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 811-21591 ---------------------------------------------- AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 816-531-5575 ---------------------------- Date of fiscal year end: 07-31 ---------------------------------------------------- Date of reporting period: 07-31-2005 ----------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] American Century Investments ANNUAL REPORT [photo of man and woman] JULY 31, 2005 My Retirement 2015 Portfolio My Retirement 2025 Portfolio My Retirement 2035 Portfolio My Retirement 2045 Portfolio My Retirement Income Portfolio [american century investments logo and text logo] Table of Contents Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 MY RETIREMENT 2015 PORTFOLIO Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 MY RETIREMENT 2025 PORTFOLIO Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 MY RETIREMENT 2035 PORTFOLIO Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 MY RETIREMENT 2045 PORTFOLIO Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 MY RETIREMENT INCOME PORTFOLIO Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . . . . . .17 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . 21 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . .25 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 27 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Report of Independent Registered Public Accounting Firm . . . . . . . . . . . 56 OTHER INFORMATION Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 The opinions expressed in 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. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the annual report for the My Retirement Portfolios for the period ended July 31, 2005. The report includes comparative performance figures, portfolio and market commentary, summary tables, a full list of portfolio holdings, and financial statements and highlights. We hope you find this information helpful in monitoring your investment. Through our Web site, americancentury.com, we provide quarterly commentaries on all American Century portfolios, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Your next shareholder report for these funds will be the semiannual report dated January 31, 2006, available in approximately six months. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 My Retirement 2015 Portfolio - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 11.17% 8/31/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 16.43% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.83% -- - -------------------------------------------------------------------------------- Institutional Class 11.32% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 10.88% 8/31/04 - -------------------------------------------------------------------------------- R Class 10.59% 8/31/04 - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 2 My Retirement 2015 Portfolio - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on August 31, 2004, through July 31, 2005, My Retirement 2015 returned 11.17%*. This return reflected the positive performance of the portfolio's equity, fixed-income, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 11 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 16.43% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value clearly surpass growth among large-cap stocks, but a far narrower victory for value in the smaller-cap arena. Foreign stock indices outperformed the overall U.S. market. The MSCI EAFE Index gained 20.44%. The MSCI Emerging Markets Index jumped 40.93%. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns in excess of 11% for the period; the two-year Treasury note returned less than 1%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.83%. PORTFOLIO STRATEGY My Retirement 2015 seeks the highest total return consistent with its target asset mix of 53% stocks, 42% bonds, and 5% cash equivalents. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds to achieve its investment objective and target asset allocation. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's target asset allocation, which features a diversified mix of asset classes and investment styles, will be adjusted annually. In general, the allocation to stocks will go down and the allocations to bonds and cash will increase each year until 2015, when the portfolio's asset mix will become fixed and match that of My Retirement Income (see page 15). An investment in My Retirement 2015 entails some risks, including those associated with investing in stocks, bonds, and foreign securities. The value of the portfolio's shares will fluctuate over time. *All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. - ------ 3 My Retirement 2015 Portfolio - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 99.9% DOMESTIC EQUITY FUNDS -- 45.9% - -------------------------------------------------------------------------------- 154,555 Income & Growth Fund Institutional Class $ 4,908,667 - -------------------------------------------------------------------------------- 667,962 Large Company Value Fund Institutional Class 4,408,549 - -------------------------------------------------------------------------------- 82,093 Real Estate Fund Institutional Class 2,319,127 - -------------------------------------------------------------------------------- 83,960 Small Company Fund Institutional Class 920,202 - -------------------------------------------------------------------------------- 120,071 Ultra Fund Institutional Class(2) 3,594,926 - -------------------------------------------------------------------------------- 291,215 Value Fund Institutional Class 2,213,234 - -------------------------------------------------------------------------------- 118,404 Vista Fund Institutional Class(2) 1,841,182 - -------------------------------------------------------------------------------- 20,205,887 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS -- 36.0% - -------------------------------------------------------------------------------- 1,248,070 Diversified Bond Fund Institutional Class 12,692,872 - -------------------------------------------------------------------------------- 248,403 High-Yield Fund Institutional Class 1,617,104 - -------------------------------------------------------------------------------- 141,771 Inflation-Adjusted Bond Fund Institutional Class 1,573,658 - -------------------------------------------------------------------------------- 15,883,634 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS -- 8.2% - -------------------------------------------------------------------------------- 126,701 Emerging Markets Fund Institutional Class 931,252 - -------------------------------------------------------------------------------- 289,887 International Growth Fund Institutional Class 2,675,657 - -------------------------------------------------------------------------------- 3,606,909 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 4.9% - -------------------------------------------------------------------------------- 2,166,265 Premium Money Market Fund Investor Class 2,166,265 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS -- 4.9% - -------------------------------------------------------------------------------- 158,164 International Bond Fund Institutional Class 2,157,357 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.9% (Cost $42,720,575) 44,020,052 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.1% 45,246 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $44,065,298 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 5 in Notes to Financial Statements.) (2) Non-income producing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 26.2% - -------------------------------------------------------------------------------- Large Cap Growth 8.1% - -------------------------------------------------------------------------------- Large Cap Growth-International 6.1% - -------------------------------------------------------------------------------- Real Estate 5.3% - -------------------------------------------------------------------------------- Mid Cap Growth 4.2% - -------------------------------------------------------------------------------- Mid Cap Growth-International 2.1% - -------------------------------------------------------------------------------- Small Cap Value 2.1% - -------------------------------------------------------------------------------- TOTAL EQUITY 54.1% - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 32.3% - -------------------------------------------------------------------------------- International 4.9% - -------------------------------------------------------------------------------- High-Yield 3.7% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 40.9% - -------------------------------------------------------------------------------- MONEY MARKET 4.9% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.1% - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 4 My Retirement 2025 Portfolio - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 13.57% 8/31/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 16.43% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.83% -- - -------------------------------------------------------------------------------- Institutional Class 13.74% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 13.28% 8/31/04 - -------------------------------------------------------------------------------- R Class 13.10% 8/31/04 - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 5 My Retirement 2025 Portfolio - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on August 31, 2004, through July 31, 2005, My Retirement 2025 returned 13.57%*. This return reflected the positive performance of the portfolio's equity, fixed-income, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 11 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 16.43% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value clearly surpass growth among large-cap stocks, but a far narrower victory for value in the smaller-cap arena. Foreign stock indices outperformed the overall U.S. market. The MSCI EAFE Index gained 20.44%. The MSCI Emerging Markets Index jumped 40.93%. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns in excess of 11% for the period; the two-year Treasury note returned less than 1%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.83%. PORTFOLIO STRATEGY My Retirement 2025 seeks the highest total return consistent with its target asset mix of 67% stocks, 28% bonds, and 5% cash equivalents. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds to achieve its investment objective and target asset allocation. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's target asset allocation, which features a diversified mix of asset classes and investment styles, will be adjusted annually. In general, the allocation to stocks will go down and the allocations to bonds and cash will increase each year until 2025, when the portfolio's asset mix will become fixed and match that of My Retirement Income (see page 15). An investment in My Retirement 2025 entails some risks, including those associated with investing in stocks, bonds, and foreign equities. The value of the portfolio's shares will fluctuate over time. *All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. - ------ 6 My Retirement 2025 Portfolio - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 99.9% DOMESTIC EQUITY FUNDS -- 55.7% - -------------------------------------------------------------------------------- 391,775 Equity Growth Fund Institutional Class $ 9,120,522 - -------------------------------------------------------------------------------- 1,358,268 Large Company Value Fund Institutional Class 8,964,569 - -------------------------------------------------------------------------------- 139,097 Real Estate Fund Institutional Class 3,929,490 - -------------------------------------------------------------------------------- 284,592 Small Company Fund Institutional Class 3,119,128 - -------------------------------------------------------------------------------- 305,255 Ultra Fund Institutional Class(2) 9,139,334 - -------------------------------------------------------------------------------- 493,523 Value Fund Institutional Class 3,750,775 - -------------------------------------------------------------------------------- 250,801 Vista Fund Institutional Class(2) 3,899,956 - -------------------------------------------------------------------------------- 41,923,774 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS -- 27.1% - -------------------------------------------------------------------------------- 1,599,799 Diversified Bond Fund Institutional Class 16,269,956 - -------------------------------------------------------------------------------- 318,470 High-Yield Fund Institutional Class 2,073,240 - -------------------------------------------------------------------------------- 181,692 Inflation-Adjusted Bond Fund Institutional Class 2,016,781 - -------------------------------------------------------------------------------- 20,359,977 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS -- 12.2% - -------------------------------------------------------------------------------- 322,167 Emerging Markets Fund Institutional Class 2,367,927 - -------------------------------------------------------------------------------- 736,854 International Growth Fund Institutional Class 6,801,163 - -------------------------------------------------------------------------------- 9,169,090 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 4.9% - -------------------------------------------------------------------------------- 3,669,778 Premium Money Market Fund Investor Class 3,669,778 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.9% (Cost $71,796,628) 75,122,619 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.1% 72,856 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $75,195,475 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 5 in Notes to Financial Statements.) (2) Non-income producing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 29.0% - -------------------------------------------------------------------------------- Large Cap Growth 12.2% - -------------------------------------------------------------------------------- Large Cap Growth-International 9.0% - -------------------------------------------------------------------------------- Real Estate 5.2% - -------------------------------------------------------------------------------- Mid Cap Growth 5.2% - -------------------------------------------------------------------------------- Small Cap Value 4.1% - -------------------------------------------------------------------------------- Mid Cap Growth-International 3.2% - -------------------------------------------------------------------------------- TOTAL EQUITY 67.9% - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 24.3% - -------------------------------------------------------------------------------- High-Yield 2.8% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 27.1% - -------------------------------------------------------------------------------- MONEY MARKET 4.9% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.1% - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 7 My Retirement 2035 Portfolio - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 15.71% 8/31/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 16.43% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.83% -- - -------------------------------------------------------------------------------- Institutional Class 15.98% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 15.53% 8/31/04 - -------------------------------------------------------------------------------- R Class 15.24% 8/31/04 - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 8 My Retirement 2035 Portfolio - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on August 31, 2004, through July 31, 2005, My Retirement 2035 returned 15.71%*. This return reflected the positive performance of the portfolio's equity, fixed-income, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 11 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 16.43% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value clearly surpass growth among large-cap stocks, but a far narrower victory for value in the smaller-cap arena. Foreign stock indices outperformed the overall U.S. market. The MSCI EAFE Index gained 20.44%. The MSCI Emerging Markets Index jumped 40.93%. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns in excess of 11% for the period; the two-year Treasury note returned less than 1%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.83%. PORTFOLIO STRATEGY My Retirement 2035 seeks the highest total return consistent with its target asset mix of 80% stocks, 18% bonds, and 2% cash equivalents. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds to achieve its investment objective and target asset allocation. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's target asset allocation, which features a diversified mix of asset classes and investment styles, will be adjusted annually. In general, the allocation to stocks will go down and the allocations to bonds and cash will increase each year until 2035, when the portfolio's asset mix will become fixed and match that of My Retirement Income (see page 15). An investment in My Retirement 2035 entails some risks, including those associated with investing in stocks, bonds, and foreign equities. The value of the portfolio's shares will fluctuate over time. *All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. - ------ 9 My Retirement 2035 Portfolio - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 99.9% DOMESTIC EQUITY FUNDS -- 65.5% - -------------------------------------------------------------------------------- 151,602 Equity Growth Fund Institutional Class $ 3,529,295 - -------------------------------------------------------------------------------- 525,715 Large Company Value Fund Institutional Class 3,469,719 - -------------------------------------------------------------------------------- 46,111 Real Estate Fund Institutional Class 1,302,636 - -------------------------------------------------------------------------------- 94,342 Small Company Fund Institutional Class 1,033,988 - -------------------------------------------------------------------------------- 118,114 Ultra Fund Institutional Class(2) 3,536,333 - -------------------------------------------------------------------------------- 229,177 Value Fund Institutional Class 1,741,745 - -------------------------------------------------------------------------------- 116,408 Vista Fund Institutional Class(2) 1,810,144 - -------------------------------------------------------------------------------- 16,423,860 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS -- 17.3% - -------------------------------------------------------------------------------- 341,334 Diversified Bond Fund Institutional Class 3,471,367 - -------------------------------------------------------------------------------- 67,923 High-Yield Fund Institutional Class 442,179 - -------------------------------------------------------------------------------- 38,763 Inflation-Adjusted Bond Fund Institutional Class 430,269 - -------------------------------------------------------------------------------- 4,343,815 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS -- 15.2% - -------------------------------------------------------------------------------- 178,035 Emerging Markets Fund Institutional Class 1,308,557 - -------------------------------------------------------------------------------- 271,606 International Growth Fund Institutional Class 2,506,924 - -------------------------------------------------------------------------------- 3,815,481 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 1.9% - -------------------------------------------------------------------------------- 487,118 Premium Money Market Fund Investor Class 487,118 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.9% (Cost $23,765,683) 25,070,274 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.1% 21,185 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $25,091,459 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 5 in Notes to Financial Statements.) (2) Non-income producing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 34.8% - -------------------------------------------------------------------------------- Large Cap Growth 14.1% - -------------------------------------------------------------------------------- Large Cap Growth-International 10.0% - -------------------------------------------------------------------------------- Mid Cap Growth 7.2% - -------------------------------------------------------------------------------- Mid Cap Growth-International 5.2% - -------------------------------------------------------------------------------- Real Estate 5.2% - -------------------------------------------------------------------------------- Small Cap Value 4.2% - -------------------------------------------------------------------------------- TOTAL EQUITY 80.7% - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 15.5% - -------------------------------------------------------------------------------- High-Yield 1.8% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 17.3% - -------------------------------------------------------------------------------- MONEY MARKET 1.9% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.1% - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 10 My Retirement 2045 Portfolio - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 16.86% 8/31/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 16.43% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.83% -- - -------------------------------------------------------------------------------- Institutional Class 17.11% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 16.57% 8/31/04 - -------------------------------------------------------------------------------- R Class 16.38% 8/31/04 - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 11 My Retirement 2045 Portfolio - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on August 31, 2004, through July 31, 2005, My Retirement 2045 returned 16.86%*. This return reflected the positive performance of the portfolio's equity, fixed-income, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 11 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 16.43% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value clearly surpass growth among large-cap stocks, but a far narrower victory for value in the smaller-cap arena. Foreign stock indices outperformed the overall U.S. market. The MSCI EAFE Index gained 20.44%. The MSCI Emerging Markets Index jumped 40.93%. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns in excess of 11% for the period; the two-year Treasury note returned less than 1%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.83%. PORTFOLIO STRATEGY My Retirement 2045 seeks the highest total return consistent with its target asset mix of 85% stocks, 13% bonds, and 2% cash equivalents. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds to achieve its investment objective and target asset allocation. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's target asset allocation, which features a diversified mix of asset classes and investment styles, will be adjusted annually. In general, the allocation to stocks will go down and the allocations to bonds and cash will increase each year until 2045, when the portfolio's asset mix will become fixed and match that of My Retirement Income (see page 15). An investment in My Retirement 2045 entails some risks, including those associated with investing in stocks, bonds, and foreign equities. The value of the portfolio's shares will fluctuate over time. *All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. - ------ 12 My Retirement 2045 Portfolio - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 100.0% DOMESTIC EQUITY FUNDS -- 70.4% - -------------------------------------------------------------------------------- 97,079 Equity Growth Fund Institutional Class $ 2,259,999 - -------------------------------------------------------------------------------- 336,548 Large Company Value Fund Institutional Class 2,221,217 - -------------------------------------------------------------------------------- 27,584 Real Estate Fund Institutional Class 779,248 - -------------------------------------------------------------------------------- 70,540 Small Company Fund Institutional Class 773,118 - -------------------------------------------------------------------------------- 75,644 Ultra Fund Institutional Class(2) 2,264,781 - -------------------------------------------------------------------------------- 146,755 Value Fund Institutional Class 1,115,338 - -------------------------------------------------------------------------------- 74,600 Vista Fund Institutional Class(2) 1,160,030 - -------------------------------------------------------------------------------- 10,573,731 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS -- 15.2% - -------------------------------------------------------------------------------- 127,781 Emerging Markets Fund Institutional Class 939,190 - -------------------------------------------------------------------------------- 146,045 International Growth Fund Institutional Class 1,347,996 - -------------------------------------------------------------------------------- 2,287,186 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS -- 12.5% - -------------------------------------------------------------------------------- 147,197 Diversified Bond Fund Institutional Class 1,496,993 - -------------------------------------------------------------------------------- 29,301 High-Yield Fund Institutional Class 190,750 - -------------------------------------------------------------------------------- 16,707 Inflation-Adjusted Bond Fund Institutional Class 185,448 - -------------------------------------------------------------------------------- 1,873,191 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 1.9% - -------------------------------------------------------------------------------- 290,954 Premium Money Market Fund Investor Class 290,954 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $14,060,933) 15,025,062 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES(3) 7,088 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $15,032,150 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 5 in Notes to Financial Statements.) (2) Non-income producing. (3) Category is less than 0.05% of total net assets. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 37.2% - -------------------------------------------------------------------------------- Large Cap Growth 15.1% - -------------------------------------------------------------------------------- Large Cap Growth-International 9.0% - -------------------------------------------------------------------------------- Mid Cap Growth 7.7% - -------------------------------------------------------------------------------- Mid Cap Growth-International 6.2% - -------------------------------------------------------------------------------- Real Estate 5.2% - -------------------------------------------------------------------------------- Small Cap Value 5.2% - -------------------------------------------------------------------------------- TOTAL EQUITY 85.6% - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 11.2% - -------------------------------------------------------------------------------- High-Yield 1.3% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 12.5% - -------------------------------------------------------------------------------- MONEY MARKET 1.9% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES --(3) - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 13 My Retirement Income Portfolio - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 8.14% 8/31/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 16.43% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.83% -- - -------------------------------------------------------------------------------- Institutional Class 8.31% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 7.82% 8/31/04 - -------------------------------------------------------------------------------- R Class 7.61% 8/31/04 - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 14 My Retirement Income Portfolio - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on August 31, 2004, through July 31, 2005, My Retirement Income returned 8.14%*. This return reflected the positive performance of the portfolio's fixed-income, equity, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 11 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 16.43% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value clearly surpass growth among large-cap stocks, but a far narrower victory for value in the smaller-cap arena. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns in excess of 11% for the period; the two-year Treasury note returned less than 1%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.83%. PORTFOLIO STRATEGY My Retirement Income seeks current income, with capital appreciation as a secondary objective, by investing in a diversified mix of asset classes and investment styles. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds to achieve its investment objectives and target asset allocation. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's target asset allocation is 55% bonds, 35% stocks, and 10% cash equivalents. This target asset mix is expected to remain fixed over time. The portfolio's asset mix is reviewed quarterly and rebalanced if necessary to maintain the target allocation. Although this is the most conservative My Retirement Portfolio, it nonetheless entails some risks, including those associated with investing in bonds, stocks, and foreign securities. The value of the portfolio's shares will fluctuate over time. *All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. - ------ 15 My Retirement Income Portfolio - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 99.8% DOMESTIC FIXED INCOME FUNDS -- 44.1% - -------------------------------------------------------------------------------- 683,389 Diversified Bond Fund Institutional Class $ 6,950,066 - -------------------------------------------------------------------------------- 135,990 High-Yield Fund Institutional Class 885,295 - -------------------------------------------------------------------------------- 77,632 Inflation-Adjusted Bond Fund Institutional Class 861,715 - -------------------------------------------------------------------------------- 8,697,076 - -------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS -- 35.9% - -------------------------------------------------------------------------------- 63,205 Income & Growth Fund Institutional Class 2,007,391 - -------------------------------------------------------------------------------- 255,484 Large Company Value Fund Institutional Class 1,686,194 - -------------------------------------------------------------------------------- 36,908 Real Estate Fund Institutional Class 1,042,651 - -------------------------------------------------------------------------------- 28,299 Small Company Fund Institutional Class 310,157 - -------------------------------------------------------------------------------- 33,757 Ultra Fund Institutional Class(2) 1,010,685 - -------------------------------------------------------------------------------- 78,612 Value Fund Institutional Class 597,451 - -------------------------------------------------------------------------------- 26,609 Vista Fund Institutional Class(2) 413,770 - -------------------------------------------------------------------------------- 7,068,299 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 9.9% - -------------------------------------------------------------------------------- 1,950,577 Premium Money Market Fund Investor Class 1,950,577 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS -- 9.9% - -------------------------------------------------------------------------------- 142,415 International Bond Fund Institutional Class 1,942,541 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.8% (Cost $19,297,202) 19,658,493 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.2% 31,254 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $19,689,747 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 5 in Notes to Financial Statements.) (2) Non-income producing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 39.6% - -------------------------------------------------------------------------------- International 9.9% - -------------------------------------------------------------------------------- High-Yield 4.5% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 54.0% - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 21.8% - -------------------------------------------------------------------------------- Real Estate 5.3% - -------------------------------------------------------------------------------- Large Cap Growth 5.1% - -------------------------------------------------------------------------------- Mid Cap Growth 2.1% - -------------------------------------------------------------------------------- Small Cap Value 1.6% - -------------------------------------------------------------------------------- TOTAL EQUITY 35.9% - -------------------------------------------------------------------------------- MONEY MARKET 9.9% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.2% - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 16 Shareholder Fee Examples (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. As a shareholder in the underlying American Century funds, your fund will indirectly bear its pro rata share of the expenses incurred by the underlying funds. These expenses are not included in the fund's annualized expense ratio or the expenses paid during the period. These expenses are, however, included in the effective expenses paid during the period. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from February 1, 2005 to July 31, 2005. 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, (continued) - ------ 17 Shareholder Fee Examples (Unaudited) 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. - ---------------------------------------------------------------------------------------------------------- EFFECTIVE BEGINNING ENDING EXPENSES PAID EXPENSES PAID EFFECTIVE ACCOUNT ACCOUNT DURING PERIOD(1) ANNUALIZED DURING PERIOD(2) ANNUALIZED VALUE VALUE 2/1/05 - EXPENSE 2/1/05 - EXPENSE 2/1/05 7/31/05 7/31/05 RATIO(1) 7/31/05 RATIO(2) - ---------------------------------------------------------------------------------------------------------- MY RETIREMENT 2015 PORTFOLIO SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------------- ACTUAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,041.00 $1.01 0.20% $4.20 0.83% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,041.90 $0.00 0.00%(3) $3.19 0.63% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,040.00 $2.28 0.45% $5.46 1.08% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,038.10 $3.54 0.70% $6.72 1.33% - ---------------------------------------------------------------------------------------------------------- HYPOTHETICAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,023.80 $1.00 0.20% $4.16 0.83% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,024.79 $0.00 0.00%(3) $3.16 0.63% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,022.56 $2.26 0.45% $5.42 1.08% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,021.32 $3.51 0.70% $6.67 1.33% - ---------------------------------------------------------------------------------------------------------- (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 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. The fees and expenses of the underlying American Century funds in which the fund invests are not included in the class's annualized expense ratio. (2) Effective expenses reflect the sum of expenses borne directly by the class plus the fund's pro rata share of the weighted average expense ratio of the underlying funds in which it invests. The effective annualized expense ratio combines the class's annualized expense ratio and the annualized weighted average expense ratio. The annualized weighted average expense ratio of the underlying funds for the one-half year period reflects the actual expense ratio of each underlying fund from its most recent shareholder report, annualized and weighted for the fund's relative average investment therein during the period. (3) Other expenses, which include the fees and expenses of the funds' independent directors and their legal counsel, did not exceed 0.005%. (continued) - ------ 18 Shareholder Fee Examples (Unaudited) - ---------------------------------------------------------------------------------------------------------- EFFECTIVE BEGINNING ENDING EXPENSES PAID EXPENSES PAID EFFECTIVE ACCOUNT ACCOUNT DURING PERIOD(1) ANNUALIZED DURING PERIOD(2) ANNUALIZED VALUE VALUE 2/1/05 - EXPENSE 2/1/05 - EXPENSE 2/1/05 7/31/05 7/31/05 RATIO(1) 7/31/05 RATIO(2) - ---------------------------------------------------------------------------------------------------------- MY RETIREMENT 2025 PORTFOLIO SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------------- ACTUAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,051.60 $1.02 0.20% $4.48 0.88% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,052.50 $0.00 0.00%(3) $3.46 0.68% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,049.70 $2.29 0.45% $5.74 1.13% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,049.80 $3.56 0.70% $7.01 1.38% - ---------------------------------------------------------------------------------------------------------- HYPOTHETICAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,023.80 $1.00 0.20% $4.42 0.88% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,024.79 $0.00 0.00%(3) $3.41 0.68% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,022.56 $2.26 0.45% $5.67 1.13% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,021.32 $3.51 0.70% $6.92 1.38% - ---------------------------------------------------------------------------------------------------------- MY RETIREMENT 2035 PORTFOLIO SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------------- ACTUAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,058.30 $1.02 0.20% $4.80 0.94% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,059.20 $0.00 0.00%(3) $3.78 0.74% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,057.40 $2.30 0.45% $6.07 1.19% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,055.60 $3.57 0.70% $7.34 1.44% - ---------------------------------------------------------------------------------------------------------- HYPOTHETICAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,023.80 $1.00 0.20% $4.72 0.94% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,024.79 $0.00 0.00%(3) $3.72 0.74% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,022.56 $2.26 0.45% $5.97 1.19% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,021.32 $3.51 0.70% $7.22 1.44% - ---------------------------------------------------------------------------------------------------------- (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 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. The fees and expenses of the underlying American Century funds in which the fund invests are not included in the class's annualized expense ratio. (2) Effective expenses reflect the sum of expenses borne directly by the class plus the fund's pro rata share of the weighted average expense ratio of the underlying funds in which it invests. The effective annualized expense ratio combines the class's annualized expense ratio and the annualized weighted average expense ratio. The annualized weighted average expense ratio of the underlying funds for the one-half year period reflects the actual expense ratio of each underlying fund from its most recent shareholder report, annualized and weighted for the fund's relative average investment therein during the period. (3) Other expenses, which include the fees and expenses of the funds' independent directors and their legal counsel, did not exceed 0.005%. (continued) - ------ 19 Shareholder Fee Examples (Unaudited) - ---------------------------------------------------------------------------------------------------------- EFFECTIVE BEGINNING ENDING EXPENSES PAID EXPENSES PAID EFFECTIVE ACCOUNT ACCOUNT DURING PERIOD(1) ANNUALIZED DURING PERIOD(2) ANNUALIZED VALUE VALUE 2/1/05 - EXPENSE 2/1/05 - EXPENSE 2/1/05 7/31/05 7/31/05 RATIO(1) 7/31/05 RATIO(2) - ---------------------------------------------------------------------------------------------------------- MY RETIREMENT 2045 PORTFOLIO SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------------- ACTUAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,061.60 $1.02 0.20% $4.75 0.93% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,063.50 $0.00 0.00%(3) $3.73 0.73% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,060.80 $2.30 0.45% $6.03 1.18% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,059.90 $3.58 0.70% $7.30 1.43% - ---------------------------------------------------------------------------------------------------------- HYPOTHETICAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,023.80 $1.00 0.20% $4.67 0.93% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,024.79 $0.00 0.00%(3) $3.66 0.73% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,022.56 $2.26 0.45% $5.92 1.18% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,021.32 $3.51 0.70% $7.17 1.43% - ---------------------------------------------------------------------------------------------------------- MY RETIREMENT INCOME PORTFOLIO SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------------- ACTUAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,029.90 $1.01 0.20% $3.77 0.75% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,030.90 $0.00 0.00%(3) $2.77 0.55% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,027.60 $2.26 0.45% $5.03 1.00% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,027.20 $3.52 0.70% $6.28 1.25% - ---------------------------------------------------------------------------------------------------------- HYPOTHETICAL - ---------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,023.80 $1.00 0.20% $3.76 0.75% - ---------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,024.79 $0.00 0.00%(3) $2.76 0.55% - ---------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,022.56 $2.26 0.45% $5.01 1.00% - ---------------------------------------------------------------------------------------------------------- R Class $1,000 $1,021.32 $3.51 0.70% $6.26 1.25% - ---------------------------------------------------------------------------------------------------------- (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 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. The fees and expenses of the underlying American Century funds in which the fund invests are not included in the class's annualized expense ratio. (2) Effective expenses reflect the sum of expenses borne directly by the class plus the fund's pro rata share of the weighted average expense ratio of the underlying funds in which it invests. The effective annualized expense ratio combines the class's annualized expense ratio and the annualized weighted average expense ratio. The annualized weighted average expense ratio of the underlying funds for the one-half year period reflects the actual expense ratio of each underlying fund from its most recent shareholder report, annualized and weighted for the fund's relative average investment therein during the period. (3) Other expenses, which include the fees and expenses of the funds' independent directors and their legal counsel, did not exceed 0.005%. - ------ 20 Statement of Assets and Liabilities JULY 31, 2005 - -------------------------------------------------------------------------------- 2015 2025 2035 - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities in affiliates, at value (cost of $42,720,575, $71,796,628, and $23,765,683, respectively) $44,020,052 $75,122,619 $25,070,274 - ------------------------------------ Cash -- 9,272 8,925 - ------------------------------------ Receivable for capital shares sold 163 408 1,227 - ------------------------------------ Distributions receivable from affiliates 54,110 71,955 14,535 - -------------------------------------------------------------------------------- 44,074,325 75,204,254 25,094,961 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Disbursements in excess of demand deposit cash 2,324 -- -- - ------------------------------------ Accrued administrative fees 6,643 8,688 3,480 - ------------------------------------ Service and distribution fees payable 60 91 22 - -------------------------------------------------------------------------------- 9,027 8,779 3,502 - -------------------------------------------------------------------------------- NET ASSETS $44,065,298 $75,195,475 $25,091,459 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $42,404,572 $71,265,079 $23,659,095 - ------------------------------------ Undistributed net investment income 306,231 483,721 100,583 - ------------------------------------ Undistributed net realized gain on investment transactions 55,018 120,684 27,190 - ------------------------------------ Net unrealized appreciation on investments 1,299,477 3,325,991 1,304,591 - -------------------------------------------------------------------------------- $44,065,298 $75,195,475 $25,091,459 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $40,716,706 $53,284,629 $21,536,885 - ------------------------------------ Shares outstanding 3,725,913 4,752,646 1,883,976 - ------------------------------------ Net asset value per share $10.93 $11.21 $11.43 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $3,011,431 $21,458,170 $3,435,072 - ------------------------------------ Shares outstanding 275,212 1,911,639 300,041 - ------------------------------------ Net asset value per share $10.94 $11.23 $11.45 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $323,333 $387,664 $113,323 - ------------------------------------ Shares outstanding 29,634 34,629 9,926 - ------------------------------------ Net asset value per share $10.91 $11.19 $11.42 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $13,828 $65,012 $6,179 - ------------------------------------ Shares outstanding 1,269 5,816 542 - ------------------------------------ Net asset value per share $10.90 $11.18 $11.40 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 21 Statement of Assets and Liabilities JULY 31, 2005 - -------------------------------------------------------------------------------- 2045 INCOME - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities in affiliates, at value (cost of $14,060,933 and $19,297,202, respectively) $15,025,062 $19,658,493 - ------------------------------------------------- Cash 1,690 2,883 - ------------------------------------------------- Receivable for capital shares sold 150 -- - ------------------------------------------------- Distributions receivable from affiliates 6,569 31,074 - -------------------------------------------------------------------------------- 15,033,471 19,692,450 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Accrued administrative fees 1,269 2,630 - ------------------------------------------------- Service and distribution fees payable 52 73 - -------------------------------------------------------------------------------- 1,321 2,703 - -------------------------------------------------------------------------------- NET ASSETS $15,032,150 $19,689,747 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $14,008,540 $19,261,187 - ------------------------------------------------- Undistributed net investment income 72,101 45,325 - ------------------------------------------------- Accumulated undistributed net realized gain (loss) on investment transactions (12,620) 21,944 - ------------------------------------------------- Net unrealized appreciation on investments 964,129 361,291 - -------------------------------------------------------------------------------- $15,032,150 $19,689,747 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $7,465,067 $15,572,320 - ------------------------------------------------- Shares outstanding 646,675 1,481,780 - ------------------------------------------------- Net asset value per share $11.54 $10.51 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $7,180,887 $3,168,674 - ------------------------------------------------- Shares outstanding 621,254 301,453 - ------------------------------------------------- Net asset value per share $11.56 $10.51 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $380,083 $940,225 - ------------------------------------------------- Shares outstanding 32,978 89,500 - ------------------------------------------------- Net asset value per share $11.53 $10.51 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $6,113 $8,528 - ------------------------------------------------- Shares outstanding 531 812 - ------------------------------------------------- Net asset value per share $11.51 $10.50 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 22 Statement of Operations FOR THE PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------------------------------------------- 2015 2025 2035 - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- INCOME: - ------------------------------------ Income distributions from underlying funds -- affiliates $ 506,278 $ 772,671 $ 169,016 - -------------------------------------------------------------------------------- EXPENSES: - ------------------------------------ Administrative fees 33,159 42,958 15,760 - ------------------------------------ Service and distribution fees: - ------------------------------------ Advisor Class 106 108 61 - ------------------------------------ R Class 35 74 25 - ------------------------------------ Directors' fees and expenses 213 404 108 - -------------------------------------------------------------------------------- 33,513 43,544 15,954 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 472,765 729,127 153,062 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ------------------------------------ Sale of investments in underlying funds (9,553) (17,782) (8,341) - ------------------------------------ Capital gain distributions received from underlying funds 64,571 138,466 35,531 - -------------------------------------------------------------------------------- 55,018 120,684 27,190 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON INVESTMENTS 1,299,477 3,325,991 1,304,591 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 1,354,495 3,446,675 1,331,781 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,827,260 $4,175,802 $1,484,843 ================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. (continued) - ------ 23 Statement of Operations FOR THE PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------------------------------------------- 2045 INCOME - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- INCOME: - ------------------------------------------------- Income distributions from underlying funds -- affiliates $ 158,416 $288,099 - -------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------- Administrative fees 6,639 13,290 - ------------------------------------------------- Service and distribution fees: - ------------------------------------------------- Advisor Class 113 83 - ------------------------------------------------- R Class 27 29 - ------------------------------------------------- Directors' fees and expenses 96 102 - -------------------------------------------------------------------------------- 6,875 13,504 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 151,541 274,595 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ------------------------------------------------- Sale of investments in underlying funds (69,987) (10,303) - ------------------------------------------------- Capital gain distributions received from underlying funds 57,367 32,247 - -------------------------------------------------------------------------------- (12,620) 21,944 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON INVESTMENTS 964,129 361,291 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 951,509 383,235 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,103,050 $657,830 ================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. - ------ 24 Statement of Changes in Net Assets PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------------------------------------------- INCREASE IN NET ASSETS 2015 2025 2035 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income $ 472,765 $ 729,127 $ 153,062 - ------------------------------------ Net realized gain 55,018 120,684 27,190 - ------------------------------------ Change in net unrealized appreciation 1,299,477 3,325,991 1,304,591 - -------------------------------------------------------------------------------- Net increase in net assets resulting from operations 1,827,260 4,175,802 1,484,843 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income: - ------------------------------------ Investor Class (151,441) (95,759) (47,247) - ------------------------------------ Institutional Class (14,925) (149,519) (5,110) - ------------------------------------ Advisor Class (86) (66) (63) - ------------------------------------ R Class (82) (62) (59) - -------------------------------------------------------------------------------- Decrease in net assets from distributions (166,534) (245,406) (52,479) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 42,404,572 71,265,079 23,659,095 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 44,065,298 75,195,475 25,091,459 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period -- -- -- - -------------------------------------------------------------------------------- End of period $44,065,298 $75,195,475 $25,091,459 ================================================================================ Undistributed net investment income $306,231 $483,721 $100,583 ================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. (continued) - ------ 25 Statement of Changes in Net Assets PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------------------------------------------- INCREASE IN NET ASSETS 2045 INCOME - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income $ 151,541 $ 274,595 - ------------------------------------------------- Net realized gain (loss) (12,620) 21,944 - ------------------------------------------------- Change in net unrealized appreciation 964,129 361,291 - -------------------------------------------------------------------------------- Net increase in net assets resulting from operations 1,103,050 657,830 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income: - ------------------------------------------------- Investor Class (11,612) (170,391) - ------------------------------------------------- Institutional Class (67,702) (58,473) - ------------------------------------------------- Advisor Class (65) (258) - ------------------------------------------------- R Class (61) (148) - -------------------------------------------------------------------------------- Decrease in net assets from distributions (79,440) (229,270) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 14,008,540 19,261,187 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 15,032,150 19,689,747 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period -- -- - -------------------------------------------------------------------------------- End of period $15,032,150 $19,689,747 ================================================================================ Undistributed net investment income $72,101 $45,325 ================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. - ------ 26 Notes to Financial Statements JULY 31, 2005 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Asset Allocation Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act), as amended, as an open-end management investment company. My Retirement 2015 Portfolio (2015), My Retirement 2025 Portfolio (2025), My Retirement 2035 Portfolio (2035), My Retirement 2045 Portfolio (2045), and My Retirement Income Portfolio (Income) (collectively, the funds) are five funds in a series issued by the corporation. The funds operate as "fund of funds," meaning substantially all of the funds' assets will be invested in other funds in the American Century family of funds (the underlying funds). Because the funds directly invest in a relatively small number of underlying funds, they are not diversified as defined by the 1940 Act. However, the underlying funds are generally diversified and so indirectly provide broad exposure to a large number of securities. The funds' (except for Income) investment objectives are to seek the highest total return consistent with their respective asset mix. The investment objective of Income is to seek current income. Capital appreciation is a secondary objective of Income. The funds pursue their objectives by investing in underlying funds that represent a variety of asset classes and investment styles. For each fund with a target year, the target asset mix will be adjusted annually in a step-like fashion. In general, as the target year approaches, the allocation to stocks will decrease and the allocation to bonds and money market instruments will increase. When a fund reaches its most conservative planned target asset allocation, which is expected to occur on approximately November 30 of the year before the target year, its target asset mix will become fixed and will match that of Income. The funds incepted on August 31, 2004. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- The funds are authorized to issue the Investor Class, Institutional Class, Advisor Class and R Class. The share classes differ principally in their respective shareholder servicing and distribution expenses and arrangements. All shares of each fund 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. UNDERLYING FUNDS -- Each fund's assets are allocated among underlying funds that represent major asset classes, including equity securities (stocks), fixed-income securities (bonds) and cash-equivalent instruments (money markets). A brief description of each of the underlying funds follows. DOMESTIC EQUITY FUNDS EQUITY GROWTH seeks long-term capital growth. It uses a quantitative investment strategy to construct an optimized portfolio drawn primarily from the 1,500 largest publicly traded U.S. companies without regard to dividend yield. INCOME & GROWTH seeks long-term capital growth with income as a secondary objective. It uses a quantitative investment strategy to construct an optimized portfolio drawn primarily from the 1,500 largest publicly traded U.S. companies. Income & Growth's managers also attempt to create a dividend yield for the fund that exceeds that of the S&P 500 Index. LARGE COMPANY VALUE seeks long-term capital growth with income as a secondary objective. It uses a value investment strategy and invests primarily in larger U.S. companies. REAL ESTATE seeks long-term capital appreciation with income as a secondary objective. It invests primarily in equity securities issued by real estate investment trusts and companies engaged in the real estate industry. SMALL COMPANY seeks long-term capital growth. It uses a quantitative investment strategy and invests primarily in smaller U.S. companies. ULTRA seeks long-term capital growth. It uses a growth investment strategy and generally invests in larger U.S. companies. VALUE seeks long-term capital growth with income as a secondary objective. It uses a value investment strategy and invests primarily in U.S. companies of all sizes. VISTA seeks long-term capital growth. It uses a growth investment strategy and generally invests in medium-sized and smaller U.S. companies. INTERNATIONAL EQUITY FUNDS EMERGING MARKETS seeks capital growth. It uses a growth strategy and invests primarily in securities of companies located in emerging market countries and companies that derive a significant portion of their business from emerging market countries. INTERNATIONAL GROWTH seeks capital growth. It uses a growth strategy and invests primarily in securities of companies located in developed countries other than the United States. (continued) - ------ 27 Notes to Financial Statements JULY 31, 2005 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) DOMESTIC FIXED INCOME FUNDS DIVERSIFIED BOND seeks a high level of income by investing primarily in high- and medium-grade non-money market debt securities. These securities, which may be payable in U.S. or foreign currencies, may include corporate bonds and notes, government securities and securities backed by mortgages or other assets. HIGH-YIELD seeks high current income by investing in a diversified portfolio of high-yield corporate bonds and other debt securities. INFLATION-ADJUSTED BOND seeks to provide total return and inflation protection consistent with investment in inflation-indexed securities. INTERNATIONAL FIXED INCOME FUNDS INTERNATIONAL BOND seeks high total return by investing in high-quality, non-dollar-denominated government and corporate debt securities outside the United States. MONEY MARKET FUNDS PREMIUM MONEY MARKET seeks to earn the highest level of current income while preserving the value of shareholder investments by investing in high-quality, cash-equivalents. SECURITY VALUATIONS -- Investments in the underlying funds are valued at their reported net asset value. The underlying funds have specific valuation policies. If the underlying funds determine that the market price of a security is not readily available, or that the specific valuation methods do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the underlying funds' Board of Directors/Trustees or its designee if such fair value determination would materially impact an underlying fund's net asset value. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Income and capital gain distributions, if any, from the underlying funds are recorded as of the ex-dividend date. Long-term capital gain distributions, if any, from the underlying funds are a component of net realized gain (loss). EXPENSES -- The expenses included in the accompanying financial statements reflect the expenses of each fund and do not include any expenses associated with the underlying funds. 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. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income, if any, are generally declared and paid annually for 2015, 2025, 2035, and 2045. Distributions from net investment income, if any, are generally declared and paid quarterly for Income. Distributions from net realized gains, if any, are generally declared and paid annually for all funds. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors 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. 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 ADMINISTRATIVE FEES -- The corporation has entered into a Management Agreement with American Century Investment Management, Inc. (ACIM), under which ACIM provides the funds with shareholder services in exchange for an administrative fee (the fee). 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 rate of the fee for the Investor, Advisor, and R Classes of the funds is 0.20%. There is no administrative fee for the Institutional Class. (continued) - ------ 28 Notes to Financial Statements JULY 31, 2005 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) DISTRIBUTION FEES -- The Board of Directors of the corporation has adopted a separate Master Distribution and Individual Shareholder Services Plan for the Advisor and R Classes (collectively, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and R Class will pay American Century Investment Services, Inc. (ACIS) 0.25% and 0.50%, respectively. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. These fees are used to pay for distribution services and shareholder services. Fees incurred under the plans during the period August 31, 2004 (fund inception) through July 31, 2005, are detailed in the Statement of Operations. MANAGEMENT FEES -- Each fund will indirectly realize its pro rata share of the fees and expenses of the underlying funds in which it invests. These fees and expenses are already reflected in the valuation of the underlying funds. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. The directors of the corporation are also directors of some underlying funds and therefore those underlying funds may be deemed to be under common control with the corporation. The officers of the corporation are also officers of all the underlying funds. ACIM or American Century Global Investment Management, Inc., a wholly-owned subsidiary of ACIM, serves as the investment advisor for the underlying funds. 3. INVESTMENT TRANSACTIONS Investment transactions for the period August 31, 2004 (fund inception) through July 31, 2005, were as follows: - ------------------------------------------------------------------------------------------ 2015 2025 2035 2045 INCOME - ------------------------------------------------------------------------------------------ Purchases $43,161,407 $72,721,011 $24,119,774 $15,552,137 $19,833,922 - ------------------------------------------------------------------------------------------ Proceeds from sales $431,279 $906,601 $345,750 $1,421,217 $526,417 - ------------------------------------------------------------------------------------------ 4. CAPITAL SHARE TRANSACTIONS The corporation is authorized to issue 3,000,000,000 shares. Transactions in shares of the funds were as follows: - ------------------------------------------------------------------------------------------ 2015 2025 - ------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------ PERIOD ENDED JULY 31, 2005(1) - ------------------------------ Sold 3,902,409 $41,049,602 5,016,269 $53,494,769 - ------------------------------ Issued in reinvestment of distributions 14,144 148,658 8,808 93,984 - ------------------------------ Redeemed (190,640) (2,029,041) (272,431) (2,945,784) - ------------------------------------------------------------------------------------------ Net increase 3,725,913 $39,169,219 4,752,646 $50,642,969 ========================================================================================== INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------ PERIOD ENDED JULY 31, 2005(1) - ------------------------------ Sold 290,244 $3,064,565 2,033,515 $21,497,434 - ------------------------------ Issued in reinvestment of distributions 1,419 14,925 14,013 149,519 - ------------------------------ Redeemed (16,451) (174,484) (135,889) (1,465,836) - ------------------------------------------------------------------------------------------ Net increase 275,212 $2,905,006 1,911,639 $20,181,117 ========================================================================================== (1) August 31, 2004 (fund inception) through July 31, 2005. (continued) - ------ 29 Notes to Financial Statements JULY 31, 2005 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------ 2015 2025 - ------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------ ADVISOR CLASS - ------------------------------------------------------------------------------------------ PERIOD ENDED JULY 31, 2005(1) - ------------------------------ Sold 32,661 $349,947 38,181 $417,596 - ------------------------------ Issued in reinvestment of distributions 8 86 6 66 - ------------------------------ Redeemed (3,035) (32,846) (3,558) (39,298) - ------------------------------------------------------------------------------------------ Net increase 29,634 $317,187 34,629 $378,364 ========================================================================================== R CLASS - ------------------------------------------------------------------------------------------ PERIOD ENDED JULY 31, 2005(1) - ------------------------------ Sold 1,282 $13,304 5,833 $62,823 - ------------------------------ Issued in reinvestment of distributions 8 82 6 62 - ------------------------------ Redeemed (21) (226) (23) (256) - ------------------------------------------------------------------------------------------ Net increase 1,269 $13,160 5,816 $62,629 ========================================================================================== - ------------------------------------------------------------------------------------------ 2035 2045 - ------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------ PERIOD ENDED JULY 31, 2005(1) - ------------------------------ Sold 1,993,049 $21,476,590 775,796 $ 8,462,831 - ------------------------------ Issued in reinvestment of distributions 4,053 43,813 1,055 11,489 - ------------------------------ Redeemed (113,126) (1,235,086) (130,176) (1,401,282) - ------------------------------------------------------------------------------------------ Net increase 1,883,976 $20,285,317 646,675 $ 7,073,038 ========================================================================================== INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------ PERIOD ENDED JULY 31, 2005(1) - ------------------------------ Sold 307,986 $3,348,138 696,708 $7,391,651 - ------------------------------ Issued in reinvestment of distributions 473 5,110 6,217 67,702 - ------------------------------ Redeemed (8,418) (92,883) (81,671) (898,297) - ------------------------------------------------------------------------------------------ Net increase 300,041 $3,260,365 621,254 $6,561,056 ========================================================================================== ADVISOR CLASS - ------------------------------------------------------------------------------------------ PERIOD ENDED JULY 31, 2005(1) - ------------------------------ Sold 10,329 $112,516 32,973 $369,026 - ------------------------------ Issued in reinvestment of distributions 6 63 6 65 - ------------------------------ Redeemed (409) (4,618) (1) (7) - ------------------------------------------------------------------------------------------ Net increase 9,926 $107,961 32,978 $369,084 ========================================================================================== R CLASS - ------------------------------------------------------------------------------------------ PERIOD ENDED JULY 31, 2005(1) - ------------------------------ Sold 537 $5,397 1,637 $ 17,906 - ------------------------------ Issued in reinvestment of distributions 5 59 6 61 - ------------------------------ Redeemed -- (4) (1,112) (12,605) - ------------------------------------------------------------------------------------------ Net increase 542 $5,452 531 $ 5,362 ========================================================================================== (1) August 31, 2004 (fund inception) through July 31, 2005. (continued) - ------ 30 Notes to Financial Statements JULY 31, 2005 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- INCOME - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- PERIOD ENDED JULY 31, 2005(1) - ------------------------------------------------- Sold 1,628,131 $16,739,912 - ------------------------------------------------- Issued in reinvestment of distributions 15,257 157,830 - ------------------------------------------------- Redeemed (161,608) (1,674,191) - -------------------------------------------------------------------------------- Net increase 1,481,780 $15,223,551 ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- PERIOD ENDED JULY 31, 2005(1) - ------------------------------------------------- Sold 323,190 $3,315,596 - ------------------------------------------------- Issued in reinvestment of distributions 5,659 58,473 - ------------------------------------------------- Redeemed (27,396) (284,000) - -------------------------------------------------------------------------------- Net increase 301,453 $3,090,069 ================================================================================ ADVISOR CLASS - -------------------------------------------------------------------------------- PERIOD ENDED JULY 31, 2005(1) - ------------------------------------------------- Sold 89,804 $942,528 - ------------------------------------------------- Issued in reinvestment of distributions 25 258 - ------------------------------------------------- Redeemed (329) (3,435) - -------------------------------------------------------------------------------- Net increase 89,500 $939,351 ================================================================================ R CLASS - -------------------------------------------------------------------------------- PERIOD ENDED JULY 31, 2005(1) - ------------------------------------------------- Sold 803 $8,118 - ------------------------------------------------- Issued in reinvestment of distributions 14 148 - ------------------------------------------------- Redeemed (5) (50) - -------------------------------------------------------------------------------- Net increase 812 $8,216 ================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. (continued) - ------ 31 Notes to Financial Statements JULY 31, 2005 5. AFFILIATED COMPANY TRANSACTIONS Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. The funds do not invest in the underlying funds for the purpose of exercising management or control; however, investments by the funds within their investment strategies may represent a significant portion of the underlying funds' net assets. As of July 31, 2005, the funds did not own a significant percentage of total outstanding shares of the underlying funds. A summary of transactions for each underlying fund during the period from August 31, 2004 (fund inception) through July 31, 2005 follows: - -------------------------------------------------------------------------------------------------------------- PURCHASE SALES REALIZED DISTRIBUTIONS JULY 31, 2005 FUND/UNDERLYING FUND COST COST GAIN (LOSS) RECEIVED(1) SHARE BALANCE MARKET VALUE - -------------------------------------------------------------------------------------------------------------- 2015 - -------------------------------------------------------------------------------------------------------------- Income & Growth Fund Institutional Class $ 4,708,861 $ 85,886 $(1,957) $ 39,072 154,555 $ 4,908,667 - ---------------------------- Large Company Value Fund Institutional Class 4,283,017 42,675 (1,259) 36,133 667,962 4,408,549 - ---------------------------- Real Estate Fund Institutional Class 2,139,047 140,977 656 41,031 82,093 2,319,127 - ---------------------------- Small Company Fund Institutional Class 855,619 28,793 (658) 14,401 83,960 920,202 - ---------------------------- Ultra Fund Institutional Class(2) 3,423,780 15,247 (624) -- 120,071 3,594,926 - ---------------------------- Value Fund Institutional Class 2,163,430 5,365 (571) 65,461 291,215 2,213,234 - ---------------------------- Vista Fund Institutional Class(2) 1,711,835 30,436 (1,590) -- 118,404 1,841,182 - ---------------------------- Diversified Bond Fund Institutional Class 12,796,605 28,794 (444) 232,968 1,248,070 12,692,872 - ---------------------------- High-Yield Fund Institutional Class 1,620,343 3,704 (151) 43,651 248,403 1,617,104 - ---------------------------- Inflation-Adjusted Bond Fund Institutional Class 1,604,408 3,616 (54) 34,477 141,771 1,573,658 - ---------------------------- Emerging Markets Fund Institutional Class 855,962 31,932 (1,798) 3,921 126,701 931,252 - ---------------------------- International Growth Fund Institutional Class 2,569,286 13,328 (627) 6,987 289,887 2,675,657 - ---------------------------- Premium Money Market Fund Investor Class 2,171,052 4,787 -- 21,685 2,166,265 2,166,265 - ---------------------------- International Bond Fund Institutional Class 2,258,162 5,292 (476) 31,062 158,164 2,157,357 - -------------------------------------------------------------------------------------------------------------- $43,161,407 $440,832 $(9,553) $570,849 $44,020,052 ============================================================================================================== 2025 - -------------------------------------------------------------------------------------------------------------- Equity Growth Fund Institutional Class $ 8,626,464 $217,104 $ (2,983) $ 47,653 391,775 $ 9,120,522 - ---------------------------- Large Company Value Fund Institutional Class 8,643,289 48,922 (1,145) 79,509 1,358,268 8,964,569 - ---------------------------- Real Estate Fund Institutional Class 3,592,561 186,777 1,740 81,205 139,097 3,929,490 - ---------------------------- Small Company Fund Institutional Class 2,875,179 91,905 (1,783) 57,283 284,592 3,119,128 - ---------------------------- Ultra Fund Institutional Class(2) 8,717,335 49,538 (1,651) -- 305,255 9,139,334 - ---------------------------- Value Fund Institutional Class 3,688,387 22,047 (2,100) 133,371 493,523 3,750,775 - ---------------------------- Vista Fund Institutional Class(2) 3,593,729 54,241 (2,741) -- 250,801 3,899,956 - ---------------------------- Diversified Bond Fund Institutional Class 16,473,201 90,171 (991) 331,415 1,599,799 16,269,956 - ---------------------------- High-Yield Fund Institutional Class 2,089,323 11,555 (382) 61,428 318,470 2,073,240 - ---------------------------- Inflation-Adjusted Bond Fund Institutional Class 2,062,567 11,348 (138) 47,072 181,692 2,016,781 - ---------------------------- Emerging Markets Fund Institutional Class 2,156,494 83,455 (4,042) 11,691 322,167 2,367,927 - ---------------------------- International Growth Fund Institutional Class 6,512,806 37,422 (1,566) 20,727 736,854 6,801,163 - ---------------------------- Premium Money Market Fund Investor Class 3,689,676 19,898 -- 39,783 3,669,778 3,669,778 - -------------------------------------------------------------------------------------------------------------- $72,721,011 $924,383 $(17,782) $911,137 $75,122,619 ============================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 32 Notes to Financial Statements JULY 31, 2005 5. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------------------------------------- PURCHASE SALES REALIZED DISTRIBUTIONS JULY 31, 2005 FUND/UNDERLYING FUND COST COST GAIN (LOSS) RECEIVED(1) SHARE BALANCE MARKET VALUE - -------------------------------------------------------------------------------------------------------------- 2035 - -------------------------------------------------------------------------------------------------------------- Equity Growth Fund Institutional Class $ 3,350,153 $ 75,325 $(1,163) $ 15,019 151,602 $ 3,529,295 - ---------------------------- Large Company Value Fund Institutional Class 3,364,293 25,988 (354) 24,934 525,715 3,469,719 - ---------------------------- Real Estate Fund Institutional Class 1,194,680 68,785 1 18,618 46,111 1,302,636 - ---------------------------- Small Company Fund Institutional Class 956,778 29,908 (755) 13,339 94,342 1,033,988 - ---------------------------- Ultra Fund Institutional Class(2) 3,370,829 26,340 (614) -- 118,114 3,536,333 - ---------------------------- Value Fund Institutional Class 1,702,791 14,556 (1,707) 41,927 229,177 1,741,745 - ---------------------------- Vista Fund Institutional Class(2) 1,674,690 23,302 (1,019) -- 116,408 1,810,144 - ---------------------------- Diversified Bond Fund Institutional Class 3,517,774 26,780 (399) 56,914 341,334 3,471,367 - ---------------------------- High-Yield Fund Institutional Class 444,012 3,365 (49) 10,804 67,923 442,179 - ---------------------------- Inflation-Adjusted Bond Fund Institutional Class 441,279 3,372 (14) 8,588 38,763 430,269 - ---------------------------- Emerging Markets Fund Institutional Class 1,196,651 33,866 (1,771) 4,564 178,035 1,308,557 - ---------------------------- International Growth Fund Institutional Class 2,415,062 18,840 (497) 5,370 271,606 2,506,924 - ---------------------------- Premium Money Market Fund Investor Class 490,782 3,664 -- 4,470 487,118 487,118 - -------------------------------------------------------------------------------------------------------------- $24,119,774 $354,091 $(8,341) $204,547 $25,070,274 ============================================================================================================== 2045 - -------------------------------------------------------------------------------------------------------------- Equity Growth Fund Institutional Class $ 2,310,257 $ 249,115 $ (8,839) $ 14,653 97,079 $ 2,259,999 - ---------------------------- Large Company Value Fund Institutional Class 2,311,842 201,899 (7,404) 24,825 336,548 2,221,217 - ---------------------------- Real Estate Fund Institutional Class 768,401 93,485 (2,357) 25,281 27,584 779,248 - ---------------------------- Small Company Fund Institutional Class 769,738 85,081 (4,892) 20,977 70,540 773,118 - ---------------------------- Ultra Fund Institutional Class(2) 2,341,089 206,892 (13,390) -- 75,644 2,264,781 - ---------------------------- Value Fund Institutional Class 1,206,851 107,245 (10,597) 64,284 146,755 1,115,338 - ---------------------------- Vista Fund Institutional Class(2) 1,154,709 110,723 (7,503) -- 74,600 1,160,030 - ---------------------------- Diversified Bond Fund Institutional Class 1,644,212 135,756 (1,728) 37,200 147,197 1,496,993 - ---------------------------- High-Yield Fund Institutional Class 209,161 17,414 (584) 6,497 29,301 190,750 - ---------------------------- Inflation-Adjusted Bond Fund Institutional Class 205,095 16,944 (51) 4,989 16,707 185,448 - ---------------------------- Emerging Markets Fund Institutional Class 924,323 119,549 (7,283) 6,568 127,781 939,190 - ---------------------------- International Growth Fund Institutional Class 1,389,743 121,339 (5,359) 6,943 146,045 1,347,996 - ---------------------------- Premium Money Market Fund Investor Class 316,716 25,762 -- 3,566 290,954 290,954 - -------------------------------------------------------------------------------------------------------------- $15,552,137 $1,491,204 $(69,987) $215,783 $15,025,062 ============================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 33 Notes to Financial Statements JULY 31, 2005 5. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------------------------------------- PURCHASE SALES REALIZED DISTRIBUTIONS JULY 31, 2005 FUND/UNDERLYING FUND COST COST GAIN (LOSS) RECEIVED(1) SHARE BALANCE MARKET VALUE - -------------------------------------------------------------------------------------------------------------- INCOME - -------------------------------------------------------------------------------------------------------------- Diversified Bond Fund Institutional Class $ 7,122,148 $129,139 $ (1,655) $138,779 683,389 $ 6,950,066 - ---------------------------- High-Yield Fund Institutional Class 901,049 16,316 (318) 25,329 135,990 885,295 - ---------------------------- Inflation-Adjusted Bond Fund Institutional Class 891,085 16,280 (231) 19,651 77,632 861,715 - ---------------------------- Income & Growth Fund Institutional Class 1,963,477 86,540 (1,490) 16,805 63,205 2,007,391 - ---------------------------- Large Company Value Fund Institutional Class 1,671,003 60,306 (1,060) 14,797 255,484 1,686,194 - ---------------------------- Real Estate Fund Institutional Class 981,033 81,675 (294) 23,699 36,908 1,042,651 - ---------------------------- Small Company Fund Institutional Class 293,954 17,389 (282) 5,810 28,299 310,157 - ---------------------------- Ultra Fund Institutional Class(2) 980,505 26,917 (711) -- 33,757 1,010,685 - ---------------------------- Value Fund Institutional Class 596,314 11,744 (1,026) 23,365 78,612 597,451 - ---------------------------- Vista Fund Institutional Class(2) 391,902 16,754 (547) -- 26,609 413,770 - ---------------------------- Premium Money Market Fund Investor Class 1,985,975 35,398 -- 20,229 1,950,577 1,950,577 - ---------------------------- International Bond Fund Institutional Class 2,055,477 38,262 (2,689) 31,882 142,415 1,942,541 - -------------------------------------------------------------------------------------------------------------- $19,833,922 $536,720 $(10,303) $320,346 $19,658,493 ============================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. 6. FEDERAL TAX INFORMATION The tax character of distributions paid during the period from August 31, 2004 (fund inception) through July 31, 2005 was as follows: - -------------------------------------------------------------------------------- 2015 2025 2035 2045 INCOME - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $166,534 $245,406 $52,479 $79,440 $229,270 - -------------------------------------------------------------------------------- Long-term capital gains -- -- -- -- -- - -------------------------------------------------------------------------------- The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences 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. (continued) - ------ 34 Notes to Financial Statements JULY 31, 2005 6. FEDERAL TAX INFORMATION (CONTINUED) As of July 31, 2005, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - ------------------------------------------------------------------------------------------ 2015 2025 2035 2045 INCOME - ------------------------------------------------------------------------------------------ COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - ------------------------------------------------------------------------------------------ Federal tax cost of investments $42,731,093 $71,816,871 $23,774,612 $14,130,639 $19,307,859 ========================================================================================== Gross tax appreciation of investments $1,487,520 $3,459,298 $1,323,336 $911,960 $ 485,941 - ------------------- Gross tax depreciation of investments (198,561) (153,550) (27,674) (17,537) (135,307) - ------------------------------------------------------------------------------------------ Net tax appreciation $1,288,959 $3,305,748 $1,295,662 $894,423 $ 350,634 ========================================================================================== Undistributed ordinary income $307,196 $486,182 $101,171 $72,101 $45,679 - ------------------- Accumulated long-term gains $64,571 $138,466 $35,531 $57,086 $32,247 - ------------------------------------------------------------------------------------------ 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. 7. OTHER TAX INFORMATION (UNAUDITED) The following information is provided pursuant to provisions of the Internal Revenue Code. For corporate taxpayers, the following ordinary income distributions paid during the period August 31, 2004 (fund inception) through July 31, 2005, qualify for the corporate dividends received deduction. - -------------------------------------------------------------------------------- 2015 2025 2035 2045 INCOME - -------------------------------------------------------------------------------- $131,370 $245,406 $52,479 $79,440 $51,676 - -------------------------------------------------------------------------------- The funds hereby designate qualified dividend income for the period August 31, 2004 (fund inception) through July 31, 2005, as follows: - -------------------------------------------------------------------------------- 2015 2025 2035 2045 INCOME - -------------------------------------------------------------------------------- $114,227 $221,438 $52,479 $68,990 $42,565 - -------------------------------------------------------------------------------- - ------ 35 My Retirement 2015 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.25 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 0.86 - -------------------------------------------------------------------------------- Total From Investment Operations 1.11 - ------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.18) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.93 ================================================================================ TOTAL RETURN(3) 11.17% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.20%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.61%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 2% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $40,717 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 36 My Retirement 2015 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.29 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 0.84 - -------------------------------------------------------------------------------- Total From Instestment Operations 1.13 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.19) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.94 ================================================================================ TOTAL RETURN(3) 11.32% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.81%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 2% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $3,011 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 37 My Retirement 2015 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.17 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 0.91 - -------------------------------------------------------------------------------- Total From Investment Operations 1.08 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.17) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.91 ================================================================================ TOTAL RETURN(3) 10.88% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.45%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.36%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 2% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $323 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 38 My Retirement 2015 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.24 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 0.82 - -------------------------------------------------------------------------------- Total From Investment Operations 1.06 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.16) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.90 ================================================================================ TOTAL RETURN(3) 10.59% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.70%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.11%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 2% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $14 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 39 My Retirement 2025 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.18 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.17 - -------------------------------------------------------------------------------- Total From Investment Operations 1.35 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.14) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.21 ================================================================================ TOTAL RETURN(3) 13.57% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.20%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.08%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 2% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $53,285 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 40 My Retirement 2025 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.27 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.11 - -------------------------------------------------------------------------------- Total From Investment Operations 1.38 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.15) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.23 ================================================================================ TOTAL RETURN(3) 13.74% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.28%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 2% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $21,458 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 41 My Retirement 2025 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.12 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.20 - -------------------------------------------------------------------------------- Total From Investment Operations 1.32 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.19 ================================================================================ TOTAL RETURN(3) 13.28% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.45%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.83%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 2% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $388 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 42 My Retirement 2025 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.15 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.15 - -------------------------------------------------------------------------------- Total From Investment Operations 1.30 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.12) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.18 ================================================================================ TOTAL RETURN(3) 13.10% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.70%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.58%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 2% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $65 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 43 My Retirement 2035 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.17 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.39 - -------------------------------------------------------------------------------- Total From Investment Operations 1.56 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.43 ================================================================================ TOTAL RETURN(3) 15.71% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.20%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.62%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 3% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $21,537 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 44 My Retirement 2035 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.16 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.43 - -------------------------------------------------------------------------------- Total From Investment Operations 1.59 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.14) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.45 ================================================================================ TOTAL RETURN(3) 15.98% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.82%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 3% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $3,435 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 45 My Retirement 2035 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.11 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.44 - -------------------------------------------------------------------------------- Total From Investment Operations 1.55 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.42 ================================================================================ TOTAL RETURN(3) 15.53% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.45%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.37%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 3% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $113 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 46 My Retirement 2035 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.22 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.30 - -------------------------------------------------------------------------------- Total From Investment Operations 1.52 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.12) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.40 ================================================================================ TOTAL RETURN(3) 15.24% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.70%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.12%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 3% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $6 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 47 My Retirement 2045 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.12 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.56 - -------------------------------------------------------------------------------- Total From Investment Operations 1.68 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.14) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.54 ================================================================================ TOTAL RETURN(3) 16.86% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.20%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.83%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 17% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $7,465 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 48 My Retirement 2045 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.25 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 1.70 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.14) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.56 ================================================================================ TOTAL RETURN(3) 17.11% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.03%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 17% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $7,181 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 49 My Retirement 2045 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.07 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.59 - -------------------------------------------------------------------------------- Total From Investment Operations 1.66 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.53 ================================================================================ TOTAL RETURN(3) 16.57% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.45%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.58%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 17% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $380 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 50 My Retirement 2045 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.18 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 1.63 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.12) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.51 ================================================================================ TOTAL RETURN(3) 16.38% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.70%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.33%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 17% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $6 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 51 My Retirement Income Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.29 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 0.52 - -------------------------------------------------------------------------------- Total From Investment Operations 0.81 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.30) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.51 ================================================================================ TOTAL RETURN(3) 8.14% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.20%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 3.16%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 6% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $15,572 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 52 My Retirement Income Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.34 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 0.48 - -------------------------------------------------------------------------------- Total From Investment Operations 0.82 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.31) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.51 ================================================================================ TOTAL RETURN(3) 8.31% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 3.36%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 6% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $3,169 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 53 My Retirement Income Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.18 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 0.61 - -------------------------------------------------------------------------------- Total From Investment Operations 0.79 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.28) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.51 ================================================================================ TOTAL RETURN(3) 7.82% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.45%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.91%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 6% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $940 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 54 My Retirement Income Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income(2) 0.29 - ----------------------------------------------------------------- Net Realized and Unrealized Gain 0.46 - -------------------------------------------------------------------------------- Total From Investment Operations 0.75 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------------------------------- From Net Investment Income (0.25) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.50 ================================================================================ TOTAL RETURN(3) 7.61% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.70%(5) - ----------------------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 2.66%(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 6% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $9 - -------------------------------------------------------------------------------- (1) August 31, 2004 (fund inception) through July 31, 2005. (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) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 55 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century Asset Allocation Portfolios, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of My Retirement 2015 Portfolio, My Retirement 2025 Portfolio, My Retirement 2035 Portfolio, My Retirement 2045 Portfolio, and My Retirement Income Portfolio, (collectively the "Funds"), five of the mutual funds comprising American Century Asset Allocation Portfolios, Inc., as of July 31, 2005, and the related statements of operations, and changes in net assets and the financial highlights for the period from August 31, 2004 (fund inception) through July 31, 2005. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2005, by correspondence with the transfer agent. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising American Century Asset Allocation Portfolios, Inc., as of July 31, 2005, the results of their operations, and the changes in their net assets and their financial highlights for the period from August 31, 2004 (fund inception) through July 31, 2005, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri September 9, 2005 - ------ 56 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the funds' investment advisor, American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services, LLC (ACS LLC). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly owned subsidiaries, including ACIM, ACIS, and ACS LLC. The directors serve in this capacity for six registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 13 investment companies advised by ACIM or American Century Global Investment Management, Inc. (ACGIM), a wholly owned subsidiary of ACIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 24 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 57 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board LENGTH OF TIME SERVED (YEARS): 9 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 10 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Process Excellence, Sprint Corporation (January 2005 to present), Senior Vice President, Transformation, Sprint Corporation (September 2003 to December 2004); Senior Vice President-Financial Services, Sprint Corporation (January 2003 to September 2003); Senior Vice President-Finance, Global Markets Group, Sprint Corporation (November 1998 to January 2003) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, American Italian Pasta Company - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman LENGTH OF TIME SERVED (YEARS): 46 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman LENGTH OF TIME SERVED (YEARS): 14 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chief Executive Officer, ACC (June 1996 to September 2000); Chairman, ACS LLC and other ACC subsidiaries; Director, ACC, ACIM, ACGIM, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 58 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Chief Operating Officer, ACC (June 1996 to September 2000); Also serves as: Chief Executive Officer and President, ACIS, ACGIM, ACIM and other ACC subsidiaries; Executive Vice President, ACS LLC; Director, ACC, ACIS, ACIM, ACGIM, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1946 POSITION(S) HELD WITH FUND: Executive Vice President LENGTH OF TIME SERVED (YEARS): 9 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); Executive Vice President, ACC (May 1995 to present); Also serves as: Chief Executive Officer, Chief Financial Officer and President, ACS LLC; Chief Financial Officer and Executive Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries; Treasurer, ACGIM, ACIM and other ACC subsidiaries; Director, ACC and other subsidiaries - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Accounting Officer LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Assistant Treasurer, ACC (January 1995 to present); Also serves as: Senior Vice President, ACS LLC; Assistant Treasurer, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- CHARLES C.S. PARK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer LENGTH OF TIME SERVED (YEARS): 4 and less than 1 year PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACS LLC, ACIM and ACGIM (March 2005 to present); Vice President, ACS LLC (February 2000 to present); Assistant General Counsel, ACS LLC (January 1998 to March 2005) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Controller LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS LLC (February 2000 to present); Controller-Fund Accounting, ACS LLC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (October 2001 to present); Vice President, Corporate Tax, ACS LLC (April 1998 to present); Also serves as: Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge upon request by calling 1-800-345-2021. - ------ 59 Share Class Information Four classes of shares are authorized for sale by the funds: Investor Class, Institutional Class, Advisor Class and R Class. The total expense ratios of the Advisor and R Class shares are higher than that of Investor Class shares; the total expense ratio of Institutional Class shares is lower 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; or 2) through a broker-dealer, which may require payment of a transaction fee to the broker. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the total expense ratio of Institutional Class shares is 0.20% less than the total expense ratio of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.25% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. R CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. R Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 60 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 funds' investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. 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 Web site at americancentury.com and on the Securities and Exchange Commission's Web site 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 funds file their 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 funds' Forms N-Q are available on the SEC's Web site 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 funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 61 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 LEHMAN BROTHERS U.S. AGGREGATE INDEX represents securities that are taxable, registered with the Securities and Exchange Commission, and U.S. dollar-denominated. The index covers the U.S. investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. Morgan Stanley Capital International (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE(reg.tm) (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EM (Emerging Markets) INDEX(SM) represents the performance of stocks in global emerging market countries. The RUSSELL 3000(reg.tm) INDEX measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. As of the latest reconstitution, the average market capitalization was approximately $4 billion; the median market capitalization was approximately $700 million. The index had a total market capitalization range of approximately $309 billion to $128 million. - ------ 62 Notes - ------ 63 Notes - ------ 64 [inside back cover= blank] [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL ADVISORS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC. 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. The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor 0509 (c)2005 American Century Proprietary Holdings, Inc. SH-ANN-45259N All rights reserved.
[front cover] American Century Investments ANNUAL REPORT [photo of man and woman] JULY 31, 2005 One Choice Portfolio(SM): Very Conservative One Choice Portfolio(SM): Conservative One Choice Portfolio(SM): Moderate One Choice Portfolio(SM): Aggressive One Choice Portfolio(SM): Very Aggressive [american century investments logo and text logo] Table of Contents Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ONE CHOICE PORTFOLIO: VERY CONSERVATIVE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 ONE CHOICE PORTFOLIO: CONSERVATIVE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 ONE CHOICE PORTFOLIO: MODERATE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ONE CHOICE PORTFOLIO: AGGRESSIVE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ONE CHOICE PORTFOLIO: VERY AGGRESSIVE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . . . . . .17 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . 19 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . .23 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 25 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Report of Independent Registered Public Accounting Firm . . . . . . . . . . . 36 OTHER INFORMATION Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 The opinions expressed in 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. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the annual report for the One Choice Portfolios(SM) for the period ended July 31, 2005. The report includes comparative performance figures, portfolio and market commentary, summary tables, a full list of portfolio holdings, and financial statements and highlights. We hope you find this information helpful in monitoring your investment. Through our Web site, americancentury.com, we provide quarterly commentaries on all American Century portfolios, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Your next shareholder report for these funds will be the semiannual report dated January 31, 2006, available in approximately six months. As always, we deeply appreciate your investment with American Century Investments. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 One Choice Portfolio: Very Conservative - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 5.43% 9/30/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 14.67% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.55% -- - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 2 One Choice Portfolio: Very Conservative - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on September 30, 2004, through July 31, 2005, One Choice Portfolio: Very Conservative returned 5.43%*. This return reflected the positive performance of the portfolio's fixed-income, equity, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 10 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 14.67% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value surpass growth among large-cap stocks, but a narrower victory for value in the smaller-cap arena. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns of approximately 10.30% for the period; the two-year Treasury note returned less than 1.0%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.55%. PORTFOLIO STRATEGY One Choice Portfolio: Very Conservative seeks the highest total return consistent with its asset mix. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds, and features a diversified blend of asset classes and investment styles. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's neutral mix, which generally represents its long-term asset allocation strategy, is as follows: 25% stocks, 50% bonds, and 25% cash equivalents. As of July 31, 2005, the portfolio's asset allocations did not deviate significantly from the neutral mix. However, going forward, we may make adjustments to the fund's asset mix to take advantage of opportunities that we believe will help the portfolio better meet its investment objective. Although this portfolio is expected to have the least short-term price volatility of the One Choice Portfolios, it nonetheless entails some risks, including those associated with investing in bonds, stocks, and foreign securities. *Returns for periods less than one year are not annualized. - ------ 3 One Choice Portfolio: Very Conservative - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 99.8% DOMESTIC FIXED INCOME FUNDS -- 39.3% - -------------------------------------------------------------------------------- 391,418 Diversified Bond Fund Investor Class $ 3,980,721 - -------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS -- 26.0% - -------------------------------------------------------------------------------- 22,761 Equity Growth Fund Investor Class 529,648 - -------------------------------------------------------------------------------- 11,903 Growth Fund Investor Class 240,083 - -------------------------------------------------------------------------------- 124,165 Large Company Value Fund Investor Class 819,489 - -------------------------------------------------------------------------------- 8,158 Real Estate Fund Investor Class 230,300 - -------------------------------------------------------------------------------- 9,958 Small Company Fund Investor Class 108,841 - -------------------------------------------------------------------------------- 67,880 Value Fund Investor Class 515,888 - -------------------------------------------------------------------------------- 12,240 Vista Fund Investor Class(2) 187,517 - -------------------------------------------------------------------------------- 2,631,766 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS -- 9.7% - -------------------------------------------------------------------------------- 72,312 International Bond Fund Investor Class 985,613 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 24.8% - -------------------------------------------------------------------------------- 2,516,885 Prime Money Market Fund Investor Class 2,516,885 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.8% (Cost $10,001,424) 10,114,985 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.2% 17,201 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $10,132,186 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 4 in Notes to Financial Statements.) (2) Non-income producing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 39.3% - -------------------------------------------------------------------------------- International 9.7% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 49.0% - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 18.4% - -------------------------------------------------------------------------------- Large Cap Growth 2.4% - -------------------------------------------------------------------------------- Real Estate 2.3% - -------------------------------------------------------------------------------- Mid Cap Growth 1.8% - -------------------------------------------------------------------------------- Small Cap Value 1.1% - -------------------------------------------------------------------------------- TOTAL EQUITY 26.0% - -------------------------------------------------------------------------------- MONEY MARKET 24.8% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.2% - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 4 One Choice Portfolio: Conservative - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 8.08% 9/30/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 14.67% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.55% -- - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 5 One Choice Portfolio: Conservative - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on September 30, 2004, through July 31, 2005, One Choice Portfolio: Conservative returned 8.08%*. This return reflected the positive performance of the portfolio's fixed-income, equity, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 10 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 14.67% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value surpass growth among large-cap stocks, but a narrower victory for value in the smaller-cap arena. Foreign stock indices outperformed the overall U.S. market. The MSCI EAFE Index gained 18.23%. The MSCI Emerging Markets Index jumped 33.65%. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns of approximately 10.30% for the period; the two-year Treasury note returned less than 1.0%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.55%. PORTFOLIO STRATEGY One Choice Portfolio: Conservative seeks the highest total return consistent with its asset mix. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds, and features a diversified blend of asset classes and investment styles. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's neutral mix, which generally represents its long-term asset allocation strategy, is as follows: 45% stocks, 45% bonds, and 10% cash equivalents. As of July 31, 2005, the portfolio's asset allocations did not deviate significantly from the neutral mix. However, going forward, we may make adjustments to the fund's asset mix to take advantage of opportunities that we believe will help the portfolio better meet its investment objective. As with many investments, One Choice Portfolio: Conservative may be subject to short-term price volatility. It entails risks, including those associated with investing in bonds, stocks, and foreign securities. *Returns for periods less than one year are not annualized. - ------ 6 One Choice Portfolio: Conservative - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 99.9% DOMESTIC EQUITY FUNDS -- 40.3% - -------------------------------------------------------------------------------- 173,586 Equity Growth Fund Investor Class $ 4,039,346 - -------------------------------------------------------------------------------- 99,540 Growth Fund Investor Class 2,007,722 - -------------------------------------------------------------------------------- 723,578 Large Company Value Fund Investor Class 4,775,615 - -------------------------------------------------------------------------------- 34,730 Real Estate Fund Investor Class 980,428 - -------------------------------------------------------------------------------- 63,454 Small Company Fund Investor Class 693,552 - -------------------------------------------------------------------------------- 388,674 Value Fund Investor Class 2,953,922 - -------------------------------------------------------------------------------- 125,808 Vista Fund Investor Class(2) 1,927,379 - -------------------------------------------------------------------------------- 17,377,964 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS -- 36.0% - -------------------------------------------------------------------------------- 1,527,420 Diversified Bond Fund Investor Class 15,533,861 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS -- 7.8% - -------------------------------------------------------------------------------- 246,436 International Bond Fund Investor Class 3,358,923 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS -- 6.0% - -------------------------------------------------------------------------------- 283,278 International Growth Fund Investor Class 2,608,990 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 9.8% - -------------------------------------------------------------------------------- 4,247,877 Prime Money Market Fund Investor Class 4,247,877 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.9% (Cost $42,258,946) 43,127,615 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.1% 55,589 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $43,183,204 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 4 in Notes to Financial Statements.) (2) Non-income producing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 27.3% - -------------------------------------------------------------------------------- Large Cap Growth-International 6.0% - -------------------------------------------------------------------------------- Large Cap Growth 4.6% - -------------------------------------------------------------------------------- Mid Cap Growth 4.5% - -------------------------------------------------------------------------------- Real Estate 2.3% - -------------------------------------------------------------------------------- Small Cap Value 1.6% - -------------------------------------------------------------------------------- TOTAL EQUITY 46.3% - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 36.0% - -------------------------------------------------------------------------------- International 7.8% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 43.8% - -------------------------------------------------------------------------------- MONEY MARKET 9.8% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.1% - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 7 One Choice Portfolio: Moderate - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 11.71% 9/30/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 14.67% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.55% -- - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 8 One Choice Portfolio: Moderate - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on September 30, 2004, through July 31, 2005, One Choice Portfolio: Moderate returned 11.71%*. This return reflected the positive performance of the portfolio's fixed-income, equity, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 10 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 14.67% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value surpass growth among large-cap stocks, but a narrower victory for value in the smaller-cap arena. Foreign stock indices outperformed the overall U.S. market. The MSCI EAFE Index gained 18.23%. The MSCI Emerging Markets Index jumped 33.65%. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns of approximately 10.30% for the period; the two-year Treasury note returned less than 1.0%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.55%. PORTFOLIO STRATEGY One Choice Portfolio: Moderate seeks the highest total return consistent with its asset mix. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds, and features a diversified blend of asset classes and investment styles. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's neutral mix, which generally represents its long-term asset allocation strategy, is as follows: 64% stocks, 30% bonds, and 6% cash equivalents. As of July 31, 2005, the portfolio's asset allocations did not deviate significantly from the neutral mix. However, going forward, we may make adjustments to the fund's asset mix to take advantage of opportunities that we believe will help the portfolio better meet its investment objective. As with many investments, One Choice Portfolio: Moderate may be subject to short-term price volatility. It entails risks, including those associated with investing in bonds, stocks, and foreign securities. *Returns for periods less than one year are not annualized. - ------ 9 One Choice Portfolio: Moderate - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 99.9% DOMESTIC EQUITY FUNDS -- 51.0% - -------------------------------------------------------------------------------- 685,502 Equity Growth Fund Investor Class $15,951,631 - -------------------------------------------------------------------------------- 381,958 Growth Fund Investor Class 7,704,093 - -------------------------------------------------------------------------------- 1,386,210 Large Company Value Fund Investor Class 9,148,986 - -------------------------------------------------------------------------------- 77,163 Real Estate Fund Investor Class 2,178,311 - -------------------------------------------------------------------------------- 187,605 Small Company Fund Investor Class 2,050,523 - -------------------------------------------------------------------------------- 700,896 Value Fund Investor Class 5,326,810 - -------------------------------------------------------------------------------- 474,302 Vista Fund Investor Class(2) 7,266,307 - -------------------------------------------------------------------------------- 49,626,661 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS -- 25.8% - -------------------------------------------------------------------------------- 2,193,900 Diversified Bond Fund Investor Class 22,311,963 - -------------------------------------------------------------------------------- 433,575 High-Yield Fund Investor Class 2,822,573 - -------------------------------------------------------------------------------- 25,134,536 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS -- 14.2% - -------------------------------------------------------------------------------- 567,697 Emerging Markets Fund Investor Class 4,121,480 - -------------------------------------------------------------------------------- 1,050,840 International Growth Fund Investor Class 9,678,237 - -------------------------------------------------------------------------------- 13,799,717 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS -- 3.1% - -------------------------------------------------------------------------------- 218,795 International Bond Fund Investor Class 2,982,176 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 5.8% - -------------------------------------------------------------------------------- 5,669,078 Prime Money Market Fund Investor Class 5,669,078 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.9% (Cost $93,982,829) 97,212,168 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.1% 100,464 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $97,312,632 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 4 in Notes to Financial Statements.) (2) Non-income producing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 31.3% - -------------------------------------------------------------------------------- Large Cap Growth-International 10.0% - -------------------------------------------------------------------------------- Large Cap Growth 7.9% - -------------------------------------------------------------------------------- Mid Cap Growth 7.5% - -------------------------------------------------------------------------------- Mid Cap Growth-International 4.2% - -------------------------------------------------------------------------------- Real Estate 2.2% - -------------------------------------------------------------------------------- Small Cap Value 2.1% - -------------------------------------------------------------------------------- TOTAL EQUITY 65.2% - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 22.9% - -------------------------------------------------------------------------------- International 3.1% - -------------------------------------------------------------------------------- High-Yield 2.9% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 28.9% - -------------------------------------------------------------------------------- MONEY MARKET 5.8% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.1% - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 10 One Choice Portfolio: Aggressive - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 13.61% 9/30/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 14.67% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.55% -- - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 11 One Choice Portfolio: Aggressive - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on September 30, 2004, through July 31, 2005, One Choice Portfolio: Aggressive returned 13.61%*. This return reflected the positive performance of the portfolio's fixed-income, equity, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 10 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 14.67% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value surpass growth among large-cap stocks, but a narrower victory for value in the smaller-cap arena. Foreign stock indices outperformed the overall U.S. market. The MSCI EAFE Index gained 18.23%. The MSCI Emerging Markets Index jumped 33.65%. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns of approximately 10.30% for the period; the two-year Treasury note returned less than 1.0%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.55%. PORTFOLIO STRATEGY One Choice Portfolio: Aggressive seeks the highest total return consistent with its asset mix. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds, and features a diversified blend of asset classes and investment styles. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's neutral mix, which generally represents its long-term asset allocation strategy, is as follows: 79% stocks, 19% bonds, and 2% cash equivalents. As of July 31, 2005, the portfolio's asset allocations did not deviate significantly from the neutral mix. However, going forward, we may make adjustments to the fund's asset mix to take advantage of opportunities that we believe will help the portfolio better meet its investment objective. As with many investments, One Choice Portfolio: Aggressive may be subject to short-term price volatility. It entails risks, including those associated with investing in bonds, stocks, and foreign securities. *Returns for periods less than one year are not annualized. - ------ 12 One Choice Portfolio: Aggressive - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 99.9% DOMESTIC EQUITY FUNDS -- 60.7% - -------------------------------------------------------------------------------- 408,491 Equity Growth Fund Investor Class $ 9,505,585 - -------------------------------------------------------------------------------- 458,526 Growth Fund Investor Class 9,248,469 - -------------------------------------------------------------------------------- 815,588 Large Company Value Fund Investor Class 5,382,881 - -------------------------------------------------------------------------------- 50,678 Real Estate Fund Investor Class 1,430,640 - -------------------------------------------------------------------------------- 138,854 Small Company Fund Investor Class 1,517,674 - -------------------------------------------------------------------------------- 397,845 Value Fund Investor Class 3,023,622 - -------------------------------------------------------------------------------- 592,325 Vista Fund Investor Class(2) 9,074,419 - -------------------------------------------------------------------------------- 39,183,290 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS -- 19.1% - -------------------------------------------------------------------------------- 606,944 Emerging Markets Fund Investor Class 4,406,413 - -------------------------------------------------------------------------------- 863,460 International Growth Fund Investor Class 7,952,467 - -------------------------------------------------------------------------------- 12,358,880 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS -- 18.1% - -------------------------------------------------------------------------------- 847,859 Diversified Bond Fund Investor Class 8,622,726 - -------------------------------------------------------------------------------- 475,460 High-Yield Fund Investor Class 3,095,245 - -------------------------------------------------------------------------------- 11,717,971 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS -- 0.1% - -------------------------------------------------------------------------------- 3,550 International Bond Fund Investor Class 48,387 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 1.9% - -------------------------------------------------------------------------------- 1,242,908 Prime Money Market Fund Investor Class 1,242,908 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.9% (Cost $61,677,770) 64,551,436 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.1% 71,704 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $64,623,140 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 4 in Notes to Financial Statements.) (2) Non-income producing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 27.7% - -------------------------------------------------------------------------------- Large Cap Growth 14.3% - -------------------------------------------------------------------------------- Mid Cap Growth 14.1% - -------------------------------------------------------------------------------- Large Cap Growth-International 12.3% - -------------------------------------------------------------------------------- Mid Cap Growth-International 6.8% - -------------------------------------------------------------------------------- Small Cap Value 2.4% - -------------------------------------------------------------------------------- Real Estate 2.2% - -------------------------------------------------------------------------------- TOTAL EQUITY 79.8% - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 13.3% - -------------------------------------------------------------------------------- High-Yield 4.8% - -------------------------------------------------------------------------------- International 0.1% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 18.2% - -------------------------------------------------------------------------------- MONEY MARKET 1.9% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.1% - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 13 One Choice Portfolio: Very Aggressive - Performance TOTAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION(1) DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 15.81% 9/30/04 - -------------------------------------------------------------------------------- RUSSELL 3000(reg.tm) INDEX(2) 14.67% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 2.55% -- - -------------------------------------------------------------------------------- (1) Returns for periods less than one year are not annualized. (2) (c)2005 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. 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 Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. The Russell 3000(reg.tm) Index represents approximately 98% of the investable U.S. equity market and provides a broad measure of equity performance. The Lehman Brothers U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and provides a broad measure of bond market performance. Performance for these indices is provided for reference only. Neither index is intended to represent the composition of the fund, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments and corresponding chart for the fund's asset allocations as of July 31, 2005.) 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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 indices are provided for comparison. The fund's total returns include operating expenses that reduce returns, while the total returns of the indices do not. An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money market fund. - ------ 14 One Choice Portfolio: Very Aggressive - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY From its inception on September 30, 2004, through July 31, 2005, One Choice Portfolio: Very Aggressive returned 15.81%*. This return reflected the positive performance of the portfolio's fixed-income, equity, and money market components. In fact, each of the underlying funds in which the portfolio invests had a positive return over the period. Because of the portfolio's broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain the portfolio's return. MARKET ENVIRONMENT U.S. and foreign stock market indices posted double-digit gains during the 10 months ended July 31, 2005, as oil prices jumped worldwide and U.S. short-term interest rates rose. U.S. stocks returned 14.67% overall, measured by the broad Russell 3000 Index. Small-cap U.S. stocks outperformed large-cap counterparts. U.S. growth and value returns saw value surpass growth among large-cap stocks, but a narrower victory for value in the smaller-cap arena. Foreign stock indices outperformed the overall U.S. market. The MSCI EAFE Index gained 18.23%. The MSCI Emerging Markets Index jumped 33.65%. In fixed-income markets, the U.S. Treasury yield curve "flattened." Overall returns for longer maturity holdings outstripped shorter-maturity returns. The Federal Reserve hiked its short-term interest rate target, sending yields up on short maturity instruments and prices down. Long-term yields descended, thereby raising prices on those instruments. The 30-year Treasury bond produced overall returns of approximately 10.30% for the period; the two-year Treasury note returned less than 1.0%. The Lehman Brothers U.S. Aggregate Index, a broad measure of the bond market, returned 2.55%. PORTFOLIO STRATEGY One Choice Portfolio: Very Aggressive seeks the highest total return consistent with its asset mix. The portfolio is a "fund of funds," which means it invests in other American Century mutual funds, and features a diversified blend of asset classes and investment styles. (See the following page for a list of the underlying funds in the portfolio.) The portfolio's neutral mix, which generally represents its long-term asset allocation strategy, is as follows: 96% stocks, 2% bonds, and 2% cash equivalents. As of July 31, 2005, the portfolio's asset allocations did not deviate significantly from the neutral mix. However, going forward, we may make adjustments to the fund's asset mix to take advantage of opportunities that we believe will help the portfolio better meet its investment objective. As with many investments, One Choice Portfolio: Very Aggressive may be subject to short-term price volatility. It entails risks, including those associated with investing in bonds, stocks, and foreign securities. *Returns for periods less than one year are not annualized. - ------ 15 One Choice Portfolio: Very Aggressive - Schedule of Investments JULY 31, 2005 Shares Value - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) -- 100.0% DOMESTIC EQUITY FUNDS -- 73.2% - -------------------------------------------------------------------------------- 197,296 Equity Growth Fund Investor Class $ 4,591,077 - -------------------------------------------------------------------------------- 222,764 Growth Fund Investor Class 4,493,150 - -------------------------------------------------------------------------------- 397,942 Large Company Value Fund Investor Class 2,626,417 - -------------------------------------------------------------------------------- 20,073 Real Estate Fund Investor Class 566,661 - -------------------------------------------------------------------------------- 60,748 Small Company Fund Investor Class 663,976 - -------------------------------------------------------------------------------- 198,919 Value Fund Investor Class 1,511,785 - -------------------------------------------------------------------------------- 282,778 Vista Fund Investor Class(2) 4,332,159 - -------------------------------------------------------------------------------- 18,785,225 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS -- 22.9% - -------------------------------------------------------------------------------- 275,063 Emerging Markets Fund Investor Class 1,996,957 - -------------------------------------------------------------------------------- 421,740 International Growth Fund Investor Class 3,884,226 - -------------------------------------------------------------------------------- 5,881,183 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS -- 1.9% - -------------------------------------------------------------------------------- 46,535 Diversified Bond Fund Investor Class 473,261 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS -- 0.1% - -------------------------------------------------------------------------------- 1,119 International Bond Fund Investor Class 15,252 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS -- 1.9% - -------------------------------------------------------------------------------- 490,724 Prime Money Market Fund Investor Class 490,724 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $24,292,313) 25,645,645 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES(3) 3,569 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $25,649,214 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (See Note 4 in Notes to Financial Statements.) (2) Non-income producing. (3) Category is less than 0.05% of total net assets. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 7/31/05 - -------------------------------------------------------------------------------- EQUITY - -------------------------------------------------------------------------------- Large Cap Value 34.0% - -------------------------------------------------------------------------------- Large Cap Growth 17.5% - -------------------------------------------------------------------------------- Mid Cap Growth 16.9% - -------------------------------------------------------------------------------- Large Cap Growth-International 15.1% - -------------------------------------------------------------------------------- Mid Cap Growth-International 7.8% - -------------------------------------------------------------------------------- Small Cap Value 2.6% - -------------------------------------------------------------------------------- Real Estate 2.2% - -------------------------------------------------------------------------------- TOTAL EQUITY 96.1% - -------------------------------------------------------------------------------- FIXED INCOME - -------------------------------------------------------------------------------- Investment Grade 1.9% - -------------------------------------------------------------------------------- International 0.1% - -------------------------------------------------------------------------------- TOTAL FIXED INCOME 2.0% - -------------------------------------------------------------------------------- MONEY MARKET 1.9% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- - -------------------------------------------------------------------------------- TOTAL NET ASSETS 100.0% - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 16 Shareholder Fee Examples (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. As a shareholder in the underlying American Century funds, your fund will indirectly bear its pro rata share of the expenses incurred by the underlying funds. These expenses are not included in the fund's annualized expense ratio or the expenses paid during the period. These expenses are, however, included in the effective expenses paid during the period. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from February 1, 2005 to July 31, 2005. 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, (continued) - ------ 17 Shareholder Fee Examples (Unaudited) 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. - ---------------------------------------------------------------------------------------------------- EFFECTIVE BEGINNING ENDING EXPENSES PAID EXPENSES PAID EFFECTIVE ACCOUNT ACCOUNT DURING PERIOD(1) ANNUALIZED DURING PERIOD(2) ANNUALIZED VALUE VALUE 2/1/05 - EXPENSE 2/1/05 - EXPENSE 2/1/05 7/31/05 7/31/05 RATIO(1) 7/31/05 RATIO(2) - ---------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: VERY CONSERVATIVE INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------- Actual $1,000 $1,020.20 $0.00 0.00%(3) $3.56 0.71% - ---------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,024.79 $0.00 0.00%(3) $3.56 0.71% - ---------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: CONSERVATIVE INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------- Actual $1,000 $1,031.50 $0.00 0.00%(3) $3.93 0.78% - ---------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,024.79 $0.00 0.00%(3) $3.92 0.78% - ---------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: MODERATE INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------- Actual $1,000 $1,047.50 $0.00 0.00%(3) $4.47 0.88% - ---------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,024.79 $0.00 0.00%(3) $4.42 0.88% - ---------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: AGGRESSIVE INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------- Actual $1,000 $1,057.30 $0.00 0.00%(3) $4.95 0.97% - ---------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,024.79 $0.00 0.00%(3) $4.87 0.97% - ---------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: VERY AGGRESSIVE INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------------- Actual $1,000 $1,065.90 $0.00 0.00%(3) $5.22 1.02% - ---------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,024.79 $0.00 0.00%(3) $5.12 1.02% - ---------------------------------------------------------------------------------------------------- (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 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. The fees and expenses of the underlying American Century funds in which the fund invests are not included in the class's annualized expense ratio. (2) Effective expenses reflect the sum of expenses borne directly by the class plus the fund's pro rata share of the weighted average expense ratio of the underlying funds in which it invests. The effective annualized expense ratio combines the class's annualized expense ratio and the annualized weighted average expense ratio. The annualized weighted average expense ratio of the underlying funds for the one-half year period reflects the actual expense ratio of each underlying fund from its most recent shareholder report, annualized and weighted for the fund's relative average investment therein during the period. (3) Other expenses, which include the fees and expenses of the funds' independent directors and their legal counsel, did not exceed 0.005%. - ------ 18 Statement of Assets and Liabilities JULY 31, 2005 - -------------------------------------------------------------------------------- VERY CONSERVATIVE CONSERVATIVE MODERATE - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities in affiliates, at value (cost of $10,001,424, $42,258,946, and $93,982,829, respectively) $10,114,985 $43,127,615 $97,212,168 - ---------------------------------- Cash 73 1,174 -- - ---------------------------------- Receivable for capital shares sold 78 -- 14,303 - ---------------------------------- Distributions receivable from affiliates 17,050 54,415 89,569 - -------------------------------------------------------------------------------- 10,132,186 43,183,204 97,316,040 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Disbursements in excess of demand deposit cash -- -- 3,408 - -------------------------------------------------------------------------------- NET ASSETS $10,132,186 $43,183,204 $97,312,632 ================================================================================ INVESTOR CLASS CAPITAL SHARES, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Outstanding 986,138 4,097,180 8,873,778 ================================================================================ NET ASSET VALUE PER SHARE $10.27 $10.54 $10.97 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital paid in $10,015,358 $42,231,339 $93,909,677 - ---------------------------------- Undistributed net investment income 24,773 81,882 135,202 - ---------------------------------- Accumulated undistributed net realized gain (loss) on investment transactions (21,506) 1,314 38,414 - ---------------------------------- Net unrealized appreciation on investments 113,561 868,669 3,229,339 - -------------------------------------------------------------------------------- $10,132,186 $43,183,204 $97,312,632 ================================================================================ See Notes to Financial Statements. (continued) - ------ 19 Statement of Assets and Liabilities JULY 31, 2005 - -------------------------------------------------------------------------------- VERY AGGRESSIVE AGGRESSIVE - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities in affiliates, at value (cost of $61,677,770 and $24,292,313, respectively) $64,551,436 $25,645,645 - ---------------------------------------------- Cash 3,568 67 - ---------------------------------------------- Receivable for capital shares sold 25,301 1,058 - ---------------------------------------------- Distributions receivable from affiliates 42,835 2,444 - -------------------------------------------------------------------------------- NET ASSETS $64,623,140 $25,649,214 ================================================================================ INVESTOR CLASS CAPITAL SHARES, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Outstanding 5,741,540 2,233,466 ================================================================================ NET ASSET VALUE PER SHARE $11.26 $11.48 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital paid in $61,459,961 $24,250,485 - ---------------------------------------------- Undistributed net investment income 260,821 49,983 - ---------------------------------------------- Accumulated undistributed net realized gain (loss) on investment transactions 28,692 (4,586) - ---------------------------------------------- Net unrealized appreciation on investments 2,873,666 1,353,332 - -------------------------------------------------------------------------------- $64,623,140 $25,649,214 ================================================================================ See Notes to Financial Statements. - ------ 20 Statement of Operations FOR THE PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------------------------------------------- VERY CONSERVATIVE CONSERVATIVE MODERATE - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- INCOME: - ---------------------------------- Income distributions from underlying funds -- affiliates $128,088 $ 446,619 $ 727,287 - -------------------------------------------------------------------------------- EXPENSES: - ---------------------------------- Directors' fees and expenses 49 191 410 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 128,039 446,428 726,877 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ---------------------------------- Sale of investments in underlying funds (33,806) (52,219) (46,762) - ---------------------------------- Capital gain distributions received from underlying funds 12,300 53,533 85,176 - -------------------------------------------------------------------------------- (21,506) 1,314 38,414 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON INVESTMENTS 113,561 868,669 3,229,339 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 92,055 869,983 3,267,753 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $220,094 $1,316,411 $3,994,630 ================================================================================ (1) September 30, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. (continued) - ------ 21 Statement of Operations FOR THE PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------------------------------------------- VERY AGGRESSIVE AGGRESSIVE - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- INCOME: - ---------------------------------------------- Income distributions from underlying funds -- affiliates $ 371,281 $ 84,846 - -------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------- Directors' fees and expenses 274 113 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 371,007 84,733 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ---------------------------------------------- Sale of investments in underlying funds (31,543) (30,761) - ---------------------------------------------- Capital gain distributions received from underlying funds 60,235 26,175 - -------------------------------------------------------------------------------- 28,692 (4,586) - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON INVESTMENTS 2,873,666 1,353,332 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 2,902,358 1,348,746 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,273,365 $1,433,479 ================================================================================ (1) September 30, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. - ------ 22 Statement of Changes in Net Assets PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------------------------------------------- VERY INCREASE IN NET ASSETS CONSERVATIVE CONSERVATIVE MODERATE - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income $ 128,039 $ 446,428 $ 726,877 - ---------------------------------- Net realized gain (loss) (21,506) 1,314 38,414 - ---------------------------------- Change in net unrealized appreciation 113,561 868,669 3,229,339 - -------------------------------------------------------------------------------- Net increase in net assets resulting from operations 220,094 1,316,411 3,994,630 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income (103,266) (364,546) (591,675) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Proceeds from shares sold 12,311,886 47,353,379 100,255,773 - ---------------------------------- Proceeds in reinvestment of distributions 101,931 357,741 569,483 - ---------------------------------- Payments for shares redeemed (2,398,459) (5,479,781) (6,915,579) - -------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 10,015,358 42,231,339 93,909,677 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 10,132,186 43,183,204 97,312,632 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period -- -- -- - -------------------------------------------------------------------------------- End of period $10,132,186 $43,183,204 $ 97,312,632 ================================================================================ Undistributed net investment income $24,773 $81,882 $135,202 ================================================================================ TRANSACTIONS IN SHARES OF THE FUND - -------------------------------------------------------------------------------- Sold 1,212,135 4,591,865 9,472,568 - ---------------------------------- Issued in reinvestment of distributions 10,054 34,607 53,589 - ---------------------------------- Redeemed (236,051) (529,292) (652,379) - -------------------------------------------------------------------------------- Net increase in shares of the fund 986,138 4,097,180 8,873,778 ================================================================================ (1) September 30, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. (continued) - ------ 23 Statement of Changes in Net Assets PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------------------------------------------- VERY INCREASE IN NET ASSETS AGGRESSIVE AGGRESSIVE - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income $ 371,007 $ 84,733 - ---------------------------------------------- Net realized gain (loss) 28,692 (4,586) - ---------------------------------------------- Change in net unrealized appreciation 2,873,666 1,353,332 - -------------------------------------------------------------------------------- Net increase in net assets resulting from operations 3,273,365 1,433,479 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income (110,186) (34,750) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Proceeds from shares sold 66,267,797 27,501,415 - ---------------------------------------------- Proceeds in reinvestment of distributions 109,534 34,434 - ---------------------------------------------- Payments for shares redeemed (4,917,370) (3,285,364) - -------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 61,459,961 24,250,485 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 64,623,140 25,649,214 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period -- -- - -------------------------------------------------------------------------------- End of period $64,623,140 $25,649,214 ================================================================================ Undistributed net investment income $260,821 $49,983 ================================================================================ TRANSACTIONS IN SHARES OF THE FUND - -------------------------------------------------------------------------------- Sold 6,188,212 2,531,600 - ---------------------------------------------- Issued in reinvestment of distributions 10,324 3,203 - ---------------------------------------------- Redeemed (456,996) (301,337) - -------------------------------------------------------------------------------- Net increase in shares of the fund 5,741,540 2,233,466 ================================================================================ (1) September 30, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. - ------ 24 Notes to Financial Statements JULY 31, 2005 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Asset Allocation Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act), as amended, as an open-end management investment company. One Choice Portfolio: Very Conservative (Very Conservative), One Choice Portfolio: Conservative (Conservative), One Choice Portfolio: Moderate (Moderate), One Choice Portfolio: Aggressive (Aggressive), and One Choice Portfolio: Very Aggressive (Very Aggressive) (collectively, the funds) are five funds in a series issued by the corporation. The funds operate as "fund of funds," meaning that substantially all of the funds' assets will be invested in other funds in the American Century family of funds (the underlying funds). Because the funds directly invest in a relatively small number of underlying funds, they are not diversified as defined by the 1940 Act. However, the underlying funds are generally diversified and so indirectly provide broad exposure to a large number of securities. The funds' investment objectives are to seek the highest total return consistent with their respective asset mix. The funds pursue their objectives by investing in underlying funds that represent a variety of asset classes and investment styles. Generally, more conservative funds emphasize investments in bonds and cash equivalents while more aggressive funds emphasize investments in stocks. The funds incepted on September 30, 2004. The corporation is authorized to issue 3,000,000,000 shares. The following is a summary of the funds' significant accounting policies. UNDERLYING FUNDS -- Each fund's assets are allocated among underlying funds that represent major asset classes, including equity securities (stocks), fixed-income securities (bonds) and cash-equivalent instruments (money markets). A brief description of each of the underlying funds follows. DOMESTIC EQUITY FUNDS EQUITY GROWTH seeks long-term capital growth. It uses a quantitative investment strategy to construct an optimized portfolio drawn primarily from the 1,500 largest publicly traded U.S. companies without regard to dividend yield. GROWTH seeks long-term capital growth. It uses a growth investment strategy and generally invests in larger U.S. companies. LARGE COMPANY VALUE seeks long-term capital growth with income as a secondary objective. It uses a value investment strategy and invests primarily in larger U.S. companies. REAL ESTATE seeks long-term capital appreciation with income as a secondary objective. It invests primarily in equity securities issued by real estate investment trusts and companies engaged in the real estate industry. SMALL COMPANY seeks long-term capital growth. It uses a quantitative investment strategy and invests primarily in smaller U.S. companies. VALUE seeks long-term capital growth with income as a secondary objective. It uses a value investment strategy and invests primarily in U.S. companies of all sizes. VISTA seeks long-term capital growth. It uses a growth investment strategy and generally invests in medium-sized and smaller U.S. companies. INTERNATIONAL EQUITY FUNDS EMERGING MARKETS seeks capital growth. It uses a growth strategy and invests primarily in securities of companies located in emerging market countries and companies that derive a significant portion of their business from emerging market countries. INTERNATIONAL GROWTH seeks capital growth. It uses a growth strategy and invests primarily in securities of companies located in developed countries other than the United States. DOMESTIC FIXED INCOME FUNDS DIVERSIFIED BOND seeks a high level of income by investing primarily in high- and medium-grade non-money market debt securities. These securities, which may be payable in U.S. or foreign currencies, may include corporate bonds and notes, government securities and securities backed by mortgages or other assets. HIGH-YIELD seeks high current income by investing in a diversified portfolio of high-yield corporate bonds and other debt securities. INTERNATIONAL FIXED INCOME FUNDS INTERNATIONAL BOND seeks high total return by investing in high-quality, non-dollar-denominated government and corporate debt securities outside the United States. MONEY MARKET FUNDS PRIME MONEY MARKET seeks to earn the highest level of current income while preserving the value of shareholder investments by investing in high-quality, cash-equivalent securities. (continued) - ------ 25 Notes to Financial Statements JULY 31, 2005 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) SECURITY VALUATIONS -- Investments in the underlying funds are valued at their reported net asset value. The underlying funds have specific valuation policies. If the underlying funds determine that the market price of a security is not readily available, or that the specific valuation methods do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the underlying funds' Board of Directors/Trustees or its designee if such fair value determination would materially impact an underlying fund's net asset value. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Income and capital gain distributions, if any, from the underlying funds are recorded as of the ex-dividend date. Long-term capital gain distributions, if any, from the underlying funds are a component of net realized gain (loss). 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. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income, if any, are generally declared and paid quarterly for Very Conservative, Conservative, and Moderate. Distributions from net investment income, if any, are generally declared and paid annually for Aggressive and Very Aggressive. Distributions from net realized gains, if any, are generally declared and paid annually for all funds. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors 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. 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 MANAGEMENT FEES -- The corporation's investment advisor, American Century Investment Management, Inc. (ACIM), does not receive an administrative fee for services provided to the funds. Each fund will indirectly realize its pro rata share of the fees and expenses of the underlying funds in which it invests. These fees and expenses are already reflected in the valuation of the underlying funds. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation's transfer agent, American Century Services, LLC. The directors of the corporation are also directors of some underlying funds and therefore those underlying funds may be deemed to be under common control with the corporation. The officers of the corporation are also officers of all the underlying funds. ACIM or American Century Global Investment Management, Inc., a wholly-owned subsidiary of ACIM, serves as the investment advisor for the underlying funds. (continued) - ------ 26 Notes to Financial Statements JULY 31, 2005 3. INVESTMENT TRANSACTIONS Investment transactions for the period from September 30, 2004 (fund inception) through July 31, 2005, were as follows: - ----------------------------------------------------------------------------------------------- VERY VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE AGGRESSIVE - ----------------------------------------------------------------------------------------------- Purchases $11,972,937 $44,670,566 $95,289,902 $62,505,591 $25,246,982 - ----------------------------------------------------------------------------------------------- Proceeds from sales $1,937,707 $2,359,401 $1,260,311 $796,278 $923,908 - ----------------------------------------------------------------------------------------------- 4. AFFILIATED COMPANY TRANSACTIONS Investments are funds within the American Century family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. The funds do not invest in the underlying funds for the purpose of exercising management or control; however, investments by the funds within their investment strategies may represent a significant portion of the underlying funds' net assets. As of July 31, 2005, the funds did not own a significant percentage of total outstanding shares of the underlying funds. A summary of transactions for each underlying fund during the period from September 30, 2004 (fund inception) through July 31, 2005 follows: - -------------------------------------------------------------------------------------------------------------- PURCHASE SALES REALIZED DISTRIBUTIONS JULY 31, 2005 FUND/UNDERLYING FUND COST COST GAIN (LOSS) RECEIVED(1) SHARE BALANCE MARKET VALUE - -------------------------------------------------------------------------------------------------------------- VERY CONSERVATIVE - -------------------------------------------------------------------------------------------------------------- Diversified Bond Fund Investor Class $ 4,723,424 $ 726,295 $ (7,400) $ 71,909 391,418 $ 3,980,721 - ---------------------------- Equity Growth Fund Investor Class 590,034 97,240 (1,566) 2,140 22,761 529,648 - ---------------------------- Growth Fund Investor Class 261,271 34,141 (211) 29 11,903 240,083 - ---------------------------- International Bond Fund Investor Class 1,229,172 214,057 (11,651) 15,911 72,312 985,613 - ---------------------------- Large Company Value Fund Investor Class 973,183 187,256 (2,476) 6,338 124,165 819,489 - ---------------------------- Prime Money Market Fund Investor Class 2,976,001 459,116 -- 24,254 2,516,885 2,516,885 - ---------------------------- Real Estate Fund Investor Class 234,702 34,759 260 681 8,158 230,300 - ---------------------------- Small Company Fund Investor Class 117,475 18,046 (569) 850 9,958 108,841 - ---------------------------- Value Fund Investor Class 617,935 120,637 (8,539) 18,276 67,880 515,888 - ---------------------------- Vista Fund Investor Class(2) 249,740 79,966 (1,654) -- 12,240 187,517 - -------------------------------------------------------------------------------------------------------------- $11,972,937 $1,971,513 $(33,806) $140,388 $10,114,985 ============================================================================================================== CONSERVATIVE - -------------------------------------------------------------------------------------------------------------- Diversified Bond Fund Investor Class $16,342,486 $ 731,222 $(10,433) $265,313 1,527,420 $15,533,861 - ---------------------------- Equity Growth Fund Investor Class 3,965,234 191,887 (1,124) 15,374 173,586 4,039,346 - ---------------------------- Growth Fund Investor Class 1,988,219 86,156 (389) 182 99,540 2,007,722 - ---------------------------- International Bond Fund Investor Class 3,682,296 190,037 (15,979) 42,558 246,436 3,358,923 - ---------------------------- International Growth Fund Investor Class 2,852,260 358,034 (900) 7,266 283,278 2,608,990 - ---------------------------- Large Company Value Fund Investor Class 4,834,905 230,613 (3,552) 33,758 723,578 4,775,615 - ---------------------------- Prime Money Market Fund Investor Class 4,446,716 198,839 -- 39,245 4,247,877 4,247,877 - ---------------------------- Real Estate Fund Investor Class 884,517 36,619 180 2,907 34,730 980,428 - ---------------------------- Small Company Fund Investor Class 664,034 28,001 (411) 4,830 63,454 693,552 - ---------------------------- Value Fund Investor Class 3,039,398 163,491 (15,400) 88,719 388,674 2,953,922 - ---------------------------- Vista Fund Investor Class(2) 1,970,501 196,721 (4,211) -- 125,808 1,927,379 - -------------------------------------------------------------------------------------------------------------- $44,670,566 $2,411,620 $(52,219) $500,152 $43,127,615 ============================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 27 Notes to Financial Statements JULY 31, 2005 4. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------------------------------------- PURCHASE SALES REALIZED DISTRIBUTIONS JULY 31, 2005 FUND/UNDERLYING FUND COST COST GAIN (LOSS) RECEIVED(1) SHARE BALANCE MARKET VALUE - -------------------------------------------------------------------------------------------------------------- MODERATE - -------------------------------------------------------------------------------------------------------------- Diversified Bond Fund Investor Class $22,606,677 $ 185,389 $ (3,285) $359,816 2,193,900 $22,311,963 - ---------------------------- Emerging Markets Fund Investor Class 3,953,173 238,028 1,099 16,357 567,697 4,121,480 - ---------------------------- Equity Growth Fund Investor Class 15,118,507 132,888 (6,189) 57,510 685,502 15,951,631 - ---------------------------- Growth Fund Investor Class 7,395,705 57,904 (2,470) 582 381,958 7,704,093 - ---------------------------- High-Yield Fund Investor Class 2,855,766 24,878 (1,122) 69,627 433,575 2,822,573 - ---------------------------- International Bond Fund Investor Class 3,139,061 33,590 (1,910) 35,473 218,795 2,982,176 - ---------------------------- International Growth Fund Investor Class 9,421,732 83,552 (4,369) 15,880 1,050,840 9,678,237 - ---------------------------- Large Company Value Fund Investor Class 8,941,210 78,683 (3,463) 60,231 1,386,210 9,148,986 - ---------------------------- Prime Money Market Fund Investor Class 5,716,584 47,506 -- 51,103 5,669,078 5,669,078 - ---------------------------- Real Estate Fund Investor Class 1,903,744 15,759 81 6,297 77,163 2,178,311 - ---------------------------- Small Company Fund Investor Class 1,904,864 17,163 (1,319) 14,939 187,605 2,050,523 - ---------------------------- Value Fund Investor Class 5,318,206 128,903 (15,072) 124,648 700,896 5,326,810 - ---------------------------- Vista Fund Investor Class(2) 7,014,673 262,830 (8,743) -- 474,302 7,266,307 - -------------------------------------------------------------------------------------------------------------- $95,289,902 $1,307,073 $(46,762) $812,463 $97,212,168 ============================================================================================================== AGGRESSIVE - -------------------------------------------------------------------------------------------------------------- Diversified Bond Fund Investor Class $ 8,728,010 $ 63,220 $ (524) $142,028 847,859 $ 8,622,726 - ---------------------------- Emerging Markets Fund Investor Class 4,080,045 106,627 (1,639) 16,942 606,944 4,406,413 - ---------------------------- Equity Growth Fund Investor Class 8,988,827 61,179 (1,263) 34,763 408,491 9,505,585 - ---------------------------- Growth Fund Investor Class 8,868,384 56,427 (489) 686 458,526 9,248,469 - ---------------------------- High-Yield Fund Investor Class 3,125,275 21,281 (621) 77,106 475,460 3,095,245 - ---------------------------- International Bond Fund Investor Class 48,230 -- -- -- 3,550 48,387 - ---------------------------- International Growth Fund Investor Class 7,775,669 103,876 (2,765) 14,629 863,460 7,952,467 - ---------------------------- Large Company Value Fund Investor Class 5,249,533 36,070 (959) 36,238 815,588 5,382,881 - ---------------------------- Prime Money Market Fund Investor Class 1,251,169 8,261 -- 11,296 1,242,908 1,242,908 - ---------------------------- Real Estate Fund Investor Class 1,249,114 8,116 (92) 4,220 50,678 1,430,640 - ---------------------------- Small Company Fund Investor Class 1,406,676 9,439 (438) 10,956 138,854 1,517,674 - ---------------------------- Value Fund Investor Class 3,093,120 146,696 (15,943) 82,652 397,845 3,023,622 - ---------------------------- Vista Fund Investor Class(2) 8,641,539 206,629 (6,810) -- 592,325 9,074,419 - -------------------------------------------------------------------------------------------------------------- $62,505,591 $827,821 $(31,543) $431,516 $64,551,436 ============================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 28 Notes to Financial Statements JULY 31, 2005 4. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------------------------------------- PURCHASE SALES REALIZED DISTRIBUTIONS JULY 31, 2005 FUND/UNDERLYING FUND COST COST GAIN (LOSS) RECEIVED(1) SHARE BALANCE MARKET VALUE - -------------------------------------------------------------------------------------------------------------- VERY AGGRESSIVE - -------------------------------------------------------------------------------------------------------------- Diversified Bond Fund Investor Class $ 535,641 $ 60,604 $ (702) $ 8,782 46,535 $ 473,261 - ---------------------------- Emerging Markets Fund Investor Class 1,890,976 81,555 (2,563) 7,978 275,063 1,996,957 - ---------------------------- Equity Growth Fund Investor Class 4,457,157 142,378 (2,616) 17,811 197,296 4,591,077 - ---------------------------- Growth Fund Investor Class 4,416,054 140,538 (2,682) 353 222,764 4,493,150 - ---------------------------- International Bond Fund Investor Class 16,873 1,668 (5) -- 1,119 15,252 - ---------------------------- International Growth Fund Investor Class 3,878,216 128,013 (4,952) 6,407 421,740 3,884,226 - ---------------------------- Large Company Value Fund Investor Class 2,630,276 83,927 (2,104) 18,620 397,942 2,626,417 - ---------------------------- Prime Money Market Fund Investor Class 506,466 15,742 -- 4,650 490,724 490,724 - ---------------------------- Real Estate Fund Investor Class 504,217 15,479 (330) 1,765 20,073 566,661 - ---------------------------- Small Company Fund Investor Class 631,640 19,407 (551) 5,373 60,748 663,976 - ---------------------------- Value Fund Investor Class 1,552,276 79,374 (8,405) 39,282 198,919 1,511,785 - ---------------------------- Vista Fund Investor Class(2) 4,227,190 185,984 (5,851) -- 282,778 4,332,159 - -------------------------------------------------------------------------------------------------------------- $25,246,982 $954,669 $(30,761) $111,021 $25,645,645 ============================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. 5. FEDERAL TAX INFORMATION The tax character of distributions paid during the period from September 30, 2004 (fund inception) through July 31, 2005 was as follows: - ------------------------------------------------------------------------------------------ VERY VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE AGGRESSIVE - ------------------------------------------------------------------------------------------ DISTRIBUTIONS PAID FROM - ------------------------------------------------------------------------------------------ Ordinary income $103,266 $364,546 $591,675 $110,186 $34,750 - ------------------------------------------------------------------------------------------ Long-term capital gains -- -- -- -- -- - ------------------------------------------------------------------------------------------ The character of distributions made during the period 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. (continued) - ------ 29 Notes to Financial Statements JULY 31, 2005 5. FEDERAL TAX INFORMATION (CONTINUED) As of July 31, 2005, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - ------------------------------------------------------------------------------------------ VERY VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE AGGRESSIVE - ------------------------------------------------------------------------------------------ COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - ------------------------------------------------------------------------------------------ Federal tax cost of investments $10,036,308 $42,316,070 $94,033,767 $61,709,704 $24,323,567 ========================================================================================== Gross tax appreciation of investments $143,643 $1,048,696 $3,425,651 $2,893,692 $1,324,554 - --------------------- Gross tax depreciation of investments (64,966) (237,151) (247,250) (51,960) (2,476) - ------------------------------------------------------------------------------------------ Net tax appreciation of investments $ 78,677 $ 811,545 $3,178,401 $2,841,732 $1,322,078 ========================================================================================== Undistributed ordinary income $25,851 $86,787 $139,378 $261,212 $50,476 - --------------------- Accumulated long-term gains $12,300 $53,533 $85,176 $60,235 $26,175 - ------------------------------------------------------------------------------------------ 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. 6. OTHER TAX INFORMATION (UNAUDITED) The following information is provided pursuant to provisions of the Internal Revenue Code. For corporate taxpayers, the following ordinary income distributions paid during the period from September 30, 2004 (fund inception) through July 31, 2005, qualify for the corporate dividends received deduction. - -------------------------------------------------------------------------------- VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE VERY AGGRESSIVE - -------------------------------------------------------------------------------- $17,681 $103,246 $203,290 $110,186 $34,750 - -------------------------------------------------------------------------------- The funds hereby designate qualified dividend income for the period from September 30, 2004 (fund inception) through July 31, 2005, as follows: - -------------------------------------------------------------------------------- VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE VERY AGGRESSIVE - -------------------------------------------------------------------------------- $12,672 $80,593 $182,174 $108,747 $34,750 - -------------------------------------------------------------------------------- - ------ 30 One Choice Portfolio: Very Conservative - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------ Net Investment Income(2) 0.25 - ------------------------------------------------------------------ Net Realized and Unrealized Gain 0.29 - -------------------------------------------------------------------------------- Total From Investment Operations 0.54 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------------------ From Net Investment Income (0.27) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.27 ================================================================================ TOTAL RETURN(3) 5.43% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ------------------------------------------------------------------ Ratio of Net Investment Income to Average Net Assets 3.00%(5) - ------------------------------------------------------------------ Portfolio Turnover Rate 38% - ------------------------------------------------------------------ Net Assets, End of Period (in thousands) $10,132 - -------------------------------------------------------------------------------- (1) September 30, 2004 (fund inception) through July 31, 2005. (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. (4) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 31 One Choice Portfolio: Conservative - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------ Net Investment Income(2) 0.22 - ------------------------------------------------------------------ Net Realized and Unrealized Gain 0.58 - -------------------------------------------------------------------------------- Total From Investment Operations 0.80 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------------------ From Net Investment Income (0.26) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.54 ================================================================================ TOTAL RETURN(3) 8.08% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ------------------------------------------------------------------ Ratio of Net Investment Income to Average Net Assets 2.63%(5) - ------------------------------------------------------------------ Portfolio Turnover Rate 12% - ------------------------------------------------------------------ Net Assets, End of Period (in thousands) $43,183 - -------------------------------------------------------------------------------- (1) September 30, 2004 (fund inception) through July 31, 2005. (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. (4) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 32 One Choice Portfolio: Moderate - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------ Net Investment Income(2) 0.17 - ------------------------------------------------------------------ Net Realized and Unrealized Gain 0.99 - -------------------------------------------------------------------------------- Total From Investment Operations 1.16 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------------------ From Net Investment Income (0.19) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.97 ================================================================================ TOTAL RETURN(3) 11.71% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ------------------------------------------------------------------ Ratio of Net Investment Income to Average Net Assets 1.98%(5) - ------------------------------------------------------------------ Portfolio Turnover Rate 3% - ------------------------------------------------------------------ Net Assets, End of Period (in thousands) $97,313 - -------------------------------------------------------------------------------- (1) September 30, 2004 (fund inception) through July 31, 2005. (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. (4) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 33 One Choice Portfolio: Aggressive - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------ Net Investment Income(2) 0.14 - ------------------------------------------------------------------ Net Realized and Unrealized Gain 1.22 - -------------------------------------------------------------------------------- Total From Investment Operations 1.36 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------------------ From Net Investment Income (0.10) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.26 ================================================================================ TOTAL RETURN(3) 13.61% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ------------------------------------------------------------------ Ratio of Net Investment Income to Average Net Assets 1.52%(5) - ------------------------------------------------------------------ Portfolio Turnover Rate 3% - ------------------------------------------------------------------ Net Assets, End of Period (in thousands) $64,623 - -------------------------------------------------------------------------------- (1) September 30, 2004 (fund inception) through July 31, 2005. (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. (4) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 34 One Choice Portfolio: Very Aggressive - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------ Net Investment Income(2) 0.08 - ------------------------------------------------------------------ Net Realized and Unrealized Gain 1.49 - -------------------------------------------------------------------------------- Total From Investment Operations 1.57 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------------------ From Net Investment Income (0.09) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.48 ================================================================================ TOTAL RETURN(3) 15.81% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(4) 0.00%(5) - ------------------------------------------------------------------ Ratio of Net Investment Income to Average Net Assets 0.84%(5) - ------------------------------------------------------------------ Portfolio Turnover Rate 8% - ------------------------------------------------------------------ Net Assets, End of Period (in thousands) $25,649 - -------------------------------------------------------------------------------- (1) September 30, 2004 (fund inception) through July 31, 2005. (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. (4) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (5) Annualized. See Notes to Financial Statements. - ------ 35 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century Asset Allocation Portfolios, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of One Choice Portfolio: Very Conservative, One Choice Portfolio: Conservative, One Choice Portfolio: Moderate, One Choice Portfolio: Aggressive, and One Choice Portfolio: Very Aggressive, (collectively the "Funds"), five of the mutual funds comprising American Century Asset Allocation Portfolios, Inc., as of July 31, 2005, and the related statements of operations, and changes in net assets and the financial highlights for the period from September 30, 2004 (fund inception) through July 31, 2005. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2005, by correspondence with the transfer agent. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising American Century Asset Allocation Portfolios, Inc., as of July 31, 2005, the results of their operations, and the changes in their net assets and their financial highlights for the period from September 30, 2004 (fund inception) through July 31, 2005, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri September 9, 2005 - ------ 36 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the funds' investment advisor, American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services, LLC (ACS LLC). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly owned subsidiaries, including ACIM, ACIS, and ACS LLC. The directors serve in this capacity for six registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 13 investment companies advised by ACIM or American Century Global Investment Management, Inc. (ACGIM), a wholly owned subsidiary of ACIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 24 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 37 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board LENGTH OF TIME SERVED (YEARS): 9 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 10 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Process Excellence, Sprint Corporation (January 2005 to present), Senior Vice President, Transformation, Sprint Corporation (September 2003 to December 2004); Senior Vice President-Financial Services, Sprint Corporation (January 2003 to September 2003); Senior Vice President-Finance, Global Markets Group, Sprint Corporation (November 1998 to January 2003) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, American Italian Pasta Company - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman LENGTH OF TIME SERVED (YEARS): 46 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman LENGTH OF TIME SERVED (YEARS): 14 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chief Executive Officer, ACC (June 1996 to September 2000); Chairman, ACS LLC and other ACC subsidiaries; Director, ACC, ACIM, ACGIM, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 38 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Chief Operating Officer, ACC (June 1996 to September 2000); Also serves as: Chief Executive Officer and President, ACIS, ACGIM, ACIM and other ACC subsidiaries; Executive Vice President, ACS LLC; Director, ACC, ACIS, ACIM, ACGIM, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1946 POSITION(S) HELD WITH FUND: Executive Vice President LENGTH OF TIME SERVED (YEARS): 9 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); Executive Vice President, ACC (May 1995 to present); Also serves as: Chief Executive Officer, Chief Financial Officer and President, ACS LLC; Chief Financial Officer and Executive Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries; Treasurer, ACGIM, ACIM and other ACC subsidiaries; Director, ACC and other subsidiaries - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Accounting Officer LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Assistant Treasurer, ACC (January 1995 to present); Also serves as: Senior Vice President, ACS LLC; Assistant Treasurer, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- CHARLES C.S. PARK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer LENGTH OF TIME SERVED (YEARS): 4 and less than 1 year PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACS LLC, ACIM and ACGIM (March 2005 to present); Vice President, ACS LLC (February 2000 to present); Assistant General Counsel, ACS LLC (January 1998 to March 2005) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Controller LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS LLC (February 2000 to present); Controller-Fund Accounting, ACS LLC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (October 2001 to present); Vice President, Corporate Tax, ACS LLC (April 1998 to present); Also serves as: Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge upon request by calling 1-800-345-2021. - ------ 39 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 funds' investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. 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 Web site at americancentury.com and on the Securities and Exchange Commission's Web site 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 funds file their 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 funds' Forms N-Q are available on the SEC's Web site 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 funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 40 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 LEHMAN BROTHERS U.S. AGGREGATE INDEX represents securities that are taxable, registered with the Securities and Exchange Commission, and U.S. dollar-denominated. The index covers the U.S. investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. Morgan Stanley Capital International (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE(reg.tm) (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EM (Emerging Markets) INDEX(SM) represents the performance of stocks in global emerging market countries. The RUSSELL 3000(reg.tm) INDEX measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. As of the latest reconstitution, the average market capitalization was approximately $4 billion; the median market capitalization was approximately $700 million. The index had a total market capitalization range of approximately $309 billion to $128 million. - ------ 41 Notes - ------ 42 Notes - ------ 43 Notes - ------ 44 [inside back cover - blank] [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL ADVISORS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC. 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. The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor 0509 (c)2005 American Century Proprietary Holdings, Inc. SH-ANN-45260N All rights reserved.
ITEM 2. CODE OF ETHICS. a. The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. b. No response required. c. None. d. None. e. Not applicable. f. A copy of the registrant's Code of Ethics for Senior Financial Officers is filed as an exhibit to this annual report on Form N-CSR pursuant to Item 12(a)(1). ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The registrant's board has determined that the registrant has at least one audit committee financial expert serving on its audit committee. (a)(2) D.D. (Del) Hock, Donald H. Pratt and Timothy Webster are the registrant's designated audit committee financial experts. They are "independent" as defined in Item 3 of Form N-CSR. (a)(3) Not applicable. (b) No response required. (c) No response required. (d) No response required. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees. The aggregate fees billed for the registrant's first fiscal year for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $57,990. (b) Audit-Related Fees. The aggregate fees billed in the registrant's first fiscal year for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item were as follows: For services rendered to the registrant: $0 Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): $0 (c) Tax Fees. The aggregate fees billed in the registrant's first fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows: For services rendered to the registrant: $13,970 These services included review of federal and state income tax forms and federal excise tax forms. Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): $0 (d) All Other Fees. The aggregate fees billed in the registrant's first fiscal year for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows: For services rendered to the registrant: $0 Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): $0 (e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant's audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant's audit committee also pre-approves its accountant's engagements for non-audit services with the registrant's investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant. (e)(2) All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant's audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C). (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than 50%. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the registrant's first fiscal year were $167,076. (h) The registrant's investment adviser and accountant have notified the registrant's audit committee of all non-audit services that were rendered by the registrant's accountant to the registrant's investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant's audit committee included sufficient details regarding such services to allow the registrant's audit committee to consider the continuing independence of its principal accountant. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The address to be used by shareholders who wish to recommend nominees to the registrant's board has changed to the following: The Corporate Secretary, American Century Funds, P. O. Box 410141, Kansas City, Missouri 64141. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Registrant's Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, is filed and attached hereto as EX-99.CODE ETH. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC. By: /s/ William M. Lyons ----------------------------------------- Name: William M. Lyons Title: President Date: September 29, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ William M. Lyons ----------------------------------------- Name: William M. Lyons Title: President (principal executive officer) Date: September 29, 2005 By: /s/ Maryanne L. Roepke ----------------------------------------- Name: Maryanne L. Roepke Title: Sr. Vice President, Treasurer, and Chief Accounting Officer (principal financial officer) Date: September 29, 2005
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N-CSR Filing
American Century Asset Allocation Portfolios N-CSRCertified annual shareholder report (management investment company)
Filed: 29 Sep 05, 12:00am