Certain countries may impose
taxes on the contract amount of purchases and sales of foreign currency
contracts in their currency. The funds record the foreign tax expense, if any,
as a reduction to the net realized gain (loss) on foreign currency
transactions.

WHEN-ISSUED AND FORWARD COMMITMENTS -- The funds may engage in securities
transactions on a when-issued or forward commitment basis. In these
transactions, the securities' prices and yields are fixed on the date of the
commitment. In a when-issued transaction, the payment and delivery are
scheduled for a future date and during this period, securities are subject to
market fluctuations. In a forward commitment transaction, the funds may sell a
security and at the same time make a commitment to purchase the same security
at a future date at a specified price. Conversely, the funds may purchase a
security and at the same time make a commitment to sell the same security at a
future date at a specified price. These types of transactions are executed
simultaneously in what are known as "roll" transactions. The funds will
segregate cash, cash equivalents or other appropriate liquid securities on
their records in amounts sufficient to meet the purchase price. The funds
account for "roll" transactions as purchases and sales; as such these
transactions may increase portfolio turnover.

FUTURES CONTRACTS -- The funds may enter into futures contracts in order to
manage the funds' exposure to changes in market conditions. One of the risks
of entering into futures contracts is 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 funds are 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 funds. The variation margin is
equal to the daily change in the contract value and is recorded as unrealized
gains and losses. The funds recognize 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 futures and swaps transactions and unrealized
appreciation (depreciation) on futures and swaps, respectively.

SWAP AGREEMENTS -- The funds may enter into swap agreements in order to
attempt to obtain or preserve a particular return or spread at a lower cost
than obtaining a return or spread through purchases and/or sales of
instruments in other markets; protect against currency fluctuations; attempt
to manage duration to protect against any increase in the price of securities
the funds anticipate purchasing at a later date; or gain exposure to certain
markets in the most economical way possible. A basic swap agreement is a
contract in which two parties agree to exchange the returns earned or realized
on predetermined investments or instruments. Credit default swaps enable an
investor to buy/sell protection against a credit event of a specific issuer.
The seller of credit protection against a security or basket of securities
receives an up-front or periodic payment to compensate against potential
default events. The funds may enhance returns by selling protection or attempt
to mitigate credit risk by buying protection. The funds will segregate cash,
cash equivalents or other appropriate liquid securities on their records in
amounts sufficient to meet requirements. Unrealized gains are reported as an
asset and unrealized losses are reported as a liability on the Statement of
Assets and Liabilities. Swap agreements are valued daily and changes in value,
including the periodic amounts of interest to be paid or received on swaps,
are recorded as unrealized appreciation (depreciation) on futures and swaps.
Realized gain or loss is recorded upon receipt or payment of a periodic
settlement or termination of swap agreements. The risks of entering into swap
agreements include the possible lack of liquidity, failure of the counterparty
to meet its obligations, and that there may be unfavorable changes in the
underlying investments and instruments.

CREDIT-LINKED TRUST CERTIFICATES -- Credit-linked trust certificates are
investments in a limited purpose trust formed under state law which invests in
a basket of derivative instruments, such as credit default swaps.
Credit-linked trust certificates represent the right to receive periodic
income payments and payment of principal at the end of the term of the
certificate. The risks of investing in credit-linked trust certificates
include the payments are conditioned on the trust's receipt of payments from,
and the trust's potential obligations to, the counterparties to the derivative
instruments and other securities in which the trust invests.

REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) (the
investment advisor) has determined are creditworthy pursuant to criteria
adopted by the Board of Trustees. Each repurchase agreement is recorded at
cost. Each fund requires that the collateral, represented by securities,
received in a repurchase transaction be transferred to the custodian in a
manner sufficient to enable each fund to obtain those securities in the event
of a default under the repurchase agreement. ACIM monitors, on

- ------
35

a daily basis, the securities transferred to ensure the value, including
accrued interest, of the securities under each repurchase agreement is equal
to or greater than amounts owed to each fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, each fund, along with other registered
investment companies having management agreements with ACIM or American
Century Global Investment Management, Inc. (ACGIM), may transfer uninvested
cash balances into a joint trading account. These balances are invested in one
or more repurchase agreements that are collateralized by U.S. Treasury or
Agency obligations.

INCOME TAX STATUS -- It is each fund's policy to distribute substantially all
net investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. The funds are no longer subject to examination by tax
authorities for years prior to 2004. At this time, management has not
identified any uncertain tax positions that would materially impact the
financial statements. Accordingly, no provision has been made for federal or
state income taxes. Interest and penalties associated with any federal or
state income tax obligations, if any, are recorded as interest expense.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income for
the funds are declared daily and paid monthly. Distributions from net realized
gains for the funds, if any, are generally declared and paid annually.

INDEMNIFICATIONS -- Under the trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the funds. In addition, in the normal course of
business, the funds enter into contracts that provide general
indemnifications. The funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the
funds. The risk of material loss from such claims is considered by management
to be remote.

2. FEES AND TRANSACTIONS WITH RELATED PARTIES

On July 27, 2007, the A Class (formerly Advisor Class, also referred to as "A
Class (new)") shareholders of Diversified Bond and High-Yield approved a
change in the class's fee structure. The change was approved by the Board of
Trustees on December 8, 2006. Effective September 4, 2007, the fee structure
change resulted in an increase of 0.25% in the unified management fee and a
simultaneous decrease of 0.25% in the total distribution and service fee,
resulting in no change to the total operating expense ratio of the class.

MANAGEMENT FEES -- The trust has entered into a Management Agreement with
ACIM, under which ACIM provides the funds with investment advisory and
management services in exchange for a single, unified management fee (the fee)
per class. The Agreement provides that all expenses of the funds, except
brokerage commissions, taxes, interest, fees and expenses of those trustees
who are not considered "interested persons" as defined in the 1940 Act
(including counsel fees) and extraordinary expenses, will be paid by ACIM. The
fee is computed and accrued daily based on the daily net assets of each
specific class of shares of each fund and paid monthly in arrears. The fee
consists of (1) an Investment Category Fee based on the daily net assets of
the funds and certain other accounts managed by the investment advisor that
are in the same broad investment category as each fund and (2) a Complex Fee
based on the assets of all the funds in the American Century family of funds.
The rates for the Investment Category Fee range from 0.2925% to 0.4100% for
Diversified Bond and from 0.5425% to 0.6600% for High-Yield. The rates for the
Complex Fee (Investor Class, A Class, B Class, C Class and R Class) range from
0.2500% to 0.3100%. The Institutional Class is 0.2000% less at each point
within the Complex Fee range. Prior to September 4, 2007, the A Class (new)
was 0.2500% less at each point within the Complex Fee range. From August 1,
2006 to July 31, 2007, the investment advisor voluntarily agreed to waive
0.071% of its management fee for High-Yield. Effective August 1, 2007, the
investment advisor voluntarily agreed to waive 0.070% of its management fee
for High-Yield. The total amount of the waiver for the six months ended
September 30, 2007, was $18,498, $7,274, $873, $3,094, $459, $690 and $10 for
the Investor Class, Institutional Class, A Class, A Class (old), B Class, C
Class and R Class, respectively. The fee waiver may be revised or terminated
at any time without notice.

- ------
36

The effective annual management fee for each class of each fund for the six
months ended September 30, 2007, was as follows:

Investor, B, C & R Institutional A
Diversified Bond 0.62% 0.42% 0.41%
High-Yield (before waiver) 0.87% 0.67% 0.66%
High-Yield (after waiver) 0.80% 0.60% 0.59%

DISTRIBUTION AND SERVICE FEES -- The Board of Trustees has adopted a separate
Master Distribution and Individual Shareholder Services Plan for each of the A
Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule
12b-1 of the 1940 Act. The plans provide that the A Class will pay American
Century Investment Services, Inc. (ACIS) an annual distribution and service
fee of 0.25%. The plans provide that the B Class and the C Class will each pay
ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans
provide that the R Class will pay ACIS an annual distribution and service fee
of 0.50%. Prior to September 4, 2007, the Board of Trustees had adopted a
Master Distribution and Shareholder Services Plan for the A Class (new),
pursuant to Rule 12b-1 of the 1940 Act, in which the A Class (new) paid ACIS
an annual distribution fee of 0.25% and service fee of 0.25%. The fees are
computed and accrued daily based on each class's daily net assets and paid
monthly in arrears. The distribution fee provides compensation for expenses
incurred in connection with distributing shares of the classes including, but
not limited to, payments to brokers, dealers, and financial institutions that
have entered into sales agreements with respect to shares of the funds. The
service fee provides compensation for individual shareholder services rendered
by broker/dealers or other independent financial intermediaries for A Class
(new), A Class (old), B Class, C Class and R Class shares. Prior to September
4, 2007, the service fee provided compensation for shareholder and
administrative services rendered by ACIS, its affiliates or independent third
party providers for A Class (new) shares. Fees incurred under the plans during
the six months ended September 30, 2007, are detailed in the Statement of
Operations.

RELATED PARTIES -- Certain officers and trustees of the trust are also
officers and/or directors, and, as a group, controlling stockholders of
American Century Companies, Inc. (ACC), the parent of the trust's investment
advisor, ACIM, the distributor of the trust, ACIS, and the trust's transfer
agent, American Century Services, LLC. American Century Asset Allocation
Portfolios, Inc. (ACAAP) owns 53% and 56% of the shares of Diversified Bond
and High-Yield, respectively. ACAAP does not invest in the funds for the
purpose of exercising management or control.

The funds have a bank line of credit agreement and securities lending
agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds
and a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity
investor in ACC.

3. INVESTMENT TRANSACTIONS

Investment transactions, excluding short-term investments, for the six months
ended September 30, 2007, were as follows:

Diversified Bond High-Yield
PURCHASES

U.S. Treasury & Government Agency Obligations $851,570,302 --

Investment securities other than U.S. Treasury &
Government Agency Obligations $60,575,371 $30,797,414

PROCEEDS FROM SALES

U.S. Treasury & Government Agency Obligations $1,053,458,127 --

Investment securities other than U.S. Treasury &
Government Agency Obligations $95,844,392 $20,240,347

- ------
37

4. CAPITAL SHARE TRANSACTIONS

Transactions in shares of the funds were as follows (unlimited number of
shares authorized):

Six months ended Year ended
September 30, 2007 March 31, 2007
Shares Amount Shares Amount
Diversified Bond

INVESTOR CLASS

Sold 9,170,155 $ 91,345,701 19,083,598 $189,679,584

Issued in
reinvestment of
distributions 256,551 2,548,201 551,974 5,481,168

Redeemed (3,837,497) (38,053,674) (3,072,427) (30,463,768)
------------ -------------- ------------ -------------
5,589,209 55,840,228 16,563,145 164,696,984
------------ -------------- ------------ -------------

INSTITUTIONAL CLASS

Sold 19,580,753 195,443,903 12,690,857 125,229,593

Issued in
reinvestment of
distributions 357,220 3,548,321 785,190 7,795,930

Redeemed (43,293,887) (432,433,377) (19,152,457) (188,236,458)
------------ -------------- ------------ -------------
(23,355,914) (233,441,153) (5,676,410) (55,210,935)
------------ -------------- ------------ -------------

A CLASS

Sold 82,078 818,247 121,547 1,207,066

Issued in
connection with
reclassification
(Note 9) 847,474 8,460,890 -- --

Issued in
reinvestment of
distributions 8,971 89,363 18,205 180,700

Redeemed (82,086) (815,693) (370,803) (3,680,623)
------------ -------------- ------------ -------------
856,437 8,552,807 (231,051) (2,292,857)
------------ -------------- ------------ -------------

A CLASS (OLD)

Sold 178,372 1,764,421 359,978 3,569,345

Issued in
reinvestment of
distributions 10,124 100,181 27,435 272,444

Redeemed in
connection with
reclassification
(Note 9) (847,474) (8,460,890) -- --

Redeemed (100,169) (991,431) (329,552) (3,266,681)
------------ -------------- ------------ -------------
(759,147) (7,587,719) 57,861 575,108
------------ -------------- ------------ -------------

B CLASS

Sold 6,520 64,989 30,434 301,436

Issued in
reinvestment of
distributions 1,071 10,642 2,190 21,749

Redeemed (7,980) (79,620) (28,058) (279,528)
------------ -------------- ------------ -------------
(389) (3,989) 4,566 43,657
------------ -------------- ------------ -------------

C CLASS

Sold 82,925 825,211 209,537 2,057,287

Issued in
reinvestment of
distributions 3,814 37,877 6,593 65,583

Redeemed (46,798) (462,589) (79,977) (791,675)
------------ -------------- ------------ -------------
39,941 400,499 136,153 1,331,195
------------ -------------- ------------ -------------

R CLASS

Issued in
reinvestment of
distributions 54 536 104 1,037
------------ -------------- ------------ -------------
Net increase
(decrease) (17,629,809) $(176,238,791) 10,854,368 $109,144,189
============ ============== ============ =============

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38

Six months ended Year ended
September 30, 2007 March 31, 2007
Shares Amount Shares Amount
High-Yield

INVESTOR CLASS

Sold 1,545,293 $ 9,869,207 3,955,742 $ 25,227,656

Issued in reinvestment
of distributions 93,881 594,442 219,459 1,396,011

Redeemed (1,215,209) (7,682,617) (2,877,431) (18,220,571)
----------- ------------ ----------- -------------
423,965 2,781,032 1,297,770 8,403,096
----------- ------------ ----------- -------------

INSTITUTIONAL CLASS

Sold 852,844 5,448,259 1,774,286 11,314,912

Issued in reinvestment
of distributions 8,526 53,994 8,236 53,017

Redeemed (171,146) (1,075,259) (448,137) (2,872,655)
----------- ------------ ----------- -------------
690,224 4,426,994 1,334,385 8,495,274
----------- ------------ ----------- -------------

A CLASS

Sold 136,439 860,114 93,171 593,364

Issued in connection
with reclassification
(Note 9) 1,531,917 9,523,342 -- --

Issued in reinvestment
of distributions 10,230 64,697 4,098 26,222

Redeemed (99,811) (623,691) (22,040) (141,034)
----------- ------------ ----------- -------------
1,578,775 9,824,462 75,229 478,552
----------- ------------ ----------- -------------

A CLASS (OLD)

Sold 128,872 822,538 613,956 3,907,488

Issued in reinvestment
of distributions 31,139 198,358 99,327 632,705

Redeemed in connection
with reclassification
(Note 9) (1,531,917) (9,523,342) -- --

Redeemed (312,246) (1,982,035) (799,098) (5,095,378)
----------- ------------ ----------- -------------
(1,684,152) (10,484,481) (85,815) (555,185)
----------- ------------ ----------- -------------

B CLASS

Sold 34,016 213,270 32,561 207,334

Issued in reinvestment
of distributions 3,332 21,100 6,257 39,884

Redeemed (35,229) (226,239) (14,471) (92,149)
----------- ------------ ----------- -------------
2,119 8,131 24,347 155,069
----------- ------------ ----------- -------------

C CLASS

Sold 36,153 226,343 130,824 831,650

Issued in reinvestment
of distributions 3,193 20,204 5,694 36,239

Redeemed (48,919) (306,221) (113,320) (718,696)
----------- ------------ ----------- -------------
(9,573) (59,674) 23,198 149,193
----------- ------------ ----------- -------------

R CLASS

Sold 14 84 82 527

Issued in reinvestment
of distributions 133 844 253 1,612

Redeemed (67) (435) -- --
----------- ------------ ----------- -------------
80 493 335 2,139
----------- ------------ ----------- -------------
Net increase (decrease) 1,001,438 $ 6,496,957 2,669,449 $ 17,128,138
=========== ============ =========== =============

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39

5. SECURITIES LENDING

As of September 30, 2007, securities in Diversified Bond and High-Yield valued
at $152,764,091, and $13,331,132, respectively, were on loan through the
lending agent, JPMCB, to certain approved borrowers. JPMCB receives and
maintains collateral in the form of cash and/or acceptable securities as
approved by ACIM. Cash collateral is invested in authorized investments by the
lending agent in a pooled account. The value of cash collateral received at
period end is disclosed in the Statement of Assets and Liabilities and
investments made with the cash by the lending agent are listed in the Schedule
of Investments. Any deficiencies or excess of collateral must be delivered or
transferred by the member firms no later than the close of business on the
next business day. The total value of all collateral received, at this date,
was $155,413,633 and $13,553,398, respectively. The funds' risks in securities
lending are that the borrower may not provide additional collateral when
required or return the securities when due. If the borrower defaults, receipt
of the collateral by the funds may be delayed or limited.

6. BANK LINE OF CREDIT

The funds, along with certain other funds managed by ACIM or ACGIM, have a
$500,000,000 unsecured bank line of credit agreement with JPMCB. The funds may
borrow money for temporary or emergency purposes to fund shareholder
redemptions. Borrowings under the agreement bear interest at the Federal Funds
rate plus 0.40%. The funds did not borrow from the line during the six months
ended September 30, 2007.

7. RISK FACTORS

High-Yield invests primarily in lower-rated debt securities, which are subject
to substantial risks including price volatility, liquidity risk, and default
risk.

8. FEDERAL TAX INFORMATION

The book-basis 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 reflect
the differing character of paydown losses, certain income items and net
realized gains and losses for financial statement and tax purposes, and may
result in reclassification among certain capital accounts on the financial
statements. Reclassifications between income and realized gain in Diversified
Bond relate primarily to the character of paydown losses and interest on swap
agreements.

As of September 30, 2007, the components of investments for federal income tax
purposes were as follows:

Diversified
Bond High-Yield
Federal tax cost of investments $804,024,580 $101,452,400
============= =============
Gross tax appreciation of investments $ 6,046,447 $ 1,131,989

Gross tax depreciation of investments (3,983,294) (1,627,379)
------------- -------------
Net tax appreciation (depreciation) of investments $ 2,063,153 $ (495,390)
============= =============

The difference between book-basis and tax-basis cost and unrealized
appreciation (depreciation) is attributable primarily to the tax deferral of
losses on wash sales.

As of March 31, 2007, Diversified Bond had net capital loss carryovers of
$(1,154,579), $(591,687) and $(5,332,851) expiring in 2013, 2014 and 2015,
respectively. High-Yield had net capital loss carryovers of $(2,522,625),
$(10,290,681) and $(15,064) expiring in 2009, 2010 and 2014, respectively. The
net capital loss carryovers may be used to offset future realized capital
gains for federal income tax purposes.

- ------
40

9. CORPORATE EVENT

Effective September 4, 2007, the A Class (old) shares of Diversified Bond and
High-Yield were reclassified as Advisor Class shares of the same fund.
Subsequent to the reclassification, the Advisor Class was renamed A Class. The
changes were approved by the Board of Trustees on December 8, 2006.

10. RECENTLY ISSUED ACCOUNTING STANDARDS

- ------
41

FINANCIAL HIGHLIGHTS
Diversified Bond

Investor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003
PER-SHARE DATA

Net Asset Value,
Beginning of
Period $10.02 $9.89 $10.10 $10.49 $10.47 $9.98
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations

Net
Investment
Income
(Loss) 0.23(2) 0.45(2) 0.41(2) 0.33(2) 0.36(2) 0.48

Net Realized
and
Unrealized
Gain (Loss) 0.01 0.13 (0.21) (0.27) 0.14 0.49
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations 0.24 0.58 0.20 0.06 0.50 0.97
-------- -------- -------- -------- -------- --------
Distributions

From Net
Investment
Income (0.23) (0.45) (0.41) (0.34) (0.37) (0.48)

From Net
Realized
Gains -- -- -- (0.11) (0.11) --
-------- -------- -------- -------- -------- --------
Total
Distributions (0.23) (0.45) (0.41) (0.45) (0.48) (0.48)
-------- -------- -------- -------- -------- --------
Net Asset
Value, End
of Period $10.03 $10.02 $9.89 $10.10 $10.49 $10.47
======== ======== ======== ======== ======== ========

TOTAL RETURN(3) 2.41% 6.05% 1.97% 0.63% 4.92% 9.93%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net Assets 0.62%(4) 0.62% 0.62% 0.63% 0.64% 0.64%

Ratio of Net
Investment Income
(Loss) to Average
Net Assets 4.60%(4) 4.58% 4.04% 3.25% 3.38% 4.67%

Portfolio
Turnover Rate 151% 323% 341% 386% 324% 151%

Net Assets, End
of Period (in
thousands) $450,892 $394,346 $225,187 $180,346 $177,791 $198,835

(1) Six months ended September 30, 2007 (unaudited).

(2) Computed using average shares outstanding throughout the period.

(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.

(4) Annualized.

See Notes to Financial Statements.

- ------
42

Diversified Bond

Institutional Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003
PER-SHARE DATA

Net Asset Value,
Beginning of
Period $10.02 $9.89 $10.10 $10.49 $10.47 $9.98
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations

Net
Investment
Income (Loss) 0.24(2) 0.47(2) 0.43(2) 0.35(2) 0.38(2) 0.50

Net Realized
and
Unrealized
Gain (Loss) 0.01 0.13 (0.21) (0.27) 0.14 0.49
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations 0.25 0.60 0.22 0.08 0.52 0.99
-------- -------- -------- -------- -------- --------
Distributions

From Net
Investment
Income (0.24) (0.47) (0.43) (0.36) (0.39) (0.50)

From Net
Realized
Gains -- -- -- (0.11) (0.11) --
-------- -------- -------- -------- -------- --------
Total
Distributions (0.24) (0.47) (0.43) (0.47) (0.50) (0.50)
-------- -------- -------- -------- -------- --------
Net Asset
Value, End
of Period $10.03 $10.02 $9.89 $10.10 $10.49 $10.47
======== ======== ======== ======== ======== ========

TOTAL RETURN(3) 2.51% 6.26% 2.17% 0.83% 5.13% 10.15%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net Assets 0.42%(4) 0.42% 0.42% 0.43% 0.44% 0.44%

Ratio of Net
Investment Income
(Loss) to Average
Net Assets 4.80%(4) 4.78% 4.24% 3.45% 3.58% 4.87%

Portfolio
Turnover Rate 151% 323% 341% 386% 324% 151%

Net Assets, End
of Period (in
thousands) $155,907 $389,829 $440,579 $336,207 $309,579 $281,998

(1) Six months ended September 30, 2007 (unaudited).

(2) Computed using average shares outstanding throughout the period.

(4) Annualized.

See Notes to Financial Statements.

- ------
43

Diversified Bond

A Class(1)
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(2) 2007 2006 2005 2004 2003
PER-SHARE DATA

Net Asset Value,
Beginning of Period $10.02 $9.89 $10.10 $10.49 $10.47 $9.98
------- ------- ------- ------- ------- -------
Income From
Investment Operations

Net Investment
Income (Loss) 0.21(3) 0.43(3) 0.38(3) 0.31(3) 0.33(3) 0.46

Net Realized and
Unrealized Gain
(Loss) 0.01 0.13 (0.21) (0.28) 0.14 0.49
------- ------- ------- ------- ------- -------
Total From
Investment
Operations 0.22 0.56 0.17 0.03 0.47 0.95
------- ------- ------- ------- ------- -------
Distributions

From Net
Investment Income (0.21) (0.43) (0.38) (0.31) (0.34) (0.46)

From Net
Realized Gains -- -- -- (0.11) (0.11) --
------- ------- ------- ------- ------- -------
Total
Distributions (0.21) (0.43) (0.38) (0.42) (0.45) (0.46)
------- ------- ------- ------- ------- -------
Net Asset Value, End
of Period $10.03 $10.02 $9.89 $10.10 $10.49 $10.47
======= ======= ======= ======= ======= =======

TOTAL RETURN(4) 2.28% 5.77% 1.72% 0.38% 4.66% 9.66%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating
Expenses to Average
Net Assets 0.87%(5) 0.87% 0.87% 0.88% 0.89% 0.89%

Ratio of Net
Investment Income
(Loss) to Average Net
Assets 4.35%(5) 4.33% 3.79% 3.00% 3.13% 4.42%

Portfolio Turnover
Rate 151% 323% 341% 386% 324% 151%

Net Assets,
End of Period
(in thousands) $12,003 $3,405 $5,642 $5,421 $7,107 $11,567

(1) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class.

(2) Six months ended September 30, 2007 (unaudited).

(3) Computed using average shares outstanding throughout the period.

(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the total
return differences would more closely reflect the class expense differences.
The calculation of net asset values to two decimal places is made in
accordance with SEC guidelines and does not result in any gain or loss of
value between one class and another.

(5) Annualized.

See Notes to Financial Statements.

- ------
44

Diversified Bond

B Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA

Net Asset Value,
Beginning of
Period $10.02 $9.89 $10.10 $10.49 $10.47 $10.40
------- ------- ------- ------- ------- -------
Income From
Investment
Operations

Net
Investment
Income (Loss) 0.18(3) 0.35(3) 0.31(3) 0.23(3) 0.26(3) 0.05

Net Realized
and
Unrealized
Gain (Loss) 0.01 0.13 (0.21) (0.27) 0.14 0.07
------- ------- ------- ------- ------- -------
Total From
Investment
Operations 0.19 0.48 0.10 (0.04) 0.40 0.12
------- ------- ------- ------- ------- -------
Distributions

From Net
Investment
Income (0.18) (0.35) (0.31) (0.24) (0.27) (0.05)

From Net
Realized
Gains -- -- -- (0.11) (0.11) --
------- ------- ------- ------- ------- -------
Total
Distributions (0.18) (0.35) (0.31) (0.35) (0.38) (0.05)
------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period $10.03 $10.02 $9.89 $10.10 $10.49 $10.47
======= ======= ======= ======= ======= =======

TOTAL RETURN(4) 1.90% 5.00% 0.96% (0.37)% 3.87% 1.20%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net Assets 1.62%(5) 1.62% 1.62% 1.63% 1.64% 1.61%(5)(6)

Ratio of Net
Investment Income
(Loss) to Average
Net Assets 3.60%(5) 3.58% 3.04% 2.25% 2.38% 2.98%(5)(6)

Portfolio
Turnover Rate 151% 323% 341% 386% 324% 151%(7)

Net Assets, End
of Period (in
thousands) $803 $806 $750 $753 $615 $84

(1) Six months ended September 30, 2007 (unaudited).

(2) January 31, 2003 (commencement of sale) through March 31, 2003.

(3) Computed using average shares outstanding throughout the period.

(5) Annualized.

(6) During the period ended March 31, 2003, the distributor voluntarily waived
a portion of its distribution and service fees. Had fees not been waived the
annualized ratio of operating expenses to average net assets and annualized
ratio of net investment income (loss) to average net assets would have been
1.63% and 2.96%, respectively.

(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended March 31, 2003.

See Notes to Financial Statements.

- ------
45

Diversified Bond

C Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA

Net Asset Value,
Beginning of Period $10.02 $9.89 $10.10 $10.49 $10.47 $10.40
------- ------- ------- ------- ------- -------
Income From
Investment Operations

Net Investment
Income (Loss) 0.18(3) 0.35(3) 0.31(3) 0.23(3) 0.28(3) 0.05

Net Realized and
Unrealized Gain
(Loss) 0.01 0.13 (0.21) (0.27) 0.14 0.07
------- ------- ------- ------- ------- -------
Total From
Investment
Operations 0.19 0.48 0.10 (0.04) 0.42 0.12
------- ------- ------- ------- ------- -------
Distributions

From Net
Investment
Income (0.18) (0.35) (0.31) (0.24) (0.29) (0.05)

From Net
Realized Gains -- -- -- (0.11) (0.11) --
------- ------- ------- ------- ------- -------
Total
Distributions (0.18) (0.35) (0.31) (0.35) (0.40) (0.05)
------- ------- ------- ------- ------- -------
Net Asset Value, End
of Period $10.03 $10.02 $9.89 $10.10 $10.49 $10.47
======= ======= ======= ======= ======= =======

TOTAL RETURN(4) 1.90% 4.99% 0.96% (0.37)% 4.07% 1.20%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating
Expenses to Average
Net Assets 1.62%(5) 1.62% 1.62% 1.63% 1.47% 1.38%(5)

Ratio of Net
Investment Income
(Loss) to Average
Net Assets 3.60%(5) 3.58% 3.04% 2.25% 2.55% 3.23%(5)

Portfolio Turnover
Rate 151% 323% 341% 386% 324% 151%(6)

Net Assets, End of
Period (in thousands) $3,122 $2,718 $1,334 $1,418 $1,347 $342

(1) Six months ended September 30, 2007 (unaudited).

(2) January 31, 2003 (commencement of sale) through March 31, 2003.

(3) Computed using average shares outstanding throughout the period.

(5) Annualized.

(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended March 31, 2003.

See Notes to Financial Statements.

- ------
46

Diversified Bond

R Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006(2)
PER-SHARE DATA

Net Asset Value, Beginning of Period $10.02 $9.89 $10.17
------- ------- -------
Income From Investment Operations

Net Investment Income (Loss)(3) 0.20 0.40 0.25

Net Realized and Unrealized Gain (Loss) 0.01 0.13 (0.28)
------- ------- -------
Total From Investment Operations 0.21 0.53 (0.03)
------- ------- -------
Distributions

From Net Investment Income (0.20) (0.40) (0.25)
------- ------- -------
Net Asset Value, End of Period $10.03 $10.02 $9.89
======= ======= =======

TOTAL RETURN(4) 2.16% 5.52% (0.33)%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average Net Assets 1.12%(5) 1.12% 1.12%(5)

Ratio of Net Investment Income (Loss) to Average
Net Assets 4.10%(5) 4.08% 3.68%(5)

Portfolio Turnover Rate 151% 323% 341%(6)

Net Assets, End of Period (in thousands) $27 $26 $25

(1) Six months ended September 30, 2007 (unaudited).

(2) July 29, 2005 (commencement of sale) through March 31, 2006.

(3) Computed using average shares outstanding throughout the period.

(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.

(5) Annualized.

(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended March 31, 2006.

See Notes to Financial Statements.

- ------
47

High-Yield

Investor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003(2) 2002
PER-SHARE DATA

Net Asset
Value,
Beginning of
Period $6.48 $6.38 $6.42 $6.55 $6.13 $5.76 $6.18
------- ------- ------- ------- ------- ------- -------
Income From
Investment
Operations

Net
Investment
Income
(Loss) 0.21 0.42 0.43 0.46 0.50 0.18 0.52

Net Realized
and
Unrealized
Gain (Loss) (0.16) 0.10 (0.04) (0.13) 0.42 0.37 (0.42)
------- ------- ------- ------- ------- ------- -------
Total From
Investment
Operations 0.05 0.52 0.39 0.33 0.92 0.55 0.10
------- ------- ------- ------- ------- ------- -------
Distributions

From Net
Investment
Income (0.21) (0.42) (0.43) (0.46) (0.50) (0.18) (0.52)
------- ------- ------- ------- ------- ------- -------
Net Asset
Value, End of
Period $6.32 $6.48 $6.38 $6.42 $6.55 $6.13 $5.76
======= ======= ======= ======= ======= ======= =======

TOTAL RETURN(3) 0.82% 8.54% 6.29% 5.17% 15.53% 9.61% 1.43%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net
Assets 0.80%(4)(5) 0.79%(4) 0.81%(4) 0.88% 0.89% 0.88%(5) 0.90%

Ratio of
Operating
Expenses to
Average Net
Assets (Before
Expense Waiver) 0.87%(5) 0.87% 0.87% 0.88% 0.89% 0.88%(5) 0.90%

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 6.72%(4)(5) 6.69%(4) 6.74%(4) 7.04% 7.82% 7.22%(5) 8.37%

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (Before
Expense Waiver) 6.65%(5) 6.61% 6.68% 7.04% 7.82% 7.22%(5) 8.37%

Portfolio
Turnover Rate 26% 45% 40% 64% 80% 9% 80%

Net Assets, End
of Period (in
thousands) $53,139 $51,717 $42,650 $40,746 $54,074 $78,223 $50,287

(1) Six months ended September 30, 2007 (unaudited).

(2) November 1, 2002 through March 31, 2003. The fund's fiscal year was
changed from October 31 to March 31, resulting in a five-month annual
reporting period. For the years before 2003, the fund's fiscal year end was
October 31.

(4) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(5) Annualized.

See Notes to Financial Statements.

- ------
48

High-Yield

Institutional Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005(2)
PER-SHARE DATA

Net Asset Value, Beginning
of Period $6.48 $6.38 $6.42 $6.43
-------- -------- -------- --------
Income From Investment Operations

Net Investment Income (Loss) 0.22 0.44 0.44 0.30

Net Realized and
Unrealized Gain (Loss) (0.16) 0.10 (0.04) (0.01)
-------- -------- -------- --------
Total From Investment
Operations 0.06 0.54 0.40 0.29
-------- -------- -------- --------
Distributions

From Net Investment Income (0.22) (0.44) (0.44) (0.30)
-------- -------- -------- --------
Net Asset Value, End of Period $6.32 $6.48 $6.38 $6.42
======== ======== ======== ========

TOTAL RETURN(3) 0.92% 8.76% 6.50% 4.53%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to
Average Net Assets 0.60%(4)(5) 0.59%(4) 0.61%(4) 0.68%(5)

Ratio of Operating Expenses to
Average Net Assets (Before Expense
Waiver) 0.67%(5) 0.67% 0.67% 0.68%(5)

Ratio of Net Investment Income
(Loss) to Average Net Assets 6.92%(4)(5) 6.89%(4) 6.94%(4) 4.37%(5)

Ratio of Net Investment Income
(Loss) to Average Net Assets
(Before Expense Waiver) 6.85%(5) 6.81% 6.88% 4.37%(5)

Portfolio Turnover Rate 26% 45% 40% 64%(6)

Net Assets, End of Period (in
thousands) $22,098 $18,177 $9,387 $3,021

(1) Six months ended September 30, 2007 (unaudited).

(2) August 2, 2004 (commencement of sale) through March 31, 2005.

(4) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(5) Annualized.

(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended March 31, 2005.

See Notes to Financial Statements.

- ------
49

High-Yield

A Class(1)
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(2) 2007 2006 2005 2004 2003(3) 2002(4)
PER-SHARE DATA

Net Asset
Value,
Beginning of
Period $6.48 $6.38 $6.42 $6.55 $6.13 $5.76 $6.22
-------- -------- -------- -------- -------- -------- --------
Income From
Investment
Operations

Net
Investment
Income
(Loss) 0.20 0.41 0.42 0.44 0.49 0.18 0.30

Net Realized
and
Unrealized
Gain (Loss) (0.16) 0.10 (0.04) (0.13) 0.42 0.37 (0.46)
-------- -------- -------- -------- -------- -------- --------
Total From
Investment
Operations 0.04 0.51 0.38 0.31 0.91 0.55 (0.16)
-------- -------- -------- -------- -------- -------- --------
Distributions

From Net
Investment
Income (0.20) (0.41) (0.42) (0.44) (0.49) (0.18) (0.30)
-------- -------- -------- -------- -------- -------- --------
Net Asset
Value, End
of Period $6.32 $6.48 $6.38 $6.42 $6.55 $6.13 $5.76
======== ======== ======== ======== ======== ======== ========

TOTAL RETURN(5) 0.70% 8.27% 6.02% 4.91% 15.35% 9.63% (2.72)%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net
Assets 1.05%(6)(7) 1.04%(6) 1.06%(6) 1.13% 1.12%(8) 0.84%(7)(8) 1.15%(7)

Ratio of
Operating
Expenses to
Average Net
Assets (Before
Expense Waiver) 1.12%(7) 1.12% 1.12% 1.13% 1.14% 1.13%(7) 1.15%(7)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 6.47%(6)(7) 6.44%(6) 6.49%(6) 6.79% 7.59%(8) 7.27%(7)(8) 7.63%(7)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (Before
Expense Waiver) 6.40%(7) 6.36% 6.43% 6.79% 7.57% 6.98%(7) 7.63%(7)

Portfolio
Turnover Rate 26% 45% 40% 64% 80% 9% 80%(9)

Net Assets, End
of Period (in
thousands) $10,858 $900 $407 $385 $242 $1 $4

(1) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class.

(2) Six months ended September 30, 2007 (unaudited).

(3) November 1, 2002 through March 31, 2003. The fund's fiscal year was
changed from October 31 to March 31, resulting in a five-month annual
reporting period.

(4) March 8, 2002 (commencement of sale) through October 31, 2002.

(5) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the total
return differences would more closely reflect the class expense differences.
The calculation of net asset values to two decimal places is made in
accordance with SEC guidelines and does not result in any gain or loss of
value between one class and another.

(6) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(7) Annualized.

(8) During the period ended March 31, 2003 and the year ended March 31, 2004,
the distributor voluntarily waived a portion of its distribution and service
fees.

(9) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2002.

See Notes to Financial Statements.

- ------
50

High-Yield

B Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA

Net Asset
Value,
Beginning
of Period $6.48 $6.38 $6.42 $6.55 $6.13 $5.98
------- ------- ------- ------- ------- -------
Income From
Investment
Operations

Net
Investment
Income
(Loss) 0.18 0.36 0.37 0.39 0.44 0.07

Net Realized
and
Unrealized
Gain (Loss) (0.16) 0.10 (0.04) (0.13) 0.42 0.15
------- ------- ------- ------- ------- -------
Total From
Investment
Operations 0.02 0.46 0.33 0.26 0.86 0.22
------- ------- ------- ------- ------- -------
Distributions

From Net
Investment
Income (0.18) (0.36) (0.37) (0.39) (0.44) (0.07)
------- ------- ------- ------- ------- -------
Net Asset
Value, End
of Period $6.32 $6.48 $6.38 $6.42 $6.55 $6.13
======= ======= ======= ======= ======= =======

TOTAL RETURN(3) 0.32% 7.47% 5.23% 4.13% 14.38% 3.64%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net
Assets 1.80%(4)(5) 1.79%(4) 1.81%(4) 1.88% 1.89% 1.86%(5)(6)

Ratio of
Operating
Expenses to
Average Net
Assets (Before
Expense Waiver) 1.87%(5) 1.87% 1.87% 1.88% 1.89% 1.88%(5)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 5.72%(4)(5) 5.69%(4) 5.74%(4) 6.04% 6.82% 7.27%(5)(6)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (Before
Expense Waiver) 5.65%(5) 5.61% 5.68% 6.04% 6.82% 7.25%(5)

Portfolio
Turnover Rate 26% 45% 40% 64% 80% 9%(7)

Net Assets, End
of Period (in
thousands) $1,338 $1,358 $1,182 $1,105 $855 $57

(1) Six months ended September 30, 2007 (unaudited).

(2) January 31, 2003 (commencement of sale) through March 31, 2003.

(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense differences
because of the impact of calculating the net asset values to two decimal
places. If net asset values were calculated to three decimal places, the total
return differences would more closely reflect the class expense differences.
The calculation of net asset values to two decimal places is made in
accordance with SEC guidelines and does not result in any gain or loss of
value between one class and another.

(4) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(5) Annualized.

(6) During the period ended March 31, 2003, the distributor voluntarily waived
a portion of its distribution and service fees.

(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the period ended March 31, 2003.

See Notes to Financial Statements.

- ------
51

High-Yield

C Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006 2005 2004 2003(2) 2002(3)
PER-SHARE DATA

Net Asset
Value,
Beginning of
Period $6.48 $6.38 $6.42 $6.55 $6.13 $5.76 $6.32
------- ------- ------- ------- ------- ------- -------
Income From
Investment
Operations

Net
Investment
Income
(Loss) 0.18 0.36 0.37 0.39 0.45 0.16 0.41

Net Realized
and
Unrealized
Gain (Loss) (0.16) 0.10 (0.04) (0.13) 0.42 0.37 (0.56)
------- ------- ------- ------- ------- ------- -------
Total From
Investment
Operations 0.02 0.46 0.33 0.26 0.87 0.53 (0.15)
------- ------- ------- ------- ------- ------- -------
Distributions

From Net
Investment
Income (0.18) (0.36) (0.37) (0.39) (0.45) (0.16) (0.41)
------- ------- ------- ------- ------- ------- -------
Net Asset
Value, End
of Period $6.32 $6.48 $6.38 $6.42 $6.55 $6.13 $5.76
======= ======= ======= ======= ======= ======= =======

TOTAL RETURN(4) 0.32% 7.46% 5.23% 4.13% 14.60% 9.28% (2.49)%

RATIOS/SUPPLEMENTAL DATA

Ratio of
Operating
Expenses to
Average Net
Assets 1.80%(5)(6) 1.79%(5) 1.81%(5) 1.88% 1.72% 1.63%(6) 1.65%(6)

Ratio of
Operating
Expenses to
Average Net
Assets (Before
Expense Waiver) 1.87%(6) 1.87% 1.87% 1.88% 1.72% 1.63%(6) 1.65%(6)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 5.72%(5)(6) 5.69%(5) 5.74%(5) 6.04% 6.99% 6.48%(6) 7.78%(6)

Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (Before
Expense Waiver) 5.65%(6) 5.61% 5.68% 6.04% 6.99% 6.48%(6) 7.78%(6)

Portfolio
Turnover Rate 26% 45% 40% 64% 80% 9% 80%(7)

Net Assets, End
of Period (in
thousands) $1,892 $2,002 $1,823 $3,351 $3,590 $283 $31

(1) Six months ended September 30, 2007 (unaudited).

(2) November 1, 2002 through March 31, 2003. The fund's fiscal year was
changed from October 31 to March 31, resulting in a five-month annual
reporting period.

(3) December 10, 2001 (commencement of sale) through October 31, 2002.

(5) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(6) Annualized.

(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2002.

See Notes to Financial Statements.

- ------
52

High-Yield

R Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
2007(1) 2007 2006(2)
PER-SHARE DATA

Net Asset Value, Beginning of Period $6.48 $6.38 $6.51
------- ------- -------
Income From Investment Operations

Net Investment Income (Loss) 0.19 0.39 0.27

Net Realized and Unrealized Gain (Loss) (0.16) 0.10 (0.13)
------- ------- -------
Total From Investment Operations 0.03 0.49 0.14
------- ------- -------
Distributions
From Net Investment Income (0.19) (0.39) (0.27)
------- ------- -------
Net Asset Value, End of Period $6.32 $6.48 $6.38
======= ======= =======

TOTAL RETURN(3) 0.57% 8.00% 2.23%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses to Average Net
Assets(4) 1.30%(5) 1.29% 1.27%(5)

Ratio of Operating Expenses to Average Net Assets
(Before Expense Waiver) 1.37%(5) 1.37% 1.37%(5)

Ratio of Net Investment Income (Loss) to Average
Net Assets(4) 6.22%(5) 6.19% 6.39%(5)

Ratio of Net Investment Income (Loss) to Average
Net Assets (Before Expense Waiver) 6.15%(5) 6.11% 6.29%(5)

Portfolio Turnover Rate 26% 45% 40%(6)

Net Assets, End of Period (in thousands) $28 $28 $26

(1) Six months ended September 30, 2007 (unaudited).

(2) July 29, 2005 (commencement of sale) through March 31, 2006.

(4) Effective July 29, 2005, the investment advisor voluntarily agreed to
waive a portion of its management fee.

(5) Annualized.

(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended March 31, 2006.

See Notes to Financial Statements.

- ------
53